A positive outlook for organic produce

The organic produce sector is ripe for expansion.

Produce already has the largest share of organic food sales—29.4%, according to the Washington, D.C.-based Organic Trade Association (OTA), and a greater focus on organic fruits and vegetables by a wider range of shopper segments is set to trigger additional activity, analysts report.

While merchandisers still must overcome consumer concerns about cost to maximize sales, more promotions and dropping prices are likely to boost purchasing, analysts note.

“Produce held its spot as the largest organic category in 2023, continuing to be the primary entry point for consumers into the organic market,” the OTA states, noting that the category grew 2.6% last year to $20.5 billion and accounts for more than 15% of total U.S. fruit and vegetable sales.

Top sellers include avocados, berries, apples, carrots, and packaged salads, the OTA states.

Millennials (persons born between 1981 and 1996) and younger Generation X shoppers (persons born between 1965 and 1980) remain the core organic produce shoppers and more are embracing selections because of lifestyle changes, says Anne-Marie Roerink, president of 210 Analytics LLC, a San Antonio-based market research and marketing strategies firm and author of the Power of Produce 2024 report, published by Arlington, Va.-based FMI—The Food Industry Association.

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“Having children is one of the few things that impacts food shopping and consumption habits,” she states. “While consumers may not buy organic produce for themselves, the arrival of children could lead to purchases of organic bananas, berries, and other important entry categories.”

An evolving marketplace

Individuals from Generation Z (persons born between 1997 to 2012) are also increasingly seeking organic produce, Roerink says. “Gen Z grew up with organic more widely available and advertised in stores,” she notes. “As they form their own families and houses, the traditions of how they grew up translates into purchases.”

In addition to age, changing incomes will have a major influence on organic purchasing, Roerink states. “Households may currently have the desire but not the financial means to buy organic fruit and vegetables,” she notes. “But they will integrate more items as they get further into their careers.”

Nevertheless, food inflation along with the typically steeper cost of organic versus conventional fruits and vegetables remain purchasing obstacles, Roerink says. “Most consumers are balancing price and promotions against such elements as convenience, nutrition, and sustainability,” she notes.

Related:Sherry Frey of NielsenIQ analyzes organic consumer trends

Despite the expense, core organic consumers remain “very dedicated” to purchasing organic produce, Roerink states, noting that such individuals are typically knowledgeable about the growing process and strongly believe in the benefits for themselves, the planet, and the farmers. Organic shoppers who decrease activity often just buy produce when items are on sale, she notes.

“Price is the top reason that consumers sit out, drop out, or are choosy,” Roerink says. In a nationally representative consumer survey for the Power of Produce 2024 report, 76% of shoppers cited being too expensive as a reason for not purchasing organic produce.

On the upside, organic sales are set to rise as the economy improves and merchandisers increase their promotions, she states.

Cross-merchandising displays that enable shoppers to easily purchase different organic meal components also can generate greater activity, Roerink says. Elements for an organic breakfast omelet display, for instance, might include organic eggs, organic mushrooms, and organic tomatoes, she notes.

“Unawareness of an outlet’s full organic assortments often leads consumers to visit different stores to buy items,” Roerink adds. “Alerting shoppers to the full depth and breadth of organic within the produce department is a great start.”

Related:Retailers discuss challenges, opportunities in organic produce

Teach them well

Educating consumers about the advantages of organics can further propel activity, she states. Thirty-seven percent of non-buyers in the Power of Produce survey, for instance, indicated that they are not purchasing organic produce because they do not believe it brings added benefits.

“So much comes down to having consumers understand why they should purchase an item that is priced at a differential,” Roerink says. “Some retailers explain the differences relative to soil health, nutritional value, and taking care of the community. Those types of things may help provide an educated choice at the shelf.”

Roerink states that while frequent organic buyers are resolute and highly knowledgeable about the benefits to themselves and the environment, many non-buyers cannot understand why they should purchase organic. That includes older generations who feel fresh conventional produce is already healthy for them and good for the earth, she notes.“Organics is one of the areas that is de-prioritized by some, yet an absolute must-have for others,” Roerink states. “The core organic consumer is very dedicated to purchasing organic produce. That is why we did not see a dip in organic sales during the 2008 recession, nor during the current time of high financial pressure.”