Organic Growth
Jul 26, 2010 12:00 PM, By MATTHEW ENIS
The organic produce category has continued to exceed expectations during the recession, posting double-digit growth
When times get tough, it always helps to have a loyal fan base. The organic produce category is a case in point. Despite usually being a little more expensive than conventional produce, despite naysayers who continue to claim that organic consumers are receiving no added benefit for their extra money, and despite the pressures of a bad economy that has had most shoppers tightening their belts, dollar sales of organic produce grew more than 12% in 2009, according to the 2010 Organic Industry Survey, published by the Greenfield, Mass.-based Organic Trade Association.
Organic produce sales are "growing at a rate that's quite a bit better than the total produce department," says one observer.
Sales of fresh organic produce were up 12.1% for the year, reaching $9.5 billion in total sales. Dried organic fruits, vegetables and beans were up 14.9%, while canned organic produce was up 6.2% and frozen organic produce sales declined 2.9%.
Although this double-digit performance actually represents a slowdown from the 20% growth the category regularly posted each year during the past decade, it is still remarkable, considering the many ways shoppers were working to trim their food budgets last year.
“What we're hearing from our consumer surveys is that people who buy organic produce really see their food choices as affecting their health,” said Barbara Haumann, press secretary for the OTA.
“They see produce as a part of a healthy diet … and they are seeking [produce] grown without the use of pesticides.”
These shoppers were also cooking at home more often and eating out less, Haumann said, which helped the category continue to grow at retail.
“The growth rates for organic produce have fallen from where they were pre-recession, but it is still growing, and it's growing at a rate that's quite a bit better than the total produce department,” agreed Steve Lutz, executive vice president for the Perishables Group, West Dundee, Ill.
According to the Perishables Group, during the most recent 13-week period ending May 29, dollar sales of organic produce were up 12.2% compared with a year earlier. Volume sales were up 7.8%, and average retail prices were up 2.4%. Compare that with the total produce category, where volume was actually down 1.1%, but dollar sales rose 4.2% on price increases of 5.4%.
This spring, Lutz moderated a panel of retail produce managers — all of whom were winners of the 2010 United Fresh Retail Produce Manager Awards — during the United Fresh Produce Association's annual trade show. And, their experiences at the store level tend to support the observations made by Lutz and Haumann.
“At our store, we're committed to our organic product line; we have 24 feet plus dry table space, and I haven't really seen a huge decline in that area,” said panelist John Thut, produce manager for a Bel Air Markets store in Sacramento, Calif. “I think the price points have come closer together between conventional and organic over the years, and the quality is there. … People can be picky at times, but when they can get a quality product, they're willing to pay the price.”
Other panelists agreed, noting that product quality and consistency have improved within the organic produce category as well — not only have organic fruits and vegetables gotten less expensive, these items are also as visually appealing as conventional produce on the shelf.
Of course, there are still different levels of dedication. In surveys specific to organic produce, Lutz said the Perishables Group has categorized four different consumer approaches to the organic category.
First, there are the most committed organic shoppers, who buy organic whenever possible and are almost impervious to price.
Second, there are shoppers who prefer to buy organic whenever possible, but are more price sensitive, and will shop around or trade out of the category when necessary.
Third are the opportunistic buyers, who will buy organic when the price is right and they feel like they are getting a good value. “Otherwise, they're not that consistent,” Lutz said.
And, finally, there are people who never buy organic.
“What we saw as we went through the recession was that the people who were in those second and third groups — the people who were inclined to buy, but would shop around, and the opportunistic shoppers — they were abandoning or decreasing organic purchases as a cost-saving move,” Lutz said.
“What you're seeing now, as you look at those growth rates, is that you continue to have the committed consumer, whose purchase behavior throughout the recession hasn't wavered, and you're beginning to see the return of some of those consumers who are on the lookout for organic or may be dabbling in the category.”
If supermarkets want to attract and retain those core and occasional organic shoppers, they have to make sure that key organic items are kept in stock.
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