Return to dominance is task for fresh produce marketers

Fresh produce has been winning the war for the pocketbook, but will it continue?

In competition for consumer dollars, the fresh produce industry has been performing better than nearly every other food group.

I make that conclusion after a look at the multi-year Consumer Expenditures report from the Bureau of Labor Statistics.
Comparing 2019 expenditures to 2013 (dollars not adjusted for inflation), the report said the average annual consumer expenditure on fresh fruits was $322 in 2019, up 19% from 2013. For fresh vegetables, the average annual household spend in 2019 was $295, up a whopping 25% compared with 2013.

How does that compare to other foods? Average expenditure on all food consumed at home was $4,643 in 2019, just 17% higher than 2013.
Some at-home food categories actually saw declines in consumer spending over the past six-year period. For example, consumer spending on fresh milk and cream averaged $140, down 8% compared with 2013. Processed fruits saw average annual expenditures of $112 in 2019, down 3% compared with 2013. Meats, poultry, fish and eggs saw average cumulative household expenditures of $980 in 2019, a gain of 14% compared with 2013. Bakery products in 2019 saw average expenditures of $400, up 11% from six years earlier.

Fresh produce didn’t outperform all non-food consumer categories, however;  alcoholic beverages, cell phone services, vehicle insurance and health insurance all saw bigger percentage gains from 2013-2019.

Prior to this year, consumers were flocking to restaurants and willingly opening their wallets. In 2019, average expenditures on food away-from-home totaled a hefty $3,525, up a whopping 34% compared with 2013.
That rate of increase on food away-from-home was certainly above trend compared with at-home food expenditures, including fresh fruits and vegetables.

However, it seems logical to expect to see expenditures for food away-from-home drop in a big way in 2020. Restaurants have been closed during many parts of the COVID-19 pandemic and the oft-told narrative is big grocery retail gains in 2020.

What will the 2020 Consumer Expenditures report show? It could be scary.

Will other food categories that are shelf-life stable fare much better than fresh produce? Will those processed fruits and vegetables, which typically lag behind fresh produce, show a bigger percentage 2020 sales gain?

Will fresh produce keep its “fair share” of the consumer’s grocery expenditures for food purchased online? Papa John’s Pizza reported sales increases of 28% in the second quarter and macaroni and cheese sales were up by about that same amount. Comfort foods have been winning the pandemic, unfortunately.

Despite impressive demand at times for fresh produce from grocery retailers and consumers this year, there will be plenty of work for produce marketers to do in 2021 to compete for a bigger share of the consumer’s dollar. It is a battle that marketers have been used to winning. A return to dominance is in order.

Tom Karst is The Packer’s editor. E-mail him at tkarst@farmjournal.com.