February 6, 2020

Field to Market: Grape Logistics

Written by SmartSense | Food Safety, Supply Chain

Delano, California is grape country. The northern California town is located about 30 miles from Bakersfield, and is the home of grape growers. It's also the site of the 1965 Delano grape strike led by then activist Cesar Chavez of the National Farm Workers Association (NFWA). At the time he led the workers seeking improvements in farm workers wages and working conditions.

 

Today, however, the region is thriving in grape production, and one company, smack dab in the middle of that grape production is Jasmine Vineyards. They're a major grower of grapes of all types with red, green, and bluish colored grapes bearing names like Summer Crunch, Sweet Globe, Great Green, Scarlet Royal, and Summer Royal. Jasmine vineyards rely on the cold chain to not only store their crops, but also to distribute their grapes to their many retailers such as Kroger, Winn-Dixie, Albertsons, and Publix Super Markets.

 

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Recently Jasmine has expanded its cold storage facility to include a massive cold storage warehouse where its grape products are stored at 31.5 degrees, awaiting loading and distribution to their final destinations.

 

Jasmine vineyards just demonstrates one company on the cold chain of the United States. They're a company that relies heavily not only on the refrigerated transport from trucks and refrigerated containers, but also on cold storage warehouse facilities.

 

Cold Storage in High Demand

Warehouse facilities such as these are in high demand as trends show that more consumers are demanding fresh produce and perishable goods that are temperature sensitive. According to the Food Marketing Institute and Nielsen, there could be demand for up to 100 million square feet of industrial real estate space over the next five years and much of that space could be driven by demand for cold storage and temperature sensitive real estate.

 

One factor that's driving this uptick in the demand for such real estate space is an overall increase in online food orders. At present total online food grocery orders, from companies like Amazon Fresh and Peapod, constitute approximately 2% to 3% of the total market of grocery purchases. It's expected, however, that that number will climb to about 13% by 2022 according to the firm CBRE.

 

CBRE says that the total industrial cold storage industry space is estimated at 214 million square feet, which represents a very small amount of the total U.S. industrial and logistics real estate market. In their report, Cold Storage Space: One Size Does Not Fit All, it said the cold storage sector growth is expected to take place in their terminology at gateway markets such as Los Angeles, New York, and other top food production states such as California, Washington state, Florida, Texas, and Washington.

 

Leading States For Cold-Storage Space

State

Million cubic feet

State

Million cubic feet

California

396.5

Pennsylvania

213.5

Washington

271.3

Illinois

188.0

Florida

259.4

Georgia

183.5

Texas

231.4

Oregon

139.6

Wisconsin

228.1

New Jersey

136.7

“Cold Storage Industry Likely To See Demand For Another 100M Sq Ft From Online Grocery Sales.” CBRE Group, Inc., 5 June 2019, www.cbre.us/about/media-center/cold-storage-industry-likely-to-see-demand-for-another-100m-sq-ft-from-online-grocery-sales.

 

Healthier Lifestyles

One of the factors driving the demand for online food orders and for perishable foods is different eating and consumption habits within U.S. households. The Food Marketing Institute states that a rising number of households – about one third – have at least one member of that household who follows a diet that could be described as vegan, vegetarian, pescatarian, or flexitarian. This means that more plant-based foods are being consumed and therefore being demanded and purchased at the grocery store. This means that not only are more refrigerated trucks required, but so is refrigerated and cold storage warehouse space required.

 

This trend can be best demonstrated and seen through the efforts by companies like Jasmine Vineyards, who has a long-standing reputation in the grape industry producing their grapes in a wide and expansive vineyard area in California's Napa Valley. They rely heavily on a robust cold chain to not only move the grapes from their cold storage facilities near where they are harvested and packed, but to also bring them to other cold storage distribution centers so that they can make their way to the final user.

 

The Global Cold Chain for Freshness

If there are takeaways from this, it's to know and learn that food production in areas like those mentioned herein are alive and well and quite robust. Fresh produce in the United States however is only part of the entire market share. Other companies all over the world are contributing to it and the global supply chain for cold transport is more active in growing than perhaps any other food market at this time.


In some states, ports are expanding to accommodate this surging need for cold storage. At the Virginia ports in Norfolk, Virginia, for example, the U.S. Department of Agriculture's southeast in-transit cold treatment pilot program has launched to allow importers of perishables from places like South American countries to move their cargo across the Port of Virginia. Before this program was established, perishable products had to come to the east coast and move across ports in the northeast. Now produce may enter directly into the Port of Virginia and then be distributed to other states for distribution into stores. It simply brings produce closer to markets and removes a limited number of gateway ports where fresh produce can enter the United States.

 

grapes preparing for transport

Fresh grapes being prepared for transport.

 

For this pilot program Virginia could import cold treated containers of produce such as, citrus, and grapes from Peru. They can import blueberries and grapes from Uruguay. They can also import apples, blueberries, and pears from Argentina.

 

The cold chain is alive and well and is one of the most vital supply chain links that exists. Its importance is not always appreciated or understood as consumers simply go into a supermarket, and have become accustomed to having access to a wide variety of fresh produce from all over the country at their fingertips. They're able to have many choices and such a luxury is only available in part from a robust and solid supply chain.

 

We can only expect the supply chain to grow, and the technology associated with it to advance. The introduction and availability of such technology will rise to meet demand driven by the changing food habits and the robust market of perishable foods both in the United States and from the global supply chain around the world.

 

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