By Steve Lutz And Kelli Beckel, Perishables Group
Sales of organic fruits and vegetables in supermarkets have grown steadily since 2006, even through the midst of a recession. Despite higher price points than conventional counterparts, organic produce is proving its staying power within consumers’ baskets.
The Perishables Group recently examined sales trends for the top organic categories in the produce department. Between 2006 and 2010, supermarket dollar sales of organic produce increased 73.3 percent, which is even small in comparison to some individual categories. For example, organic berries increased sales by nearly 200 percent during the five-year time period, compared to the category’s overall growth (including organic and conventional) of 30 percent. The positive trend continued in the 52 weeks ending July 30, 2011, as 13 of 19 organic vegetable categories increased sales compared to the prior year. Fruit displayed the same upward pattern, with 12 of 14 organic fruits increasing sales.
While a growing base of loyal consumers is supporting organic fruit and vegetables’ growth, the increase is also fueled by more organic items on store shelves. Even as store shelves are increasingly crowded, retailers increased the number of unique organic produce items on shelves during the latest 52 weeks. The most notable increase was in organic value-added produce, where there were 40.4 percent more unique items on shelves in the 52 weeks ending July 30, 2011, compared to the prior year.
Organics: The Success Story Of Packaged Salads
As the highest selling organic produce item, packaged salad sales are critical to understanding organic trends throughout the entire department. Since the recession hit, the packaged salad category struggled as consumers switched to lower-priced bulk lettuce and salad ingredients. However, organic packaged salad is the apparent success story in the category. The number of households that purchased packaged salad increased 1.6 percent in the 52 weeks ending June 25, 2011. During the same period, household penetration for the category overall and for every other packaged salad variety declined, with the exception of broadleaf spinach salad.
Aiding the success of organic packaged salad was the fact that its price remained steady in the past year, up just 0.6 percent, while its primary competitors, garden salads, and blends, increased prices more substantially. Organic salad still carries a higher price point than its conventional counterparts, but consumers are willing to pay the premium because many consider organic as an indication of quality.
Source: Perishables Group FreshFacts® Shopper Insights powered by Spire
Based on the performance declines in garden salads and blends, it can be implied that packaged salad consumers are switching their purchases from garden and blend salads to organic salads.
Given its positive momentum, organic packaged salad can be positioned to grow sales for the category by continuing to drive innovation and keeping prices steady within organic salads.
How Can Retailers Capitalize On The Growth Of Organics?
Based on consumer surveys conducted by the Perishables Group, organic buyers in conventional supermarkets are different from buyers in natural food stores. While heavy organic food users frequent supermarkets, they clearly prefer to regularly shop the natural foods channel. Conversely, lighter organic users — driven more by convenience and price — are much less likely to deviate from established shopping patterns or seek out organic foods beyond their normal conventional supermarket shopping trip.
The high potential organic customer in a conventional supermarket is a crossover-shopper, comparing organic and conventional prices, quality and product differences. These individuals are less committed to “organic only,” so they are more sensitive to product and price comparisons between organic and conventional items. As a result, these target consumers are more likely to purchase when the organic product choices are convenient, accessible and easily comparable with the conventional items they regularly purchase.
When it comes to organic potential, all supermarkets are not created equal. Based on Spectra demographic profiles and performance, the organic opportunity for supermarkets lies with the stores located in affluent, suburban neighborhoods with older shoppers.
Once high-opportunity stores are identified, how do retailers get the shelf space to expand organic products in already crowded produce departments? Within high potential stores, replacing selected conventional items with substitute organic products (versus just adding an organic SKU) offers a stronger opportunity to maximize organic product visibility and shelf turns while minimizing shrink. This focused substitution strategy for key organic items allows the supermarket to reduce SKU count, improve shelf visibility and significantly enhance the store image as a provider of high quality organic and natural foods.