Dole on the industry

A bellwether for the industry, Dole Food Co. is a market leader in many produce categories. Although the company is privately held, it does file an annual 10-K report with the Securities and Exchange Commission. Find the 2007 10-K report from Dole here. Apart from what the company says about itself and its performance, I found it interesting to read what the annual report says about the industry. From the report:

The worldwide fresh produce industry enjoys consistent underlying demand and favorable growth dynamics. In recent years, the market for fresh produce has increased faster than the rate of population growth, supported by ongoing trends including greater consumer demand for healthy, fresh and convenient foods, increased retailer square footage devoted to produce, and greater emphasis on fresh produce as a differentiating factor in attracting customers. According to the Food and Agriculture Organization, worldwide produce production grew 3.6% per annum from 814 million metric tons in 1990 to an estimated 1.4 billion in 2005.

Health-conscious consumers are driving much of the growth in demand for fresh produce. Over the past several decades, the benefits of natural, preservative-free foods have become an increasingly significant element of the public dialogue on health and nutrition. As a result, consumption of fresh fruit and vegetables has markedly increased. According to the U.S. Department of Agriculture, Americans consumed 40 more pounds of fresh fruit and vegetables per capita in 2005 than they did in 1987. Consumers are also consuming more organic foods. Specifically, organic produce sales grew 11% to $5.4 billion in 2006, according to the Organic Trade Association and represented 5.5% of total retail produce sales in the U.S.

Food manufacturers have responded to consumer demand for convenient, ready-to-eat products with new product introductions and packaging innovations in segments such as fresh-cut fruit and vegetables and ready-to-eat salads, contributing to industry growth.

The North American packaged fruit industry is experiencing stable growth, driven by consumer demand for healthy snacking options. FRUIT BOWLS® in plastic cups, introduced by Dole in 1998, and other innovative packaging items have steadily displaced the canned alternative. These new products have spurred overall growth in the packaged fruit category, while the consumption of traditional canned fruit has declined as consumers opt for fresh products and more innovative packaging.
Retail consolidation and the growing importance of food to mass merchandisers are major factors affecting the food manufacturing and fresh produce industries. As food retailers have grown and expanded, they have sought to increase profitability through value-added product offerings and in-store services. The higher margins of the fresh produce category are also attractive to retailers. As a result, some retailers are reducing their dry goods sections of the store, in favor of expanding fresh and chilled items, offering new product and merchandising opportunities for packaged fruit. Fully integrated produce companies, such as Dole, are well positioned to meet the needs of large retailers through the delivery of consistent, high-quality produce, reliable service, competitive pricing and innovative products. In addition, these companies including Dole have sought to strengthen relationships with leading retailers through value-added services such as banana ripening and distribution, category management, branding initiatives and establishment of long-term supply agreements.