Chiquita sizes up salad opportunities

by Eric Schroeder
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CHARLOTTE, N.C. — Although salads and healthy snacks are a significantly smaller portion of the company’s business than bananas, executives with Chiquita Brands International, Inc. believe the former offer “some interesting opportunities” as the company heads into fiscal 2013.

Chiquita sustained a loss of $4 million in its Salads and Healthy Snacks segment in the year ended Dec. 31, 2012, which compared with income of $8 million in fiscal 2011. Sales were flat, at $953 million. Chiquita said full-year results were affected adversely by more than $13 million in unusual charges, including $8 million in the fourth quarter alone. Additionally, lower retail salad volumes and higher raw product costs negatively impacted fiscal 2012 results.

But opportunities to build the salad business exist, Ed Lonergan, president and chief executive officer, said during a March 11 conference call to discuss full-year results. First, while the overall salad business in North America is about $5 billion, Chiquita hasn’t been playing outside the $2 billion share of the packaged salad business, Mr. Lonergan said. Second, Chiquita has an opportunity to convert to higher value salads.

“People consume about 11 bagged salads in the course of a year, and about 36 salads overall per capita, and so we have some interesting opportunities within the category,” he said.

Mr. Lonergan said Chiquita wants to find out what will change consumers’ view of the bagged salad business and encourage them to purchase more. At the same time, the company is extending its position in private label and the whole head lettuce business as a way to participate in the broader part of the salad category.

Even as some of its salad strategy changes, Chiquita will remain a player in the food service industry, which accounts for about 20% of salad sales, Mr. Lonergan said.

“We have a pretty significant exposure to quick-service restaurants where we bring the value of our scale across North America, but as well, we’re in the sweet spot of their more healthful menus,” he said. “And so as they create better products to feed the global consumer we’re at the right place to intersect that.

“We expect that business to continue to grow and contribute. We expect our apple business and healthy snacks businesses to grow. And of course, with our new strategy in salads business, packaged salads business, we expect both private label business to grow and our branded Fresh Express business.”

In the fiscal year ended Dec. 31, 2012, Chiquita Brands sustained a loss of $408 million, which compared with net income of $57 million in fiscal 2011. Net sales fell to $3,078 million from $3,139 million.

Operating income in the Bananas segment totaled $83 million in fiscal 2012, down from $132 million in fiscal 2011. Net sales eased 2% to $1,985 million from $2,023 million.
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