Chiquita bags Salad Express
On the heels of McDonald's renewed entry into the fruit and vegetable market with enormous consequences for consolidation and standardization, comes another major development in the prepackaged salad market, an area growing in dominance and profitability. Chiquita Brands International, a major banana company, has agreed to buy packaged salad vendor Fresh Express for $855 million. That's a lot of lettuce.
All of this is part of the move from selling fruits and vegetables not as undifferentiated commodities, but rather as branded, packaged foods with some value added. In Fresh Express's case, it is selling pre-washed convenience salad with long in-bag shelf lives. Supermarkets can charge more for these products and have far less spoilage. Consumers save the few seconds of washing and ripping the salads. Salad Express also sells a number of variations with different salad ingredients and with kits for making some other kinds of salad.
Fresh Express has 40% of the nearly $3 billion packaged salad market in the US, according a Wall Street Journal article ("Chiquita Will Buy Maker of Salads For $855 Million", 2/23/2005). The company also sells precut fruit, to consumers and restaurants.
Chiquita (formerly United Fruit Company) is the world's largest banana reseller (it sells some cucumbers and tomatoes), and much of its bananas are sold in Europe. The Fresh Express purchase will balance the company's revenues between Europe and North America. European banana sales look to be threatened by new tariffs against Latin American bananas.
And it helps a lot that Fresh Express is the primary supplier of salads for fast food restaurants, including McDonald's, Taco Bell, and Pizza Hut. It is also a major supplier of apple slices to McDonald's.
Chiquita gets a leg up with purchase on fruit rivals Dole and Fresh Del Monte Produce, both of which have moved into bagged salads in recent years.
We expect that Chiquita and the others will do to salad farming what they have done to the banana industry. After all, this is the company that gave rise to the term "banana republic."
3:34:04 PM 
|
|
