HERE COME BRAND-NAME FRUIT AND VEGGIES Labels don't make much difference in the $20-billion-a-year produce business. Campbell Soup wants to change that.
By - Eleanor Johnson Tracy

(FORTUNE Magazine) – WHEN a National Institutes of Health panel recently recommended that Americans lower their blood cholesterol by reducing fat intake, some food marketers took heart. Fresh fruit and vegetables--$20 billion in retail sales in l984--are already the fastest-growing category in U.S. supermarkets. Since most fruit and vegetables are low in fat, health-conscious Americans are now likely to eat even more of them. But how to turn apples and artichokes into more than commodities--hardly a thing to make much money on? Campbell Soup, at least, has found that consumers like produce with a brand on it and are willing to pay up for it. Campbell's Farm Fresh mushrooms, introduced six years ago, contributed only $65 million to Campbell's 1984 revenues of $3.7 billion. But the company anticipates that its harvest of mushrooms and other fresh vegetables could ripen to a $1-billion-a-year business by the early l990s. It has started to test-market premium-priced branded tomatoes as well as nine vegetable and fruit salads, such as a broccoli and cauliflower mix. ''Campbell points the direction the big food companies will take in the future,'' says Richard Rakowski, president of Princeton Technologies, a food consulting firm. ''They will add value to their fresh produce, put on their brand names, and increase their profit margins.'' Adding a name is one thing. Adding value to a product whose best-selling feature is its naturalness takes imagination and money. Thanks to technology, branded veggies that are better than unbranded ones may not be impossible. NPI, formerly Native Plants Inc., of Salt Lake City has contracts with several large food companies to genetically engineer premium produce. And DNA Plant Technology, a New Jersey biotechnology company, is developing tomatoes that taste as good as they look. Campbell opened a high-technology plant in Georgia last year where mushrooms of uniform size--the size consumers like --are grown. Hydroponic cultivation, in which plants are raised in a liquid nutrient instead of soil, turns out some worthwhile products--spinach that doesn't have to be washed, for one. But this technique lost its biggest sponsor when General Mills sold its PhytoFarms division back to its developer in l982. General Mills figured it would take too long for hydroponics to pay off. Recently Del Monte found a way to make its pineapples stand out. After market research showed that more consumers would buy pineapples if they knew how to peel them, the company sold pineapple-cutting machines at cost (about $1,000) to retailers carrying its brand. Clerks cut the pineapples for the customer. A Florida retailer sold 250 cases the week he put the machine to use. He had sold only 50 cases the week before. For now Campbell is making the biggest bet on branded produce. Says President R. Gordon McGovern, ''Fresh produce offers a vast new business opportunity.'' Retailers are already taking advantage of it. Fruit and vegetables bring in 8% of a store's revenue but a startling 30% of profits. Food processors like the sound of that kind of action.