What if the $5.7 billion organic produce industry could accelerate its growth? And what if that amounted to $10 billion in retail sales? Such growth in today’s challenging retail environment might sound daunting, but the goal is attainable and one the industry should be striving to achieve, according to new research presented by Nielsen and the Organic Produce Network.
In order to surpass the $10 billion mark, an assumption requires that organic generates at least 15% of each produce commodity’s sales. Today, 11 different cIommodities have already achieved this milestone, and requires a significant shift in the role of organic for some large produce commodities.
“Our latest research shows more than one-third of shoppers at least consider buying organic fruits or vegetables,” said Matt Lally, associate director at Nielsen. “While the importance of organic as part of the shopper’s decision making process does differ from commodity to commodity, the interest is there for many categories as long as quality supply is on the shelves and the price is right.”
Nielsen Forecast of Fresh Organic Produce Sales based on Total US xAOC, 52 weeks Ending 3/23/19
Having product on the shelf is indeed a differentiating factor of the commodities with a high share of organic sales versus those with a low share. According to Lally, it’s no longer enough to simply carry the organic varietal, but consumers want options just as they do in size, brands and packaging for their conventional options. “Each of these high-opportunity commodities has a very low ratio of organic to conventional items offered compared to some of the commodities where organic generates a higher portion of sales,” he said.
Matt Lally, Associate Director, Nielsen
Vic Savanello, vice president of produce for The Fresh Market, agrees with the potential for continued organic growth. “All these sales objectives and conversation regarding increased volume and consumption are absolutely within reach. They could absolutely be attained with a good mix of new organic variety, better more consistent product identification, and more consumer-friendly value-added offerings. It almost sounds like those ideas align themselves with what should be our industries objectives as a whole, not just the organic sector---and they do,” he said.
Produce Categories with the Lowest Share of Sales from Organic
The decision process for many shoppers, however, does ultimately hinge on price, and that’s another area where several of these commodities have struggled. Not only does a retailer need to consider the price relative to the competition, but also the price difference with the conventional offering. For those retailers who merchandise organic and conventional items next to each other, this heightens the importance as shoppers can more easily price compare between the two.
Vic Savanello, Vice President of Produce, The Fresh Market
Building a $10 billion retail industry isn’t an unrealistic goal, but it will take planning and execution to succeed.