Canadian company Execulytis Consulting reports growth will be largely driven by those under 25 years old increasing their purchasing power.
Likewise, Category Partners of Idaho Falls, ID notes more product availability and the narrowing price gap between organic and conventional produce items is also spurring the market. This price gap has gradually narrowed over time due to more product being available. This will continue to put downward pressure on prices in the future.
A recent Execulytics Consulting survey of 5,000 Canadian grocery shoppers found 39% of consumers under 25 (Generation Z) say organic is always their preferred choice or that they only buy organic products. This compares with 25% of those over 25 saying the same.
This survey revealed consumers under 25 have shown an interest in more specialty products including mangoes, limes and Asian vegetables, and this could provide a growth opportunity for such products. At the same time, they have purchased fewer bananas, apples, potatoes and strawberries than their older counterparts. While this younger age group is not fully in the marketplace yet, they will increase their purchasing power and thus drive growth of organic produce in the future.
During the pandemic, consumers moved toward products they perceived as providing a safer way to obtain food naturally, and this positively affected the organic market.
This perception of safety also gave a boost to packaged produce products. In the past, retailers have been focused on the number of unique items they carry, but the current labor shortage has put pressure on those offerings, which in turn has affected the number of unique organic items retailers can offer.
Carlson Produce Consulting of Chicago notes while the organic market has experienced double-digit growth in the past, that growth has slowed, saying the category is maturing.
However, the growth of indoor farming will boost the segment, and CPC reports there is significant opportunity for indoor farming to grow. The company reports the availability of product on a 52-week basis will be key to driving growth of specific items including blueberries. With this increased availability the market could get a boost from items that aren’t typically the highest drivers of sales.
Category Parnters notes unique salad blends coming out of urban greenhouse environments will drive growth as consumers are discovering those products, and they come with a higher retail price.
During the third quarter of 2021, total organic sales dollars increased by 3.4% compared with the same quarter of the previous year, according to the Organic Produce Network, Category Partners and Nielsen. This compared with a third quarter of 2020 that was influenced by pandemic-driven shopping. Conventional produce dollars increased by 1.3% in comparison. Berries, apples and packaged salads accounted for 85% of all organic fresh produce dollar growth during the third quarter. Berries specifically grew in sales dollars by 11% during the quarter.
In the future the growth of the segment will not be limited by demand but by supply. When consumers are surveyed, they indicate they believe organic produce is superior in every way, indicating a larger share of consumers will act on that preference as more options become more affordable.
Category Partners observes it is not a question of consumer demand, but supplier capabilities and grower capabilities.
During the third quarter of 2021, organic produce represented 12% of the total produce market in the U.S. and it is conceivable the organic segment could gain another 10 percentage points of growth over the next 10 years.