Demand for Fresh Produce Still Above 2019 Levels
By: Anne-Marie Roerink, President, 210 Analytics
June 2020 – Restaurants in many states have started to reopen dine-in facilities with social distancing measures in place. Research firms 210 Analytics and IRI partnered with PMA to understand how retail sales for produce are developing throughout the pandemic and as restaurants around the country are starting to re-open their doors.
During the last week of May, elevated everyday demand drove double-digit produce gains for fresh, frozen and shelf-stable fruits and vegetables. Fresh produce year-over-year growth for the week of May 31, versus the comparable week in 2019, increased 13.2%. Year-to-date, fresh produce sales are up 10.4% over the same time period in 2019.
“Fresh produce has grown in double-digits for 11 out of the last 12 weeks,” said Joe Watson, vice president of membership and engagement for the Produce Marketing Association (PMA). “While gains eroded by about a point this week once more, demand is still well above 2019 levels. As an industry, we sold an additional $2.7 billion in fresh produce since the beginning of the year at retail, or 944 million pounds.”
Fresh Produce
Vegetables, up 18.8% for the week, easily outperformed fruit, which, at 8.6%, has fallen back into single-digit gains. While strong, growth rates have dropped by one to two percentage points each week since the last week of April. Fresh vegetables have seen the stronger performance throughout with double-digit gains for all but one week since mid March.
“Fruit sales are typically highly reliant on impulse purchases,” said Jonna Parker, Team Lead, Fresh for IRI. “Importantly, in our latest wave of consumer surveys, 42% of consumers said they are spending less time in the store when shopping for groceries than pre-pandemic. That means four in 10 consumers tend to hurry through the aisles, which undermines impulse tendencies. Making sure consumers are aware of a great new batch of cherries or watermelons before they even enter the store has become all the more important.”
Fresh versus frozen and shelf-stable
Percentage-wise, gains in fresh produce are bound to be lower than frozen and shelf-stable due to its share of total store fruits and vegetables. “At the end of May, shelf-stable was actually below normal levels, down from its highest share of 19% mid-March, but the share for frozen fruits and vegetables remained elevated,” said Watson.
Fresh Produce Dollars versus Volume
Memorial week was the first time that dollar gains tracked slightly ahead of pound gains since the onset of the pandemic. During the final week of May, this trend accelerated, with dollars increasing 13.2%, while pounds grew 10.1%.
Both fruit and vegetables saw volume growth tracking ahead of dollars the week of May 31, versus the comparable week in 2019. However, the volume/dollar gap for fresh vegetables was just 0.6 percentage points. In fruit, dollar gains are tracking 3.7 points ahead of volume, signaling price increases.
The top three growth items in terms of absolute dollar gains for the week of May 31 versus one year ago were cherries, berries and lettuce.
Strong demand is driving volume along with dollar gains across the board. However, in some areas, ample supply is still suppressing prices, which means there are continued significant volume/dollar gaps for items such as avocados (17 point gap) and onions (nine points).
Fresh Fruit
“Like we have seen for the past four weeks, fruit gains lost about one point and dropped just below +9% the week of May 31 versus the same week year ago,” said Parker. “Oranges continued to amaze with gains upward of 70% throughout the entire month of May. Citrus is a logical choice for consumers looking to boost immune systems and solid supply is meeting this elevated demand. Cherries were the biggest grower of all fruits and vegetables this week and were the number four in terms of sales, generating $65 million for the week.”
Fresh vegetables
All Top 10 vegetable items in terms of dollar sales gained double-digits the week ending May 31, with the exception of carrots, which fell just below +10%. “Vegetables had been outgrowing fruit for a few years,” said Parker. “But that disparity got amplified amid the pandemic. Fresh vegetables are still pacing nearly 20% above last year’s levels nearly three months into the pandemic. Many more consumers are cooking, and 23% plan to cook from scratch more often going forward. Manufacturers and retailers have an opportunity to innovate around solutions to the top cooking challenges consumers say they are facing.”
Lettuce was the top sales category followed by tomatoes and potatoes. Sales gains for fresh cut salad (included in Lettuce above) continued to be a strong performer over the week ending May 31, with dollar sales 13% above year ago levels — maintaining the record gain measured in the prior week.
What’s Next?
The relaxation of the stay-at-home executive orders looks different from state to state. In most states, consumers are able to resume shopping, dining and working out of home. The speed of economic recovery, along with any levels of latent social anxiety, will drive the demand for meat coming from foodservice for the foreseeable future. Given the limited seating for in restaurant dining and significant levels of economic pressure, it is likely that demand for produce in retail will continue to track well above 2019 levels for the foreseeable future.
Anne-Marie Roerink is the Principal and Founder of 210 Analytics, which specializes in quantitative and qualitative market research. IRI is a global leader in innovative solutions and services for consumer, retail and media companies. The Produce Marketing Association (PMA), is an industry trade organization representing companies from every segment of the global fresh produce and floral supply chain.
‘Normalcy’ Will Depend On Politics And Willingness To Take Health Risks
By Jim Prevor, Editor-in-chief, Produce Business
There are many explanations as to why fresh produce sales at retail are above those of last year. To start with, many restaurants are closed, operating at reduced hours and limiting seating when open. Then, of course, many people normally dine out for specific reasons: They may be at work and need to grab lunch; they may be on vacation and not have access to their kitchen; they may be at a trade show and either grab something quick at a concession stand or having an elaborate meal with clients. Now they are not doing much of any of these things.
There is also money and financial insecurity. Maybe they are laid off or uncertain about their job future. It just makes sense to save money and eat at home until things clarify. Indeed, there is some indication that people who were laid off, but receive unemployment and sometimes other benefits such as a moratorium on paying back federally underwritten student loans, are finding themselves with higher disposable income than their normal wages. Under normal circumstances, they might have a big party or go on a cruise, but with options so limited, they bolster savings and pay down debts.
There is a lot of talk that consumers are enjoying meals at home, learning to cook again and that, post-pandemic, the future is thus bright for retailers and selling food through the retail channel.
Well, maybe. It is true that, while families may be enjoying a renaissance in home cooking, some experts are predicting many years of recovery before the economy will return to its status prior to the COVID-19 outbreak. And the recent Black Lives Matter protests seem likely to extend the recovery time for the economy.
Yet, the stock market tells us a different story. Although, of course, these numbers fluctuate daily, in early June, long after COVID-19 had led to massive unemployment numbers, the S&P 500 and Nasdaq composite were both positive for the year. Warren Buffet, the CEO of Berkshire Hathaway and well recognized as a stock market guru, has said that his own mentor, Benjamin Graham, a British-born economist, professor and investor, expressed an understanding of the market stipulating that in the short term, the stock market acts like a “voting machine,” which reflects all kinds of attitudes both rational and irrational. In the long run, though, the stock market functions more like a weighing machine, reflecting the true value of a firm.
So is the market currently voting or weighing? Maybe the answer is that produce, as a whole, is on its own trajectory. Most of the industry has thrived as it tried to meet retail demand. But some of the industry has collapsed along with the loss of foodservice demand.
As for the future, it is entirely possible that speculations about the joy of cooking and future desire of people to stay home and cook might be correct. We would be inclined to say, however, that this take is a misunderstanding of the situation. Sure, people may report enjoying eating home and cooking, but that is more a function of the family-togetherness experience than it has much to do with the joy of cooking.
Though my own children will grab breakfast at home, they are never home for lunch or snacks. When it is time for dinner, my children normally would be busy participating in school sports, staying late for play rehearsal or on a trip with their school chorus, attending a party or visiting a friend. My wife would be at the mall getting them clothes or at an evening charity, and this author might be across the world at a trade show or conference. No matter how much we enjoyed all being together during the COVID-19 outbreak – and that bubble of family time amidst the lockdown was certainly real and a memory this author will always remember – the return to normalcy means a return to all those activities now put on hold. The daily family breakfast, lunch and dinner will become a memory, something my children will tell their children in years to come as they will listen with amazement.
The short term is uncertain. Schools are conflicted about reopening. What will happen to the economy is uncertain. Even our political direction, which will probably effect the decisions on how to proceed, is uncertain.
Growers will have to make difficult decisions about what to plant, and processors will have to decide what to process as the question of the degree to which our future will be like our past is resolved by politics, by medicine and by the willingness of the population to live in a mode defensive against the possibility of disease. pb