UPDATED: Inflation challenges berry sales

04/11/2011 09:20:38 AM
Mike Hornick

(UPDATED COVERAGE, April 13) MONTEREY, Calif. — The steady growth in volume and cash value for berries typical of the last several years will be challenged in 2011 by rising prices, according to speakers at the Global Berry Congress.

“We’re seeing inflation in produce at the retail level,” said Steve Lutz, executive vice president at the Perishables Group, West Dundee, Ill. “When retailers promote, they don’t promote as aggressively as they did last year.”

On-promotion prices for all fresh produce items are up 6% this year, Lutz told an international group of growers, buyers and related businesses at the event, April 6-8.

There were 190 delegates from 16 countries.

Those prices have added importance for berries, with 45% of their U.S. volume sold on promotion, compared to a 30% average for all produce.

 Mike Hornick

Global Berry Congress panelists Ed Garner, (from left), communications director for Kantar Worldpanel, Steve Lutz, executive Vice president at the Perishables Group, and Dan Crowley, sales manager for Well-Pict Berries, discuss the effect of promotions on berry sales.

“As that promotion price pushes higher, you’ve got a price-sensitive consumer (and) you begin to see more switching behavior,” Lutz said. “Will we, in a sense, create switching from berries to grapes to apples or items that have a slightly lower price point?”

In this environment a 10% increase in berry prices, for example, would translate into a 15% loss in volume, according to Lutz. “Price is motivating consumers to trade down, and that’s not a positive trend,” he said.

“It’s up to our trading partners to stay very aggressive at price point,” said Dan Crowley, sales manager for Watsonville, Calif.-based Well-Pict Berries.

The number of households purchasing berries dipped 2.1% in the last year. There was also a drop in same-store purchases.

“It appears to be deal shoppers … going out of their way,” Lutz said.

But the recent past has been good to berries — all varieties. Through the end of February, dollar value was up 7.4% annually, and volume was up 8.2%. Because they’re popular with more affluent shoppers, they’re likely to hold onto their retail space, Lutz said.


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