Inflation dings sales of organic produce, report says

Sales of organic produce tumbled during 2022 as consumers sought out less-expensive fruits and vegetables amid soaring inflation, according to the 2023 Power of Produce report from FMI – The Food Industry Association released earlier this month.

Dollar-wise, fresh produce sales increased last year, due to inflation. But sales decreased on a per-pound basis. Fresh produce, though, remained the second-largest grocery perimeter department, behind meat.

Produce department sales grew 4.8%, to $74.5 billion, in 2022, the report found. And fruit was the big winner, with sales increasing 6.8% to $37 billion. Citrus and tropical fruits led dollar growth and berries were the biggest seller, with 23% of the department’s total sales.

Fresh vegetable sales grew 2.8%, to $36.4 billion. But vegetable prices rose 7.9% in 2022, leading to unit and volume declines that were especially evident in categories such as asparagus, corn and squash, the report said.

“Consumers are continuing to purchase produce at roughly the same volume as in 2021 despite rising prices due to inflation,” Rick Stein, FMI’s VP of fresh foods, said in a statement. “The shift we’re noticing is that shoppers turned to more-affordable conventional fresh fruits and vegetables and canned and frozen vegetables rather than buying pricier organic items.”

On the flip side, however, shoppers are looking for ways to save time and 68% said they’d like to see more value-added produce at their local grocery stores.

“Shoppers are searching for deals but also willing to pay more for convenience—like pre-cut and washed products,” Stein said. “This shows how complicated the consumer decision process is. On one hand, shoppers are saying price is important, but when it comes to convenience, they are willing to pay.”

Sales of organic produce have increased steadily in recent years, but decreased in pound sales in 2022, the report found.

Twenty-five percent of shoppers said they are buying cheaper fresh produce because of rising grocery prices.

Consumers tend to think fresh produce is even more expensive than it really is. Nearly 90% of shoppers said they were somewhat or very concerned about produce prices, the highest of all grocer departments along with meat. And most consumers said fresh fruits and vegetables were more expensive than the year before when produce has actually seen below-average inflation.

Traditional supermarkets were favored by 72% of shoppers for fresh produce buying, while 50% said they shop at mass/supercenters for fruits and vegetables, 34% favored club stores, 30% favored hard discounters and 17% said they head to dollar stores and natural/organic markets, the report said.

Just 46% of consumers are buying fresh produce online, though millennials, hybrid workers, high-income households and people living in the Western U.S. over-index on that metric.