Retailers drive up organic produce sales with key strategies
For many years, it seemed retail organic sales would increase at a minimum of 10% every year.
The Organic Trade Association’s website has a standing statement that reads, “Organic food sales increase by double digits annually, far outstripping the growth rate for the overall food market.”
Times change, and the winds of inflation and worries about the economy are slowing the momentum toward organics.
Retail scan data show retail organic produce sales growth moderated in 2021 and 2022. The Organic Trade Association reported organic food sales in the U.S. increased by about 2% in 2021, down from a 12% increase in 2020, the first year of the COVID-19 pandemic.
For the third quarter of 2022, ending Sept. 30, 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 report from the Organic Produce Network and Category Partners.
A survey question from The Packer asked organic produce marketers this question: “On a percentage basis, how will retail organic produce sales perform in 2023 compared with 2022?”
Five of the eight shippers responding to the survey projected organic sales growth of 1% to 5% in 2023, with one marketer predicting sales would be the same or lower compared with 2022. Two of the eight responding to the survey expect sales growth between 6% and 10% in 2023.
Reasons why
Sometimes supply and demand issues can create inflation and slower movement, observers say.
“We aren't seeing a decrease in demand,” said Kevin Stennes, organic sales manager for Chelan Fresh, Chelan, Wash. “To start off the 2022-23 crop, we have been challenged to cover the demand with our current supply.”
Brianna Shales, marketing director for Stemilt Growers, Wenatchee, Wash., said consumer inflation is only part of the story, noting that shorter organic crops are also driving price increases due to an imbalance of supply and demand. “Substitution is a great way to drive organic sales during inflationary times, as is continued promotion,” Shales said. “Bags have become an important merchandising vehicle for organic apples.”
Retailers can help dial up more sales for organic, marketers say.
“Since people are spending less in restaurants, it is a great opportunity for retailers to continue to show the value in fresh fruits and vegetables as an ingredient for cooking at home,” said Chris Ford, business development and marketing manager for Viva Tierra Organic, Mount Vernon, Wash.
“Inflation has caused some consumers to buy conventional instead of organic,” said Chuck Sinks, president of sales and marketing for Sage Fruit Co., Yakima, Wash. Retailers can help boost organic retail sales by building eye-catching displays, promoting the health benefits of organic products and putting organic produce on ads more frequently, he said.
Given the economic conditions, organic sales have exceeded expectations for Brian Bocock, vice president of product management for Naturipe. “That said, in order to move the volumes effectively, we are sizing up the packaging to provide a better value to the consumer,” he said.
