Category Spotlights

Peppers, the No. 7 vegetable in the produce department, realized dollar and volume growth beyond the rate of the produce department in the 52 weeks ending Aug. 27, 2011. This growth was driven not only by the familiar sweet green, red and yellow peppers, which comprise nearly 75% of pepper dollar share, but by unique pepper products touting innovations in packaging and breeding technologies. 

Peppers: Year in Review

The pepper category contributed 3.0% to produce department dollars sales in the 52 weeks ending Aug. 27, 2011, averaging $1,289 per store per week, which was an 5.0% increase compared to the prior year. The pepper category’s dollar growth outpaced the produce department, which increased average dollar sales 3.3% and average retail price 4.7%. The average retail price of peppers increased only 0.8%.

Sweet green and sweet red peppers accounted for the largest share of the category, contributing 35.0% and 31.4% of dollar sales. Sweet yellow, sweet orange and other sweet peppers were the next largest contributors, making sweet peppers responsible for over 90% of the category’s sales. Although all sweet peppers increased average weekly dollar sales, red, orange and other sweet peppers increased at a faster rate than the category as a whole; posting increases of 4.6%, 5.7%, and 19.3%, respectively.

Jalapeno peppers contributed 3.5% to the pepper category, but decreased average weekly dollar sales 1.4% from the previous year. Several niche varieties of hot peppers experienced greater growth than the category overall. Cubanelles had the largest percent increase of the category at 23.5%. Other hot peppers that grew faster than the category were Serrano, Chili, and Habanero peppers.

The pepper category sold 29.3% of its volume on promotion over the latest 52-week period, which was consistent with the previous year. However, several types of hot peppers experienced increased promotional activity. Jalapeno, Pasilla and Serrano peppers increased the percentage of volume sold on promotion by the largest amounts, 4.8%, 5.2% and 5.7% respectively.

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Pepper sales varied by region. The East region led sales with $2,016 per store per week, but had the smallest increase from the previous year at 1.2%. The pepper category’s share of department dollars was 3.3% in the East, which was the highest of the four regions. The Central region increased average pepper sales 8.2% to $1,537 per store per week, representing 3.2% of produce department sales. Peppers represented a smaller portion of the department in the West and South regions, with average weekly sales of $1,303 and $889, respectively.

Peppers grown in the northern hemisphere reach peak sales from June to November. Average sales reached their highest level the week of June 6 at $1,523 per store. The week ending Dec. 4 posted the lowest dollar sales at $979 per store.

Across the past five years, the traditional choices for sweet and hot peppers have made way for other types of peppers. In 2006, sweet green peppers represented 38.6% of the category. In 2010, it decreased to 35.6%. Jalapeno peppers have also given up category share, dropping from 4.2% to 3.7%. Sales that fall under other sweet peppers (packages of mixed sweet peppers, white sweet peppers, mini sweet peppers, etc.) grew from 8.9% of the category in 2006 to 11.1% in 2010.

Peppers, especially hot and specialty, are gaining popularity thanks to the diversity of the category, which offers a range of flavors and colors, and accessibility in popular settings like local grocery stands and farmers markets.

An Internet survey of 1,000 consumers conducted by the Perishables Group suggests that peppers appeal to a wide range of shoppers. Consumers with children consistently purchase peppers and other vegetables on a more frequent basis than those without children.

This trend mirrors national efforts from organizations outside the home (Produce for Kids, the U.S. Department of Agriculture Fresh Fruit and Vegetable program, etc.) to curb childhood obesity and instill healthier eating habits in today’s youth. Fourteen percent of those surveyed who reported having no children bought bell peppers on a weekly-or-more basis, compared to 27% of those who reported having one child and 21% of those reporting two or more children. The trend is evident across many vegetable categories, particularly with onions, tomatoes and bagged lettuce.

This trend might lead to the assumption that younger consumers (age 34 and below) are not purchasing as many vegetables as their older counterparts. However, the survey showed that young people are consistently the top purchasers of vegetables on a weekly-or-more basis. In the case of bell peppers, 23% of 25-34 year-olds buy peppers weekly-or-more; 21% of consumers age 24 and under purchase at the same frequency.

The pepper category retains a wide appeal thanks in part to flavor and variety. Taste has become increasingly important, as is evident by the strong growth of hot peppers, including Serrano, Chili and Habanero, which grew faster than the pepper category during the 52-week period ending Aug. 27, 2011. The category’s largest increase was in the small but growing Cubanelles variety, which, at 23.5%, had the largest percent increase of the category.

The growth of these niche pepper varieties indicates other specialty peppers might be worth increased marketing attention and promotions.

Consumer Insights:  Consumers Seek Variety in Peppers

Sweet pepper combination packs are one of the fastest growing products in the pepper category. Not only are these products convenient for time-strapped consumers, but they provide consumers the opportunity to experience a variety of sweet pepper flavors. With 19.2% dollar growth over the latest 52 weeks, it’s not surprising these products receive increased attention by the industry and consumers alike. Distribution for other sweet peppers, which includes mixed packages of sweet peppers as well as bags of mini sweet peppers, increased by 3 percentage points to 82.3%.

A tricolor package of red, green and yellow peppers is one of the most popular combinations of sweet peppers, nicknamed the “traffic peppers” or “stoplight peppers.”  This product group experienced dollar and volume growth of 15.0% and 16.6% respectively during the latest 52 weeks.  

Sweet mini peppers are another variety gaining traction in the category. Sweet mini peppers were developed through plant breeding using bell peppers and hot peppers to develop a smaller product with fewer seeds. Over the latest 52 weeks, sweet mini peppers grew 70.5% in dollars and 78.0% in volume, driven by growth of organics and increased distribution.

These two products exemplify several driving forces behind successful product development. In the case of stoplight peppers, a product familiar to consumers was transformed utilizing innovative assortment and packaging to deliver supplemental value to shoppers. Sweet mini peppers capitalize on the usability of a fresh product across different meal occasions, including the consumer desire for healthy snacking alternatives.