News Release
 November 11, 2004
CONTACT: Stefanie Zakowicz

Jeff Beaulieu, vice president of produce/floral for Giant Food Stores, LLC commented today on the challenging produce issues that grocery stores will be facing through the holiday season. This season is unprecedented in terms of the various factors affecting entire produce categories, he stated.

Factors Impacting Produce

Beaulieu provided an overview of the factors that have been and continue to impact produce supplied from both the southeastern and western portions of the United States. Beaulieu sited the two significant hurricanes that hit Florida, Georgia, Alabama and the Carolinas: Hurricane Francis on September 6 and Hurricane Ivan on September 15.

He also discussed that the West Coast experienced record temperatures in September, now replaced by rainstorms in the key growing areas, including the desert, Southern California and Oxnard. Another powerful rainstorm is threatening the West Coast this weekend and will further impact crops.

Lastly, Beaulieu mentioned the high fuel costs that have adversely impacted promotional prices as the cost to transport produce continues to increase along with fuel costs.

The Damage Done

Beaulieu reviewed how the various factors have impacted crops. In the southeast: · Damage and crop losses · Planting delayed, creating gaps in inventory · Government disaster relief has created further planting delays

- more -

Produce Issue contd. Page 2 of 2

In the West: · Low yields · Supplier gaps and quantity gaps

Beaulieu indicated that 50% of the produce supply that comes from the Southeast and California has been impacted.

While Giant and Tops will continue to maintain high quality standards, Beaulieu emphasized that if any produce does not meet the standards, then it will not be offered for sale. Further, this may result in a shorter product shelf life.

End Result

The demand for fresh fruits and vegetables is on the rise in the U.S. Beaulieu discussed the limited supply and high fuel costs that will make the holiday season a challenge in meeting forecasted demand. He explained further that certain items would see higher retails until growing regions begin producing new crops.

Future Forecast

Beaulieu forecasted that the Southeast should begin to get back to normal in mid-to-late December, with some relief on certain commodities, such as peppers by Thanksgiving.

He further commented that the rain in the West needs to stop before any predictions can be made for product coming out of that area.

Attachments: 1

Attachment 1

Attachment 1

Category and Pricing Overview

Categories Not Impacted: · Apples  New York State and Washington State · Pears · Potatoes · Root Vegetables  carrots, turnips, beets · Bananas · Mushrooms · Clementines

Categories Impacted: · Citrus · Particularly grapefruit yield down 60%, relief when Texas crop comes in, costs up 100%. · Seedless Grapes  gap in supply before Chile · Tomatoes  some availability  overall wholesale costs up 150% over LY · Roma and grape tomatoes  up 300% in wholesale price over LY · Last years retail on cherry tomatoes: $2.99/pint · This years retail on cherry tomatoes: $3.99/pint (as of 11/26/04) · Organics  availability and quality issues · Peppers  limited available · Wholesale prices up 300% over LY · Berries  quality issues, costs up 50% · Broccoli  pin rot due to rain in West, costs up 60% · Melons  forecasting difficult due to this weekends rain storm in west (Arizona) · Lettuce  yields down, spring mix down by 40%, Romaine up 36% · Pecans  hurricanes in Georgia affected crop · Mangoes  gap in supply

It is important to note that only a portion of these higher costs have been passed on to our customers; they will not see the same increases in retail prices.


Press Room Archive