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Demand for fresh produce has skyrocketed during the pandemic, with organic produce outperforming its conventional counterpart. And there are indications that this specific COVID-induced trend will continue beyond the pandemic.
That was one of the takeaways from the Organics LIVE general session that took place during the virtual United Fresh 2020 LIVE produce show on Wednesday, June 17. OPN’s Tonya Antle was the moderator of the session and kicked off the talk revealing that the latest OPN retail data show that both volume and dollar sales of organic produce were up more than 16% during the month of May. This impressive performance was quickly confirmed by the webinar panel, which included Jerry Callahan and Rich Mendonsa from Albertsons, Brian Kocher from the Castellini Group of Companies and Rod Braga from Braga Family Farms.
Tonya Antle, Co-Founder & Executive Vice President, Organic Produce Network
Over 600 on-line viewers heard each of the panelists speak of the tremendous demand organic produce has generated in recent months, but the take by Braga about the present and future of the category might have been the most telling. “Every time we think that demand is plateauing, we are proven wrong and it continues to grow.”
Furthermore, he believes the amount of home cooking that has proliferated during this era of COVID could create a significant increase in organic produce demand post-COVID at foodservice. Braga noted that there are many consumers – especially in the major cities of the country – that have had to alter their eating habits and are now shopping at the grocery store rather than eating out many times a week. The Salinas Valley grower theorized that this segment has helped increase retail demand during the pandemic and may well move the needle at foodservice once restaurants reopen fully as they will want to order those same products when dining out.
Rod Braga, President, Braga Fresh Family Farms, Josies Organics
“From your mouth to God’s ears,” quipped Antle, noting that the organic produce world has been trying to make significant sales gains in foodservice for many, many years.
Most of the webinar dealt with the organic category and its positioning at retail. Mendonsa said the “O” brand is a $1 billion sector for Albertsons/Safeway with 1500 items across 180 categories. Specifically speaking of fresh produce, he noted that during the pandemic, organic demand has outstripped conventional with some surprising sales gains. While consumers have stocked up on hardware items such as onions and potatoes, the top sellers in the organic category have been in the green department led by celery and some of the cooking greens. He also said berry and bananas sales “went through the roof.” Mendonsa said it appeared that shoppers were taking a back-to-basics approach and filling their baskets with what they perceived to be healthier items.
Richard Mendonsa, Vice President of Produce and Floral Procurement, Albertsons
The Albertson’s executive also predicted that the increase in demand would last beyond the COVID pandemic, as consumers have been reminded that their food dollar stretches further in the supermarket and he doesn’t expect that they will abandon the concept of eating healthy.
Kocher made a similar observation, predicting that two COVID trends will endure. He said both organic produce sales and on-line shopping were already growth areas that received a “jump start” during these shelter-in-place times. He believes there were new shoppers introduced to both opportunities and those shoppers will continue to fuel the growth in those two areas.
Kocher also said retailers are re-examining their product lines and organics may also get a boost from this SKU rationalization effort. Kocher wondered if there is really a need for twin SKUs on some items. “If you offer organic bok choy, do you really need conventional bok choy?”
Mendonsa agreed with that concept. With the significant uptick in demand for produce during the pandemic, he said if your fresh produce item “didn’t sell during COVID, maybe we don’t need it after COVID.”
Brian Kocher, President & CEO, Castellini Group of Companies
Callahan did observe that this is probably not the best time to introduce new items to retailers. He advised suppliers to concentrate on their core items and make sure they are providing the service and supplies their retail partners need on those items. Callahan said that if producers new to the organic world want him to try a new product, they better come equipped with a compelling reason that will make him switch from his current supplier. “What is unique about your product? What are you doing differently than my current supplier?” he asked.
He did offer that one of his pet projects is to have every organic item labeled with a GTEN, PLU or GS1 code. He said Albertsons buys much more organic produce than it gets credit for at checkout. His goal is to make sure that every product that is organic is rung up as such. Albertsons' buying model is local, with each of its 14 divisions wielding a lot of control over what they buy and promote. He suggested that the best way to get them to help promote an organic item is to make sure the item is being rung up properly.
Jerry Callahan, Group Vice President, Produce and Floral, Albertsons
Braga understands the reluctance to add new products currently but said Braga Farms is always looking forward to innovation. He indicated it would be counterproductive to stop that process and he wants the team to have its own sense of normalcy during the pandemic. “We have lots of new things in the pipeline,” he said.
Braga Farms transitions about 500 acres from conventional to organic production each year which does mean new products are always on the horizon. He credited the company’s success on its commitment to making every part of the farming process a top priority. He said they strive to grow and produce every product as if it is going to be sold in a “$70 celery market.”
Industry experts weigh in on organics, virtually
Talking specifically about the experiences learned during the pandemic, the speakers did say that not everything will return to normal. There have been some learnings that will change the way business is done.
Kocher said Castellini went from one remote worker to 150 in two days. He expects many of those workers will continue to work at home, adding that the company has learned that it can be effective and get a lot of things done at a lower cost with less travel.
“I love the idea of going more and more digital,” he said, but added that face-to-face meetings are an important part of the produce industry and will continue.
Callahan agreed saying that Zoom meetings with team members and suppliers have worked well. He said digital promotions also appear to be a cost-effective way to introduce new products.
Antle concluded the session by emphasizing that the organic produce sector continues to lead the way for increased sales in the produce category. “We are in the right lane,” she said.
