Industry seeing a rise in organic produce sales
Although organic produce has been increasing in sales for more than a decade, ever since the pandemic, the numbers have grown even stronger as more people associated organic with being healthier and safer.
Paul Kneeland, vice president of fresh operations for Encino, CA-based Gelson’s Markets, noted that while some think organics are a healthier choice, the truth is that all produce is healthy and everyone should be eating more. That’s why the retailer continues to stock up on organic items and has grown the category over the last couple of years.
“Our organic produce sales increased 20 percent after the pandemic hit,” he said. “When there were no other choices for produce during the height of buying food, customers that normally wouldn’t buy organic did, and were happy with the flavor and quality of the product so continued to buy once the height of COVID-19 subsided.”
There is also an element of people joining the organic movement from an environmental standpoint, too.
“Organic produce continues to be something that guests want more and more of as they realize the health benefits and environmental benefits of these products,” said Eli Lesser-Goldsmith, co-owner of Healthy Living, a retailer with locations in Saratoga Springs, NY, and South Burlington and Williston, VT. “Sometimes people just follow trends. You know, they see that people eating cleaner and better, that are healthier, happier and, and more vibrant, if you will. I think those are the two main reasons.”
Higher costs in labor, transportation and supply chain meant higher retail prices of organic produce during the third quarter of 2022, according to the Organic Produce Network’s Organic Produce Performance Report. This meant a decrease of about 4.5 percent in organic volume year-over-year, though an increase of 4.1 percent in total dollars.
Sales for the third quarter of 2022 were approximately $2.4 billion and the organic produce segment sold about $10 billion for the year overall, though exact numbers weren’t released yet.
Organic tomatoes were one of the biggest gainers in Q3, with an increase of 19 percent for volume and 30 percent in dollars. Other items that were in the top of total dollars included organic onions, potatoes and peaches. On the opposite end, apples, lettuce and peppers all saw falling organic numbers, as consumers chose to pay less for their conventional counterparts, according to the report.
Yet even though organic produce may cost a bit more, retailers can win new customers by highlighting the many benefits.
“You’re never going to win on price, organics are not a price play,” Lesser-Goldsmith said. “It’s storytelling. It’s telling people why and what the benefits are.”
Daniel Levine, a trends expert with the Avant-Guide Institute, a New York City-based consultancy that focuses on consumer trends, noted because the category is growing, there will be continued pressure on grocery retailers to adapt their offerings to meet demand if they want to remain competitive.
“This includes expanding the range of organic items and making them easier for customers to find,” he said. “We will be seeing more dedicated sections or aisles devoted entirely toward organics so shoppers can quickly identify what’s available without having search through all other food options first.”
Additionally, he expects to see growth in pre-packaged mixed bags of organic produce which makes it even simpler for customers who don’t want take time selecting individual items.
Organic produce should continue to do well in 2023 according to the experts, with projections that the segment will top the $10 billion again.