The ‘Power of Produce’ prevails, annual FMI report finds

ORLANDO, Fla. — Fresh produce remains a powerful force at retail, with opportunities for continued growth squarely on the table despite inflation. This was among the key takeaways from "The Power of Produce 2023" educational session, held March 3 during the Southeast Produce Council’s annual Southern Exposure event, March 2-4.

"The Power of Produce 2023" report from FMI, The Food industry Association, revealed produce department sales grew 4.8% to $74.5 billion in 2022, even as inflation increased the price of fruits and vegetables.

Led by Rick Stein, FMI vice president of fresh foods, and Anne-Marie Roerink, president of 210 Analytics, the dynamic Power of Produce session at SEPC featured a trio of grocery retail panelists including Jeff Cady, vice president of produce and floral for Tops Markets; Mike Emery, director of produce category pricing and merchandising for Hannaford Supermarkets; and Rich Gonzales, vice president of global produce sourcing for Walmart.

Unless you’re living under a rock, you’re aware of rising inflation and its effect, Roerink said. And when consumers talk about food inflation concerns, they point to eggs, meat and produce.

But while "The Power of Produce" finds that 89% of consumers are somewhat or very concerned about the price of fresh produce and 84% of consumers have implemented money-saving changes in their fresh produce purchases, there are still “opportunities to make produce shine as a budget hero,” Roerink said.

Sales and promotions — though increasingly infrequent — have become even more important to today’s price-sensitive shopper.

“Specials have taken on a very important role,” she said, as have personalized promotions, which are “more popular by the day.”

Tops, which Cady says has been fortunate to remain a highly promotional, high-low retailer in spite of today’s economic climate, runs buy one, get one free promotions departmentwide that have “spurred additional excitement.” Tops also runs 10 for 10 ads and then ties those deals to gas promotions. “We see a 30[%] to 40% increase [in sales] by tying [these promotions] to gas,”’ he said.

At Walmart, a “save money; live better” philosophy driven by the retailer’s everyday low-price strategy is “working,” said Gonzalez, who adds that price elasticity, convenience and trust are a winning combination for Walmart, for which fresh is the fastest-growing segment.

But it’s not only price and promotion driving sales.

When it comes to impulse purchases — what Roerink calls the “bread and butter” of produce sales — seasonal, eye-catching and locally grown displays are three ways to maximize such purchases, as are offering new items, recipe ideas and sampling, the latter of which is one thing the internet can’t do, she said.

“New varieties are driving growth,” Cady said. Tops communicates new produce items at POS. The grocer has also had success in cross-merchandising new and existing produce items throughout the store. “Cross-merchandise cucumbers by the salad case? Boom,” he said.

Consumers still hungry for convenience

And despite inflation, more consumers are turning to valued-added produce — pre-cut and washed as well as packaged salads — which provide convenience, but typically come with a higher price point per pound, the report found. The majority of shoppers, or 68%, say they’d like their store to carry a bigger selection of these time-saving produce products, despite higher prices and inflation.

“Convenience is absolutely driving more trips,” Gonzales affirmed.

“Fresh and convenience is Hannaford’s strategy,” Emery said. The grocer offers its shoppers meal inspiration at affordable prices. One of its promotions showed how to feed a family on $15 with recipes that included produce. The campaigns run digitally and in-store, Emery said.

Feeding demand for convenience, “value-added had a big year,” Roerink said. The report found that consumers “frequently" purchasing value-added vegetables grew from 25% in 2020 to 30% in 2023. For value-added fruit, the number of consumers purchasing frequently rose from 20% in 2020 to 24% in 2023.

Driven by fruit, value-added represented 14.6% of total produce sales in 2022, the report found. Top sellers in value-added fruit included melons, mixed fruit and mixed berries, while the top sellers in value-added veg were lettuce, broccoli and carrots.

While many consumers say they need to save money on their grocery bill, in many cases convenience wins out.

“Shoppers are searching for deals, but [are] also willing to pay more for convenience — like pre-cut and washed products,” Stein said in a news release. “This shows how complicated the consumer decision process is. On one hand, shoppers are saying price is important, but when it comes to convenience, they are willing to pay.”  

Room for consumption growth

While the volume of produce purchased in 2022 decreased from 2021, overall produce sales also remained ahead (19%) of 2019 numbers as did volume sales (3.4%), highlighting the continuing trend of consumers choosing fresh and healthy options despite higher prices, finds "The Power of Produce."  

Given this focus on fresh and healthy, Stein and Roerink see room for continued growth in fresh produce across different meal occasions, both at home and away from home.

Offering consumers new recipe and usage ideas is one way to boost consumption. At Hannaford, social media plays a major role in inspiring shoppers to use produce in new and exciting ways.

At Walmart, where “online pickup and delivery is a huge channel,” dropping a free mandarin or produce-based snack in a pickup or delivery order is one way to engage customers with fresh produce, Gonzalez said.

The potential for growth in fresh is also both online and in-store.

“Where is the nearest Walmart store?” Gonzalez asked the audience at Southern Exposure. “It’s in your pocket,” he said answering his own question. Walmart is also focused on driving convenience through its app and reaching its customers earlier in the shopping journey with personalized recommendations, he said.

"The Power of Produce 2023" is FMI’s eighth in-depth look at produce consumption and buying habits through shoppers’ eyes. The report was conducted by FMI and made possible by Yerecic Label, Southeast Produce Council and Invafresh.