Jun 22, 2016

Local, Organic and Convenience Key Drivers of Dollar and Volume Growth

JUNE 22, 2016 – CHICAGO – Fresh produce is in demand. At $61 billion in annual sales, fresh produce is big, growing (+4%) and lucrative with a grocery basket with fresh produce averaging nearly $30 more than one without. The consumer trends in Food Marketing Institute's (FMI) second-annual Power of Produce report substantiate the growth opportunities for fresh produce in food retail.

Power of Produce launched today at FMI Connect during a presentation by Anne-Marie Roerink, principal of 210 Analytics, who prepared the study. The shopper survey was supplemented by IRI and the Nielsen Perishables Group point-of-sales data. The report reveals shopper habits regarding fruits and vegetables pre-trip, in-store and at home, as well as hundreds of shopper suggestions on how to improve the produce department. The report was financially made possible by Yerecic Label.

FMI Vice President of Fresh Foods Rick Stein said, “The nation’s food retailers fully understand the clout of the perimeter, and when it comes to their fresh strategies, it’s imperative that we continue to track shopper behavior to help them monitor and respond to consumers. Produce certainly wields influence.”

Produce continues to be a supermarket stronghold through high primary shopper conversion and being the primary destination among switchers. The study found that nearly one-quarter of shoppers switch outlets when purchasing fresh produce versus the bulk of groceries, primarily to full-service supermarkets, farmers’ markets/produce stands and specialty organic stores. Roerink cautioned that younger generations are drawn to alternative channels, which she deemed “a red flag for traditional retailers as losing the produce basket may result in losing additional spending in center store.”

The study explores several mega trends in produce, most notably the demand for local, with the Power of Produce signaling that 61 percent of shoppers want their produce department to stock more local items. However, shoppers’ definition of local is rapidly tightening to sourcing within a certain mile radius or simply inside state lines.

Notably, consumers are placing increased value on transparency – how and where the crop was grown – as evidenced by how support for the local farmers/economy overtook perceived freshness as the top reason for buying locally-grown. This shopper sentiment also applies double-digit sales gains for organic fresh produce and an expressed need for “free-from” products. Still, organic remains a niche segment to date, reflecting eight percent of total produce sales, with usage skewing to the more affluent shoppers and families with children.

At the conclusion of the session, Roerink announced a new project pending for fall 2016 that follows a similar methodology as Power of Produce, but looks specifically at prepared foods and deli.