Organic sales are up but volume is lower in the third quarter, Organic Produce Network reports
Inflation is apparently causing sticker shock for some organic consumers.
In the third quarter of 2022 retail fresh produce organic sales rose 4.1%, but volume was off 4.5% compared with the same period a year ago, according to a new report from Organic Produce Network and Category Partners.
For the three months ending Sept. 30, the Organic Produce Performance Report said inflation was evident in organic produce pricing.
Organic fresh produce pricing per pound increased by 8.9% for the three months ending Sept. 30, according to the report, as sales for the quarter topped $2.4 billion.
By way of comparison, conventional produce's average price per pound increased by more than 10%, with total sales of $17.93 billion, according to the report.
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Overall combined produce department sales gained 8.3% in dollars for the third quarter of 2022, while volume declined by 1.5%. The average price per pound increased by 21 cents for the total produce department compared with the same quarter a year ago.
The report uses Nielsen IQ syndicated data to track and report the performance of the top 20 organic categories, according to a news release.
“Comparing the third quarter of this year to third quarters of the past three years shows organic volume declining—and more than three percentage higher than the decline in conventional produce volume for Q3 of 2022,” Tom Barnes, CEO of Category Partners, said in the release. “Conventional produce outperformed organic produce in dollar growth, suggesting price increases in conventional produce have been more easily absorbed by consumers than the higher prices in organics.”
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Organic apples and lettuce were examples of product substitution from organic to conventional by consumers as their price per pound of organic increased by more than double the amount of conventional. This resulted in a volume decline as high as 15%, the report said.
The organic tomato category, on the other hand, witnessed a 19% increase in volume and a staggering 30% increase in dollars, according to the report.
In total, the report said 14 of the top categories posted year-over-year increases in dollars, with potatoes, onions and peaches showing double-digit gains. Conversely, apples posted the largest decline in dollar sales, with lettuce and bell peppers also showing noticeable declines, the report said.
Berries and packaged salads continue to be the top two organic produce categories, responsible for nearly 40% of all organic produce dollars, according to the report.
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While organic prices in aggregate remain substantially higher than conventional (by $1.55 per pound in Q3 2022), the average price of both conventional and organic produce has increased, the report said.
When compared to the third quarter of last year, organic pricing per pound has risen 8.9% while conventional pricing has risen 10.3%.
“In Q3 2022, the average price gap between conventional and organics is the largest it has been in the last four years,” Barnes said in the release. “In this inflationary time period, it will be important for organic suppliers to understand how their pricing impacts substitution behavior among various consumer demographics.”
All four regions of the U.S. showed consistent organic performance where dollars grew and volume declined. The Midwest saw the lowest dollar growth (1.8%) and highest volume decline (–7.4%), and it was the region with the highest price per pound increase (9.9%). Consistent with previous reports, the South continued to show the most improvement in year-over-year increases in sales and decreases in volume for the quarter (5.5%).
OPN co-founder and CEO Matt Seeley said in the release that he remains bullish on the long-term prospects for growth of organic fresh produce.
“Inflation and supply chain challenges have impacted pricing in the short term; however, organic fresh produce will remain an important component of weekly food shopping as consumers look for healthy, safe and nutritious products for their families,” Seely said in the release.
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