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OPN Connect Newsletter 253 · January 27, 2022

The Rise in Organics: Why Retailers Expect the Demand to Continue in 2022


The pandemic definitely made consumers think more deeply about the food they buy and consume, which, in turn, led to significant growth in the amount of organic produce sold in supermarkets.

In fact, the latest sales data from OPN reveal that organic fresh produce grew sales by 5.5 percent in 2021, topping $9 billion for the first time, and outpaced conventionally grown produce in year-over-year gains in both sales and volume.

Global Organics Aug 2022

When comparing 2021 organic sales and units to pre-pandemic levels, Kelly Davis, director of produce and floral for Allegiance Retail Services (an Iselin, NJ-based grocery cooperative that has the Foodtown and Green Way Markets banners among its 130-plus stores), noted there’s been considerable growth.

Kelly Davis, Director of Produce, Allegiance Retail Services

“[The growth] has been led by a surge in organic salad consumption and our Green Way line of organic salads,” she said. “Customers still view organics as the optimum health choice for their produce needs. Our stores report an elevated trend in customer requests for additional organic offerings and variety.”

Chelan Aug 2022

In the past, higher prices for organic produce have often driven consumers away, but price points are much closer now, and younger, more health-conscious consumers are willing to spend a little extra on organic produce they feel is better for them.

“Customers still view organics as the optimum health choice for their produce needs. Our stores report an elevated trend in customer requests for additional organic offerings and variety.” – Kelly Davis

Jeff Cady, director of produce and floral at Williamsville, NY-based Tops Friendly Markets, which has more than 160 stores, noted that the organic segment in 2021 experienced a strong year-over-year growth that exceeded expectations not only in dollars but also in units. And he expects more of the same in 2022.

Misionero Aug 2022

Jeff Cady, Director of Produce and Floral, Tops Friendly Markets

“Consumer demand and acceptance [of organics are] still growing,” Cady said. “Key items are now expected to be in stock and are purchased frequently by our primary and secondary shoppers. I anticipate that it will continue to increase as demand grows.”

John Savidan, senior director of produce and floral for Gelson’s Markets, an Encino, CA-based supermarket chain with 27 stores, shared he saw nothing less than pure excitement centered around the company’s organic program and organic offerings in 2021, outpacing the two previous years.

Cal-Organic Aug 2022

John Savidan, Senior Director of Produce and Floral, Gelson's Markets

“As of right now, we really don’t see any signs of sales comps declining any time soon,” he said. “I think that the pandemic brought on some extra precautions and awareness when it comes to safety, and, in particular, food safety. I truly do feel shoppers felt better about buying organics during the pandemic.”

“Consumer demand and acceptance [of organics are] still growing. Key items are now expected to be in stock and are purchased frequently by our primary and secondary shoppers. I anticipate that it will continue to increase as demand grows.” – Jeff Cady

Trending Up

Vitalis

While there are staples in the organic produce category, retailers are starting to see increased demand more specialty items.

At Allegiance, Davis is seeing that both younger and older customers are requesting tropical offerings, and she sees that as a huge opportunity going forward.

“I think that the pandemic brought on some extra precautions and awareness when it comes to safety, and, in particular, food safety. I truly do feel shoppers felt better about buying organics during the pandemic.” – John Savidan

Savidan expects organic citrus, berries, and specialty produce to be the big growth vehicles in 2022 for Gelson’s.

“These organic items really focus on health and in particular immunity and will be strong for years to come, especially as we continue to battle different strains of COVID,” he said. “I see organics growing even more than they are now. The whole entire growers network has become very strong and has shown great strides on quality and availability.”

Among Tops Markets’ hottest organic produce items are lettuce, salad mixes, berries, bananas, and apples.

Stemilt Aug 2022

“I believe there is a consistent supply and demand for these,” Cady said. “The retail for these types of items is generally close to their conventional counterpart. So, there is a value in the consumers’ opinions.”

“I see organics growing even more than they are now. The whole entire growers network has become very strong and has shown great strides on quality and availability.” – John Savidan      

Finding Success

In order for the organic category to continue to prosper, Davis noted that some issues need to be worked out.

For instance, transportation and the cost associated with it are driving the cost of organics up at a higher rate than conventional, and it’s a juggling act for produce managers to react to higher prices and ensure that organic offerings are not priced too much higher than conventional to stay competitive.

“As long as we can keep the price gap between organics and conventional produce to a minimum, I foresee that we [will] experience further boosts in consumption,” Davis said. “Gen Z consumers demand more healthy, sustainable items but want value for their dollars.”

While many supermarkets are dealing with labor issues and feeling the impact of trucking disruptions and higher delivery costs, the biggest challenge for presenting a robust organic program in the supermarket has historically been consistency of supply.

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“For the record, it is leaps and bounds better than where it was just a few short years ago; however, it still remains a challenge that the industry needs to continue to mitigate,” Cady said.

“Gen Z consumers demand more healthy, sustainable items but want value for their dollars.” – Kelly Davis

At Gelson’s, Savidan doesn’t see many hurdles left to get through when it comes to having a triumphant organic program.

“Strong programs are built around relationships, and organic relationships are no different,” he said. “At the end of the day, we are only as good and strong as our stable of vendors. We take a lot of pride in strengthening these relationships and it really shows when you look at the products on the stands and the end sales results.”  

Impact of CEA

The CEA Leafy Greens Module (LGM), the new certification that addresses the unique attributes of growing indoor leafy greens, is emerging in retail stores and affecting the organic segment in a positive way according to retailers. 

“Let’s face it, no matter how you look at it, CEA is the new sexy thing out there,” Savidan said. “There are not many times that a new produce item becomes available, but when it does, it usually makes a big splash. I see CEA as really no different—it’s new; it’s fun; and it’s very attractive to us on the retail end. I think that the ones who figure it out and offer CEA organically will take home the grand prize.”

“At the end of the day, we are only as good and strong as our stable of vendors. We take a lot of pride in strengthening these relationships and it really shows when you look at the products on the stands and the end sales results.” – John Savidan 

Cady feels that as more CEA companies are given an organic seal of approval, it will be utopia.

“I also think that consumers like and are starting to understand CEA,” he said. “They know that in many instances, they take food miles out of the supply chain, plus the food safety aspect will continue to gain traction, especially as recalls keep popping up.”

Davis isn’t so sure people are on board yet, noting that on the East Coast where the consumer demand for locally grown produce is high, there is still not much awareness of CEA and exactly what it does.

“There are not many times that a new produce item becomes available, but when it does, it usually makes a big splash. I see CEA as really no different—it’s new; it’s fun; and it’s very attractive to us on the retail end. I think that the ones who figure it out and offer CEA organically will take home the grand prize.”  – John Savidan 

“Once consumers begin to get educated on CEA, learning that it is pesticide-free and consistently available, I do see a huge impact to organics—especially salad ingredients that travel from points far west of here,” she said.  

One thing’s for certain, the organic craze doesn’t seem to be dying down anytime soon.

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