OPN Connect Newsletter 317 · April 27, 2023

Inflation Continues to Take Bite out of Organic Fresh Produce Sales in Q1 2023

Ongoing inflation continued to impact organic fresh produce sales in the first quarter of 2023 as overall dollar sales grew by slightly less than 1 percent and volume declined by 3.4 percent from the same per year-over-year period, according to the Q1 2023 Organic Produce Performance Report released by Organic Produce Network (OPN) and Category Partners.

Overall, the total produce department gained 2.6 percent in dollars for Q1 2023 compared to the same period in 2022 and declined by 1.3 percent in volume. Sales of organic fresh produce totaled nearly $2.4 billion for the first quarter of 2023, while overall volume topped 703 million pounds. Conventional produce dollars rose higher than organic dollars by about 2 percent and declined in volume by a smaller degree than organic. The average price gap between conventional and organic is now the largest it has been in the last four years.

Cal Organic May 2024

The Q1 2023 Organic Produce Performance Report uses Nielsen IQ syndicated data to track and report the performance of organic fresh produce—and specifically the 20 leading organic categories. The report suggests that the rising prices may cause consumers to be more selective in their organic shopping.

“In an inflationary period, we see this standard of growth for dollars and decline for volume repeated for most organic and conventional items. When we look at pricing, conventional produce average price per pound grew by 4.3 percent compared to the first quarter of 2022, while organic produce average price per pound rose by 4 percent,” said Tom Barnes, CEO of Category Partners. “With rising prices, we may be seeing more selective organic shopping from consumers as they substitute conventional items for higher-priced organic items.”

Tom Barnes, CEO, Category Partners

Earthbound Farms May 2024

Organic tomatoes were the most noticeable example of substitution as their price per pound increased by almost three times the amount of conventional, resulting in a volume decline of 8 percent. Most other categories with large differentials in price increase (compared to conventional) did not see large drops in organic volume.

Organic grapes had an incredible quarter with a 37.3 percent increase in volume and a 40.2 percent increase in dollars. The first quarter is deep into the import season for grapes. Imported organic grapes are closing in on entering the top 20 organic categories in Q1 with $22 million in sales for the quarter this year, which places them in the 22nd spot by dollars. A 40 percent increase in dollars and a 37 percent increase in volume means that import grapes are a category to keep an eye on as we continue to track organic produce sales each quarter.

“With rising prices, we may be seeing more selective organic shopping from consumers as they substitute conventional items for higher-priced organic items.” - Tom Barnes

Driscolls May 2024

Prepackaged salads and the berry category (strawberries, raspberries, blueberries, and blackberries) led the quarter as the top organic produce categories in dollars, accounting for nearly 40 percent of all sales.

Current trends show both conventional and organic produce volume shrinking year over year. At the same time, while volume for conventional produce is below 2020 and organics are on par with 2020, both are consistently gaining in dollars. For the first quarter of 2023, half of the leading 20 organic categories posted increases in dollars. Organic onions generated the largest percent increase in dollars at 10 percent, followed by bell peppers, lettuce, and herbs. Inversely, avocados posted the largest decline in dollars, while apples also posted noticeable declines.

In the first quarter of this year, 15 of the leading 20 categories posted declines in volume, with only seven of those 15 categories displaying positive year-over-year dollar growth. Organic apples posted the largest year-over-year decline in volume (by total pounds) of the leading categories, followed by bananas and carrots.

OPS Retailer Reg leaderboard

Despite the flat dollar growth and minor decline in volume across the country, OPN Co-founder and CEO Matt Seeley is bullish on the long-term prospects for growth of organic fresh produce. “Inflation and supply chain challenges have impacted pricing in the short term; however, organic fresh produce will remain an important component of weekly food shopping as consumers look for healthy, safe, and nutritious products for their families,” he said.

The Q1 2023 Organic Produce Performance Report covers total food sales in the US, including all outlets (i.e., supermarkets, mass merchandisers, club stores, dollar stores, convenience stores, and military commissaries) over the months of January, February, and March of this year. The full Q1 2023 Organic Produce Performance Report is available on the Organic Produce Network website here.

OPS 2024 Retailer Reg square

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