‘Ugly’ fresh produce gets hipper for grocers but there’s one problem — supply

Walmart’s “I’m Perfect” brand of bagged apples sold at some stores.

Jeff Daniels | CNBC
Walmart’s “I’m Perfect” brand of bagged apples sold at some stores.

It might be hip for supermarkets such as Wal-Mart to embrace the sale of so-called ugly produce as a way to reduce food waste, but whether it even makes practical or economic sense to launch regular offerings of odd-looking or funny-shaped fruits and vegetables maybe something altogether different.

Wal-Mart started selling branded and bagged apples at a discount earlier this week to consumers in about 300 of its Florida stores under the “I’m Perfect” label but even smaller chains have found it difficult to get a steady stream of ugly fruits and veggies to continue such programs. The retailer may get a shipment of imperfect produce one week but then have to wait weeks or months until the next harvest brings more, thus making it difficult to keep stores regularly stocked with this cheaper-priced produce.

“Selling cosmetically imperfect produce is relatively rare right now,” said Dana Gunders, a senior scientist in the food and agriculture program at the Natural Resources Defense Council. “Whole Foods has a pilot program and there was a California-chain Raley’s that tried it for a little while but discontinued it.”

Ugly produce: watermelon

Jeff Daniels | CNBC

Last year, Raley’s, a West Sacramento-based chain with more than 130 stores, launched a 90-day pilot known as the “Real Good Produce” program with plums, peppers and pears but ultimately decided to end it and cited “some challenges sourcing the product.”

Whole Foods has a northern California pilot with imperfect produce in five stores and next week plans to add a sixth location. Also, Giant Eagle, a Pittsburgh-based food retailer with more than 420 locations, earlier this year launched a program in its hometown market to sell “ugly” oranges, apples and potatoes.

Some of the odd produce eventually gets repurposed in store kitchens and used to make higher-margin prepared foods, such as fruit salads. Also, some of the fruit or vegetables considered undesirable for sale in markets may go to food-service companies that run cafeterias on corporate campuses, hospitals or universities — and a portion of it gets donated to food banks or sent to landfills, where it rots and turns into methane gas, which is a pollutant.

“Food waste overall is a huge problem going into landfills,” said NRDC’s Gunders.

There are no hard numbers, but the NRDC scientist estimates as much as 20 percent to 30 percent of a crop could fall into the category of “fine to eat but cosmetically imperfect.”

California farmer Craig Underwood, who grows fruits and vegetables in Ventura County, estimates that between 15 percent and 20 percent of some citrus crops such as lemons might get rejected due to scarring or insect damage. Sometimes the damage is due to unfavorable weather.

For Wal-Mart, the sale of imperfect apples marks only the second time one of its suppliers created a packaged or bundled special brand of imperfect produce. Earlier this year, the company sold a “Spuglies” brand of bagged potatoes at about 400 stores in three states after a Texas potato supplier was hit by bad weather and suffered a crop of blemished, misshaped and smaller-than-usual spuds.

“We have a flexible framework that the supplier can use when the harvest produces this type of produce,” said John Forrest Ales, a spokesman for Walmart in Bentonville, Arkansas.

According to the Walmart spokesman, the use of brands such as “Spluglies” or “I’m Perfect” are examples of how the retailer can make the most of large quantities of imperfect fresh produce when they become available. But finding those large supplies is not always easy and sometimes the grower may get a better deal sending the imperfect crop to food processors for things such as frozen food products.

“On the potatoes, it’s not like these will be available all the time because… Mother Nature has to give that supplier wonky or imperfect potatoes,” he said.

Some of the growers of potatoes and other produce will decide to donate them to charities such as food banks. Legislation passed last year provided permanent tax incentives for more companies and farmers to donate food.

Feeding America, a non-profit organization with more than 200 food banks in the U.S., is getting a substantial amount of unsaleable produce from growers, retailers and food processors. In 2016, the group expects to receive more than 2.6 billion pounds from grocery stores, growers and other sources.

“Nobody wants to see food go to waste,” said Ross Fraser, a spokesman for Feeding America. “We have nearly doubled the amount of fresh produce that we have provided for our food banks in just the last five years.”

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