UPDATED: First-quarter produce sales run 4.8% higher - The Packer

UPDATED: First-quarter produce sales run 4.8% higher

06/10/2011 12:32:00 PM
Chris Koger

(UPDATED COVERAGE, June 16)  First quarter 2011 produce department dollars were up 4.8% and volume levels were off a fraction in the latest FreshFacts on Retail report from United Fresh Produce Association.

For fruits, the report showed a 3.8% gain in sales, a 1.5% gain in volume and a 2.2% increase in average retail prices compared with year-ago levels.

Vegetables featured a whopping 8.4% gain in average retail pricing which resulted in a 2.1% reverse in volume and a 6.1% gain in sales for the quarter.

Given much higher prices for head lettuce for much of the first quarter, volume did not drop off as much as might be expected, said Ed Odron, president of Ed Odron Produce Marketing & Consulting, Stockton, Calif.

The FreshFacts report showed that lettuce dollars per store were up 10.5%, based on 13% higher prices and only a 2.2% decline in volume.

Inflation has been creeping into the produce department and produce prices may continue to escalate if energy costs remain high, said Steve Lutz, Wenatchee, Wash.-based executive vice president with Perishables Group, West Dundee, Ill.

“If gas prices stay elevated, that impacts short term discretionary spending,” he said.

Less disposable income could also push people away from restaurants and toward bigger spending at supermarkets, he said.

However, recent loyalty card data from supermarkets indicate that households are making smaller produce purchases. “It is a concern that with higher prices people will reduce units,” he said.

The summer selling season also may be hurt by a later marketing season in the Northwest, Lutz said.

 “It looks like the cherry crop won’t be there to support the Fourth of July promotions,’ he said. “It puts the pressure on the cherry industry to make up for sales they normally get that first week of July.”

FreshFacts found the volume of produce sold on promotion declined significantly in the first quarter, while everyday prices were up in 18 out of 19 vegetables categories and seven out of 14 fruit categories.

Retailers appeared to be promoting less aggressively than year-ago levels across the produce department, Lutz said.

“Promotion prices are generally up, year over year,” Lutz said.

In other highlights, value-added fruit sales were up 6.9% and value-added vegetables sales climbed 8.4% in the first quarter, the report said.

Organic vegetables sales in the first quarter were up 8.4%, fueled by a 2.1% gain in volume and a 6.1% gain in average retail price. Meanwhile, organic fruit sales shot up 23.2%, linked to a 6% gain in average retail prices and 16.2% jump in average weekly volume.

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