A fruit or vegetable grower can be as productive as they like but without a successful shelf presence this can all be in vain for the end product. At the Produce Marketing Association's (PMA) Fresh Connections China event in Shanghai last week, participants heard the views of retailers from three different continents. First up was Costco Wholesale Canada assistant general manager Oleen Smethurst, who discussed the innovation of new product development in a bid to stay "two steps ahead of the competition".

While Costco's produce traditions in Canada are in a bulk format, Smethurst highlighted a trend in recent years towards pre-packaging for many categories.

Oleen Smethurst

While many innovative products have shown strong sales, the company learned an important lesson when adopting a clamshell apple item developed by its U.S. division.

"We had it in for two weeks and sales across every apple were down 40%. I can tell you I've never seen the amount of comments from the customer that we received on this – they basically told us, quite nicely, that we were idiots, and what were we doing overpackaging an apple?" she said.

"It's a hardy fruit, it doesn’t need to be packaged in plastic to that extent, so we went back as quickly as possible to the bag, and sales are doing just fine.

"It's really understanding that if something’s delicate and it needs to be protected, clamshell packaging is fine. If it's hardy, don't go there. At least I won't do that again. Lesson learned."

It's a balance Costco has struck across many products highlighted by Smethurst in her presentation. She said the salad and berry categories were already well-developed in pre-packaged formats, while this way of presentation and protecting from contamination was being adopted for hothouse tomatoes, bell peppers and cucumbers.

"The Canadian consumer consumes quite a lot of produce and they’re always looking for something new to try; they’re very adventurous," Smethurst said.

"They're looking for healthy snack foods for lunches on the go, local items, and year-round supply even though we have winter six months of the year in Canada."

She said cocktail cucumbers had revolutionized the cucumber category as they were crunchier, better tasting and more flavorsome. The latest addition was a mini vegetable marketed as the "cutecumber".

"Actually one of the reasons the new product didn't launch as quickly as it should have is because the pricing when it was first tried was extremely expensive because the yields are very low.

"But the growers have actually persisted and they’ve developed it to the point where the pricing actually makes sense, and we can actually sell it and do a good job on it."

She said children were the "foremost key" for maintaining produce growth and increased consumption, and Costco was tapping this market mini bell peppers and grape tomatoes.

"This [the mini bell pepper] is great for children. They can actually hold the stem of the pepper and snack on it, because the seeds are at the top," she said.

She added grape tomatoes had been "phenomenally successful", including the introduction of yellow grape tomatoes which had not cannibalized their red counterparts.

Smethurst also pointed to developments in superfoods, with a sweet kale salad now "the highest selling salad we’ve ever launched in Canada".

"Costco’s always looking to innovate and differentiate. We always try to stay two steps ahead of the competition at all times," she said.

Testing the waters

The assistant general manager discussed a raft of products introduced where Costco had gone against the grain to think fresh to boost sales. One instance was celery hearts, which used to perform poorly.

"We were carrying a three-pack of celery hearts, and we were considering discontinuing the item because sales were very slow and we only carried it in probably a less than a third of the buildings in Canada.

"We knew there were four inch celery sticks out in the market place, but we wanted to be different, so we asked the supplier if the sticks could actually be made to the full length of the stalk, hence how the eight inch celery stick was created.

"There’s no waste as the inedible parts have been removed, this is a much more efficient product as we’re not going to ship product that has to be thrown away. We now carry celery sticks across our 85 locations in Canada and it’s hugely successful, and it’s gone from being a seasonal item to being a year-round item."

Other initiatives include the value adding of combining different colors of nugget potatoes in one bag, marketing red grapes as "Absolutely Pink", keeping leaves in bags for an "orchard feel", and the introduction of new fruits and varieties like black velvet apricots and Sharon fruit.

"Traditionally we don’t carry a lot of apricots because there’s not that much flavor in them. This variety’s very limited because production is just starting to come into commercial quantities, but this [Black Velvet] is the best tasting apricot I’ve ever had.

"Based on the success the grower had with the black velvet, they’ve created a ruby velvet apricot - it’s a later growing variety to help extend the success."

She said Costco ventured into Sharon fruit after a good run with Californian persimmons, as it had a different season.

"Lo and behold, behold we discovered there was an Israeli grower in South Africa also growing Sharon fruit, so we’re going to be trying South African Sharon fruit, again at a different season, so that’s helping us address the year-round supply."

Elsewhere in packaging changes, Smethurst said the company aimed to adopt topseal packs for many fruit and vegetable products, following in the footsteps of retailers in the U.K.

"I thought if we changed our grape tomatoes which are currently in a clamshell, and go from clamshell to a top seal, what would that represent?

"We would actually utilize just over 36,270kg (79,961lbs) less plastic per year on one item. That’s something that we’re looking at with quite a lot of interest, because if we can do this we’re going to show people it’s much more sustainable, there’s that much less plastic in the environment."

Keep your eyes peeled on www.freshfruitportal.com for tomorrow's second installment of our retail series from PMA Fresh Connections China.

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