Matt Seeley, the CEO of the Organic Produce Network, conducted an educational session on trends in the organic produce sector during last week’s Produce Marketing Association’s Fresh Summit. Seeley and a trio of retailers dissected the category discussing challenges and opportunities.
The OPN executive set the stage for the panel discussion by noting that it is the younger shoppers driving demand and continuing this era of double-digit year-over-year growth in sales. He said millennials are buying products in the organic category at a pace much higher than the average shopper. And the majority of the products that they are buying are fruits and vegetables. He said the organic food category is a multi-billion dollar industry with fresh produce accounting for more than 36 percent of those sales. He revealed that organic fresh fruit and vegetable sales were just shy of $16 billion in 2016, according to an analysis of scan data. While the figure varies across the country, on average organic fruits and vegetables make up about 10 percent of total produce department sales. However, the category is even more important than that as it accounts for freater than a third of year-over-year growth.
It appears that it is trending up within the entire supermarket as well, as organic items are increasingly being used as an ingredient. Seeley said the baby food aisle in every grocery store is now dominated by organic labels.
Joining him in a panel discussion were Oleen Smethurst of Costco Wholesale Canada, Scott Calandra of Michigan-headquartered Meijer supermarkets and Jeff Brown of Wakefern Food Corporation, which operates out of the Northeast. The three retailers talked about many different challenges, agreeing most of the time.
Smethurst said Costco Canada is new to the organic game and is still trying to figure it out. Though a player in the category for more than two decades, Calandra agreed that the category can be baffling, noting that he is often wrong as to how sales of a specific organic item will fare as they have had both sales gains and declines that are difficult to predict.
Discussing merchandising techniques, Calandra said the retailer is “trying to crack the code” as to how to position organics within the department. Meijer operates supercenters with more than 6500 square feet of produce. The supermarket has experimented with merchandising organics in a variety of ways and is currently integrating the organic produce items next to the same conventional item. He said that concept is working, but allowed that just as you think you have it figured out, sales don’t match your expectations.
Brown said Wakefern Food Corporation’s organic produce sales are above 5 percent of produce sales and on the rise. He has been encouraged recently by repeat sales of an organic item after a promotion ends. He believes signage is very important to differentiate these items from their conventional counterparts, and the other two panelists agreed.
Calandra and Brown agreed that supply is an issue at times and can hamper growth of the category. But Brown said that also happens on the conventional side. He noted that at the current time – late October – it was difficult to get good supplies of both organic and conventional berries.
While the retailers agreed that locally-grown product trumps organic produce in the view of consumers, organic product, locally grown, is at the top of the charts.