Organic fresh produce sales edge up in dollars, tick down in units for Q1

Inflation remained a double-edged sword for organic fresh produce in the 2023 first quarter as dollar sales inched up and volume tailed off, the Organic Produce Network (OPN) reported.

Organic fresh produce sales rose 0.8% year over year to $2.4 billion in the first quarter, atop annual growth of 3.8% to approximately $2.4 billion in the 2022 quarter, according to the 2023 Q1 Organic Produce Performance Report from OPN and fresh food research and analysis firm Category Partners. Average price per pound for organic produce ($3.38) climbed 4.3% (14 cents) year over year in Q1, contributing to a 3.4% dip in unit sales to 700 million, compared with a 2% decrease to 730 million units a year earlier.

The trend was similar for conventional fresh produce but with a bigger dollar ring and narrower volume decrease. Dollar sales of conventional produce grew 2.9% to $17.4 billion in the first quarter from $17 billion a year ago, when sales advanced 7.7%. Unit volume fell 1.2% to 9.2 billion in Q1 2023 from 9.3 billion in Q1 2022, which saw units down 2.6%.

Source: 2023 Q1 Organic Produce Performance Report, from Organic Produce Network and Category Partners.

Despite carrying a lower average price per pound, conventional produce experienced a similar price hike in the first quarter, the OPN/Category Partners report said. Average price per pound for conventional produce rose 4.1% year over year (7 cents) to $1.90 in Q1.

The Q1 2023 Organic Produce Performance Report uses NielsenIQ multi-outlet, syndicated data (covering supermarkets, mass merchants, club stores, dollar stores, convenience stores and military commissaries) to track and evaluate the performance of organic fresh produce, namely the 20 largest organic categories.

“Comparing 2023 Q1 to the past four years shows that organic volume is declining. Organic’s percentage decline in volume was more than 2 percentage points higher than the decline in conventional volume for 2023 Q1. This is most likely an inflationary trend and not indicative of organic growth in the long term,” OPN and Category Partners said in the report. “Conventional produce outperformed organic produce in dollar growth, suggesting price increases in conventional have been more easily absorbed by consumers than the higher prices in organics. Current trends show both conventional and organic produce volume shrinking year over year. Although volume for conventional produce is below 2020 and organics are on par with 2020, both are consistently gaining in dollars.”

In the 2023 first quarter, half of the top 20 organic produce categories generated dollar sales gains, led by onions at 9.9%. Also seeing dollar sales growth were bell peppers ( 5.9%), lettuce ( 4.7%), broccoli ( 3.8%), herbs and spices ( 3.6%), cucumbers ( 3.4%), potatoes ( 2.8%), prepackaged salads ( 1.3%), mushrooms ( 1.2%) and tomatoes ( 0.7%). Dollar sales fell in avocados (-16.7%), apples (-4.7%), green beans (-3.7%), citrus (-3.1%), kale (-3.1%), celery (-2%), bananas (-1.9%), squash (-1.9%), carrots (-0.8%) and berries (-0.4%).

Source: 2023 Q1 Organic Produce Performance Report, from Organic Produce Network and Category Partners.

Meanwhile, 15 of the 20 largest organic produce categories posted volume declines in the first quarter, reflecting the effect of higher prices, the OPN/Category Partners report said. The unit decreases were led by herbs and spices (-12.7%) and celery (-10.5%), followed by apples (-9.4%), kale (-8.3%), tomatoes (-8.1%), cauliflower (-6.9%), carrots (-6.8%), squash (-6.3%), potatoes (-5.6%), bananas (-3.9%), lettuce (-3.8%), prepackaged salads (-2.7%), berries (-0.6%), onions (-0.4%) and cucumbers (-0.1%). Unit sales increased in the quarter for cabbage ( 7.4%), bell peppers ( 6.3%), avocados ( 4.8%), broccoli ( 3.9%) and citrus ( 2.8%).

Prepackaged salads ($400 million) and berries ($374 million) were by far the two largest organic fresh produce categories by sales in Q1, accounting for 28.1% of total organic produce dollars and well above No. 3 apples at $177 million. Bananas led in organic produce volume at 130 million, followed by carrots (66 million) and apples (62 million) in the top three categories by units.

“Organic prices in aggregate are still substantially higher than conventional. However, over the past two years, the average price of both conventional and organic produce has increased,” OPN and Category Partners noted in the report. “Increases in pricing may continue to impact total produce volume in the future. In 2023 Q1, the average price gap between conventional and organics is now the largest it has been in the last four years. In an inflationary time period, it will be important for organic suppliers to understand how their pricing impacts behavior among various consumer segments and their choice to purchase organic.”