Category Spotlights

Organic produce sales continue to grow, realizing growth beyond conventional fruits and vegetables during the latest 52 weeks. While accounting for a small percentage of department dollar sales, the success of organic produce is fueled by a group of loyal consumers who seek out organic fruits and vegetables. Understanding this consumer group, as well as marketing to new consumers, will help maximize the potential of organic produce at supermarkets.

Organics:  Year in Review

Organic produce has grown steadily over the past five years and represented 5.5% of produce department dollar sales in the 52 weeks ending July 30, 2011.

In the five-year period from 2006 to 2010, organic produce sales increased 173%. The produce categories with the strongest growth include packaged salads, berries, apples, lettuce and cooking greens.

During the 52 weeks ending July 30, 2011, organic produce posted average sales of $2,338 per store per week, up 10.1% compared to the prior year.

Organic produce sales varied by region. In the East and West regions, organics contributed 6.1% of produce department dollars, with average weekly sales of $3,612 and $2,697 per store, respectively. Organics represented a smaller portion of the department in the Central and South regions, with average weekly sales of $2,564 and $1,511 per store. Despite the smaller share, The Central and South regions had double-digit increases in dollar sales compared to last year.

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Vegetables comprise the majority of organic produce in the U.S., representing 54.4% of dollar sales. Fruit accounted for 29.4% of organic produce sales and had the largest dollar growth. The remaining 16.2% of organic produce sales falls under other produce, which includes beverages, grains, dried fruit, nuts, herbs and spices, dressings and dips.

Organic berries represented almost one-third of organic fruit sales, or 32.3% in the latest 52 weeks, followed by apples at 26.6% share of organic sales. Bananas, citrus and grapes rounded out the top five organic fruits. Four of the top five organic fruits experienced double-digit dollar growth from a year ago, and all 14 organic fruit categories increased sales from last year, except cherries and pineapples.

Packaged salad made up one-third of organic vegetable sales (33.2%) and experienced solid dollar growth of 9.4% in the past year.
Although they represent a small share of organic vegetable sales, cooking greens and peppers grew 21.6% and 36.4% respectively. The number of organic items available in the cooking greens and pepper categories outpaced all other vegetables, contributing to their growth. Of the top 10 organic vegetables, only potatoes declined in average dollar sales, down 4.0%.  

Organic products represented 10% of sales in other produce, with average weekly sales of $378 per store. Herbs, spices and seasonings accounted for 43.7% of organic other produce sales. Dried fruits and snack mixes followed with 18.3% contribution.

Category Management Toolbox:  Consumer Web Surveys

Recent Perishables Group consumer research confirms that the growth of organic produce sales comes from a small percentage of the overall consumer base. In 2010, the Perishables Group conducted an Internet survey of 1,000 consumers to understand purchasing behaviors in relation to organic fruits and vegetables.

According to the survey, only 6% of consumers regularly thought about purchasing organic produce, and 10% of consumers sometimes look for and purchase organic produce. Over half of consumers (57%) rarely or never purchased organic items in the produce department. The implication of this statistic is that a small consumer base is responsible for organic produce sales, and a large percentage of consumers do not see enough value in organics to seek them out and pay higher prices.

Many consumers are price sensitive, which impacts their decisions to purchase organic produce. Nearly one-fifth of consumers (19%) only purchase organic produce when they find the price to be a good value. Perhaps influenced by affordable organic items or promotions, these price-conscious consumers represent a retail opportunity for targeted promotions or marketing efforts.

Consumers did indicate organic was more important to them at the time of the survey compared the prior year. However, consumers cited quality and price as the two primary drivers of their produce purchase decisions.

In the survey, 12% of consumers indicated they were purchasing “significantly more” or “more” organic produce than the prior year. Many more consumers, 29%, indicated they were purchasing “significantly more” or “more” locally-grown produce. The excitement over locally grown, seen recently through retail marketing initiatives and the growth of farmers markets, is gaining consumer attention.

The study results confirm that while organic produce remains a strong and growing element of the produce department, targeted education, communication, assortment and promotions can help gain new organic shoppers. Examples of strategies and tactics include:  

• Educate consumers on the benefits of organic fruits and vegetables through signage and other retail communications such as online and print newsletters. Topics could include a general definition and overview of organic produce, benefits and features on organic farming practices for the product.
• Develop a merchandising display to promote organics across a variety of fruits and vegetables, utilizing targeted signage to communicate to new consumers.
• ·    Capitalize on the locally grown trend to showcase organic products farmed close to home.
• Understanding many consumers are price sensitive, highlight lower-priced organic items such as bananas to show consumers they purchase organics even if they are pinching pennies.
• Promote higher-priced organic produce to entice trial, especially to consumers who already purchase some organic products.

 

Consumer Insights

Berries are a leader in the produce department, and organic berries are no exception. The category accounts for nearly one-third (32.3%) of organic fruit sales. While organic berries represent a small percent (5%) of berry category sales, their recent growth is noteworthy. Over the five-year period from 2006 to 2010, berries saw the largest increase in all organic fruit sales, growing 193.2% in average weekly sales.

Looking across the different types of berries, organic is outpacing conventional berry sales in most varieties. Blueberries realized the most significant organic growth with a 40% gain in sales from the prior year. Organic strawberry growth was 20%, while conventional sales grew just 1%. Raspberries were the only berry variety in which conventional sales outpaced organic sales.

The strong organic berry performance demonstrates that many consumers are willing to pay a higher price for organic berries. The average retail price of conventional strawberries is $2.59, while organic strawberries have an average price of $3.42. Blueberries, raspberries and blackberries follow the same trend, with organic products averaging a retail price 33% higher than the price of conventional berries.

While berries have always been a strong profit generator for retailers, there is opportunity to give increased attention to organic varieties. Stores can utilize merchandising, within the berry display or using a secondary display, education on farming techniques and organic benefits and promotions to capitalize on the positive consumer response to organic berries.