Grower hopes new bags help sales mushroom
Silicon Valley Business Journal – by Becky Bergman
When it comes to dishing out meals, it’s not easy pleasing hungry Americans. Busy consumers are increasingly demanding nutritious, non-fattening, fresh, convenient food that tastes good. If that order wasn’t complicated enough, they want it doled out in the comfort of their kitchen.
Executives at Monterey Mushrooms Inc. say they have the winning recipe to satisfying consumer appetite for fresh, convenient and safe mushrooms. The grower-shipper and marketers of fresh mushrooms — the largest in the United States — is rolling out a new resealable package for its ready-to-eat sliced mushrooms. It will be the first — and only — supplier to package mushrooms in a resealable bag, according to Peter Jensen, the company’s West Coast regional vice president.
The mushroom company employs roughly 1,400 people locally in its Watsonville headquarters and locations in Morgan Hill and San Juan Bautista. The international company, which has 4,000 employees in a dozen locations around the world, first took a bite out of the $2.8 billion ready-to-eat produce industry four years ago when it launched its Clean N Ready package of pre-washed mushrooms.
“Consumers want fresh appearance, convenience in the way they use produce and reassurance about their food safety,” said Mr. Jensen. “We addressed all that with our Clean N Ready package. The resealable bag is just an evolution of that process.”
Execs won’t disclose how much the company’s revenue mushroomed after the grower introduced the Clean N Ready line but published reports peg its sales at roughly $350 million last year. “Our sliced, white mushrooms increased our revenues significantly,” said Mr. Jensen. “It is the driver of growth for our company and I expect the resealable bag will do the same.”
Mr. Jensen said the company was inspired by the salad packaging market, the fastest-growing segment in produce packaging. Analysts at market research firm Freedonia Group say the salad packing market will reach — and likely surpass — the $495 million mark in 2008.
“We looked at these trends and thought we ought to be trying this,” said Mr. Jensen. “We looked at other foods like tuna and nuts, and at other fresh-cut vegetables and they have all been successful.”
It has taken the company several years and millions of dollars — execs didn’t give an exact figure — to develop and patent the equipment and technology it uses for the resealable bags, according to David Fullington, general manager for the Watsonville farm.
Competing mushroom growers have introduced their own ready-to-eat packaging that failed to grab the market, said Mr. Fullington. He said patent restrictions will likely serve up the same doomed outcome over resealable bags. “They will need to develop their own technology and material and that will be very costly to do.”
Recipes, nutrient information and a bold logo will highlight the new 10-ounce bag and help differentiate the company from its competitors. The standing package will also change how grocery retailers position the mushrooms so customers can easily view and select the white, shiitake or Baby Bella mushrooms. Company officials say the new resealable packaging will also keep mushrooms fresh 20 percent longer.
“Our customers don’t use an entire package of mushrooms for one meal, whether they are cooking for just themselves or the whole family,” said Mr. Jensen. “The new packaging gives them the convenience of ready-to-eat mushrooms and a bag they can reseal and put back in the refrigerator for the next meal.”
The company will also unveil its 40-ounce resealable package of mushrooms for club stores and restaurants. It already bags and distributes a 4-ounce package of mushrooms for the ready-to-eat salad industry. For all its innovative packaging and positive earnings reports, execs admit the company overlooked a significant market at the peak of the low- and no-carb diet craze two years ago. Even when the late Dr. Robert Atkins suggested dieters feast on a mushroom dish for breakfast, company officials failed to seize on consumer demand for low carbohydrate foods.
“When Atkins made the big announcement that a mushroom omelet was a great breakfast choice, we didn’t grab onto that one like we should have,” said Joe Caldwell, the company’s East Coast regional vice president.”
Of the 853 million pounds of mushrooms sold in the United States last year, 215 million pounds came from the 300-acre mushroom farm, according to Shah Kazemi, owner and president of the company. Like other agricultural businesses in the region, workers’ compensation insurance prices, energy costs and a labor shortage have made it difficult for Monterey Mushrooms to operate in the expensive state.
Because the company grows its vegetables in a 600,000-square-foot facility, energy costs have tripled in recent years. “The price of energy is a global issue that you can’t get away from,” said Mr. Kazemi.
Although health insurance and workers’ comp still gobble up nearly 30 percent of the company’s wages it pays its workers, the exec said the cost is finally inching downward. Execs said the financial challenges won’t be enough to push company out of the area any time in the near future. In fact, the only economical location would strap the mushroom supplier with the high cost of importing raw material.