FoodReview • Volume 23, Issue 2
14
Structural Change in the U.S. Food Industry
Sales of fresh fruits and vege-
tables to U.S. consumers
through supermarkets and
other retail stores, through meals
and snacks eaten in foodservice
establishments, and through direct
sales by farmers were $70.8 billion
in 1997, up from $34.6 billion a
decade earlier. Supermarket pro-
duce departments have expanded
dramatically, increasing from an
average of 173 items in 1987 to 335
in 1997. Many of these items—
prepackaged salads, cilantro, and
bok choy—reflect consumers’
demand for added convenience,
variety, and ethnic items.
Growing consumer demand for
fresh fruits and vegetables and the
changing structure of produce
wholesalers and retailers have
affected how produce travels from
the farmer to the consumer. Both
wholesalers and retailers have sig-
nificantly consolidated as they have
attempted to take advantage of
economies of size in procurement
and information technologies (see
“Grocery Retailers Demonstrate
Urge To Merge” elsewhere in this
issue). More produce is being
shipped directly from grower/ship-
pers to large retailers that operate
their own distribution centers, while
less produce is shipped to whole-
salers at central produce markets
(terminal markets) in major cities.
Within retailing, the amount of pro-
duce sold through discount mass
merchandisers, such as Wal-Mart
supercenters, has increased from
almost nothing in 1987 to $1.3 bil-
lion in 1997.
Produce sales are also shifting
from retail stores to foodservice
operators. During the past decade,
retail stores’ share of total produce
sales to consumers fell from 63.6
percent in 1987 to 48.4 percent in
1997 (fig. 1). The share of produce
sales to consumers accounted for by
the foodservice sector, in contrast,
rose from 34.7 percent to 50.0 per-
cent. The share of consumer sales
through direct markets remained
nearly constant at about 1.6 percent.
Health Concerns and
Convenience Boost
Consumption
Several factors account for the
dramatic rise in consumption of
fresh fr