Posts Tagged “organic fresh produce”
Organic fresh produce is booming despite total grocery store dollar growth may have climbed only two percent in the last year.
The Organic Produce Network (OPN) and Nielsen, have released new data showing organic produce sales have set new records, totaling $5.6 billion in 2018, far exceeding the status quo. And the year ended on a particularly high note as sales soared 13 percent the final week of the year.
The OPN notes it is particularly interesting is an impressive two-thirds of all produce commodity groups increased organic sales year-over-year which indicates this is not an isolated incident. At the same time, organic growth occurred in these three categories despite a decline in conventional sales.
According to a press release, fresh produce represented 26 percent of total store organic sales, and a growth rate of 8.6 percent was on par with total store organic, suggesting a continued movement toward mainstream demand across product consumption.
In terms of absolute dollars, blueberries saw the greatest increase followed by prepackaged salads. Many popular organic categories exceeded $20 million in dollar growth—among them organic bananas, apples, and grapes.
“Although organic accounted for 10.1 percent of total produce sales, it’s driving a disproportionate amount of growth within the produce department,” said Matt Lally, Associate Director at Nielsen. “In total, 43 percent of total produce growth occurred from organic items which equates to an additional $450 million sold.”
OPN noted in its press release, organic isn’t a given recipe for success. Products like strawberries and tomatoes experienced far greater growth in the conventional offering, but a closer look reveals how important pricing is for these categories. Prices varied widely—ranging from $1.97 to $3.38 per pound between conventional and organic tomatoes and $2.26 to $4.26 for conventional and organic strawberries.
“When you compare this difference with commodities that experience a high organic growth rate such as grapes, the difference is striking,” noted Lally “Conventional grapes rang in at $2.18 per conventional pound compared to $2.94 per organic pound. Clearly there’s a strong connection between the growth of organic and the price premium with its conventional counterpart.”
In addition to room for growth in the strawberry and tomato category, onions, bell peppers, watermelon, and mandarins are all disproportionately under-represented in organic sales compared to the total produce average. And OPN noted that making organics widely available during key periods like summer holidays, Thanksgiving, and Christmas is a great way to reach more shoppers.
Organic fresh produce items reached almost $5 billion in 2017, an 8 percent increase from the previous year, according to data released by the Organic Produce Network and Nielsen. Overall, nearly 2 billion pounds of organic produce were sold in grocery stores last year, a 10 percent volume increase from 2016.
Partnering with Nielsen, OPN’s review of 2017 organic fresh produce sales at retail stores across the United States shows dollar sales of organic fresh vegetables were $2.4 billion, while organic fresh fruit sales topped $1.6 billion. Nearly $1 billion in organic value-added produce items brought total sales to $4.8 billion in 2017.
Sales of organic fruit volume and dollar sales were up 12.6 percent from 2016 to 2017, while organic fresh vegetable sales showed a 4 percent increase in dollar sales and a 6 percent increase in overall volume. Organic packaged salad was again the leading organic fresh produce item sold last year, approaching $1 billion in sales. Packaged salad still accounts for one in five organic dollars, but the 2.3 percent growth rate was below the department average.
Organic fruits led the growth with a 23 percent increase in organic berry volume sales. Not far behind was the growth of bananas and apples. Organic berry sales, which include strawberries, blueberries and blackberries, topped $586 million in 2017, with volume up 22 percent from last year. Organic apple and banana volume increased 11 and 17.5 percent respectively last year, while the average retail prices for each category down 8 and 3 percent.
“What’s most impressive about these two categories is the growth they were able to achieve in organic despite stagnant or declining conventional fresh produce sales. This also highlights that even the most mature categories have opportunity to grow the consumer base and sales through an organic offering,” said Matt Seeley, co-founder and chief executive officer of Organic Produce Network. “Not many product groups can claim double-digit growth in today’s competitive environment, which reinforces the power and importance of organic produce.”
Rounding out the top five was double-digit growth from organic fresh produce beverages and the herb and spices segment.
“Potatoes, grapes and citrus all rank in the top 10 for conventional sales but fail to crack the top 10 in organic sales, which shows that some categories still have opportunity for an increased market presence, said Matt Lally, an associate director at Nielsen. “Understanding and setting pricing strategies between conventional and organic varieties is critical for success. People will pay a premium for organic, but at some point, they will trade to conventional or out of the category all together.”