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Organic produce sales may be no longer be escalating at a double-digit rate, but retailers, foodservice operators and grower-shippers say movement continues to trend upward.

Fruits and vegetables remained the biggest-selling organic food category, with $16.5 billion in sales in 2017, the latest year for which data was available. 
That’s up 5.3% from the previous year, according to the Washington, D.C.-based Organic Trade Association.

Fresh produce accounts for 90% of organic fruit and vegetable sales, OTA says, and almost 15% of the fresh fruits and vegetables sold in the U.S. are organically grown — up from 8% in 2009.

“Fresh produce is often the entry-point for new consumers of organic, and this sector will continue to attract new buyers, while deepening the loyalty of experienced organic consumers,” said Laura Batcha, OTA’s CEO.

At retail, the number of supermarkets offering organic fruits and vegetables is “probably close to 100%,” said Steve Lutz, vice president of U.S. West and Canada for the Produce Marketing Association.

“I’d think you’d be hard pressed to find a supermarket that doesn’t have something (organic),” he said.

Packaged salads in various forms drive about 1 of 5 organic dollars, Lutz said.
“That’s the biggest single category for organics,” he said.

Apples are second, followed by carrots, potatoes and bananas.

But the higher cost of growing organic produce compared to conventional translates to higher retail prices, and that can impact sales.

“Price is absolutely a barrier,” Lutz said.

Holding down retail prices makes a significant difference in sales, he said.

A Nielsen study indicated that a 50% price premium over conventional produce “was a realistic number that could attract tremendous amount of consumer interest,” he said.

A 20% premium “would drive (consumers) out of conventional,” he said.

“They would instantly trade up.”

Lutz sees continued growth for the category.

“The growth rate suggests that organic will be doubling in a short amount of time,” he said.

The popularity of organic produce also is obvious at the restaurant level, which now accounts for 51% of food dollars, up from 25% in 1955.

“The role of organics in restaurant menus only continues to be expanding and growing in importance,” said Hudson Riehle, senior vice president of research for the Washington, D.C.-based National Restaurant Association.

When organic produce started showing up on the association’s What’s Hot survey more than a decade ago, no one was sure whether the category was actually a trend or just a passing fad, Riehle said.

Most recently, 49% of operators of fine dining establishments said they plan to add organic or food grown in an environmentally friendly manner to their menus, and about 20% of other establishments agreed. 

Growth also is apparent to organic grower-shippers.

“You have a lot more customers that have real organic programs,” said Scott Mabs, CEO of Homegrown Organic Farms, Porterville, Calif.

Organic produce no longer is limited to a few select customers, he said.

“Almost every retailer is going to have an organic offering,” Mabs said.

“That has changed the whole deal significantly, and it has allowed for additional growth.”

One of the biggest changes for organic farmers in coming years may be “the reality of cycles” that conventional growers long experienced, Mabs said.

“Things become overplanted, prices drop, and people stop farming a particular item,” he said. 

High demand generally has prevented such a scenario on the organic side, but that may change.

“I think you are going to start to see cycles with commodities that become overplanted organically,” he said.

The Packer’s Global Organic Produce Exposition & Conference (GOPEX) provides a forum to meet the rapidly changing needs of professionals who grow, distribute, pack and market organic produce. This international trade show and conference provides the ideal opportunity for organic produce professionals from around the world to network, exchange ideas, source new products and services, and do business with the industry's leading growers, distributors, packers, marketers and retailers. 

 

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