Organic Produce Sales Gains Continue to Over-Index in California

An analysis of scan store data, during a 52-week period ending April 1, 2018, revealed that organic fresh produce accounted for 17 percent of total produce volume growth in California, which is much greater than its market share.

The report, prepared by Southern California based Fusion Marketing as part of a webinar on June 21, focused exclusively on organic produce in California.

Data showed that for the period analyzed, organic produce accounted for 11 percent of produce dollar sales and six percent of volume statewide.The dollar growth in the category is being fueled by organic vegetable sales, while the volume growth is led by organic fruit sales.  This anomaly is caused by the declining price gap between organic and conventional produce, especially on some of the larger-volume fruit items such as apples and bananas. 

No matter how you slice it, organic produce sales at retail in California continue to increase, albeit at a slower percentage rate as the category is no longer a niche player but mainstream. In 2017, data revealed dollar sales reached $768 million and are projected to increase another $21 million in 2018 to $789 million.

The retail price of organic produce has steadied even as conventional produce pricing has risen, which is what is causing the shrinking of the price gap and a slowing of the growth of actual organic dollar sales.  From 2013 to 2018, the retail price of organic produce on a per pound basis rose 3.5 percent to $2.93.  During that same time frame, the price of conventional produce rose 15.6 percent to $1.56.  The gap between the two prices shrunk from $1.48 per pound to $1.37 per pound.

Organic vegetables sales accounted for 13 percent of the dollar market share, while organic fruit sales provide eight  percent of a typical retailer’s dollar volume.  Of particular note is that there are approximately a  dozen vegetables that have a dollar market share greater than 20 percent.  On the fruit side, there is no item at that lofty number.

Organic spinach, carrots and lettuce are the top three organic vegetable items in dollar sales, with organic lettuces leading the pack at $84 million of retail sales in California alone.  Organic spinach sales account for 46 percent  of total dollars sold in the Golden State, while organic carrots are at 31 percent  and organic lettuce at 22 percent.  There is also a handful of items where organic sales are greater than conventional sales including chard, leeks, beets and greens.

Organic berries are the top seller in dollar sales and percentage of sales with about $120 million in sales in California, representing 17 percent  of berry dollars.  Apples and bananas round out the top three, with organic sales each representing 10-11 percent  of total dollars.  Both organic apples and bananas experienced average per pound retail pricing around 10 percent  lower than the previous year because of increased volume. Price declines in those two items, which are among the largest sellers in the organic fruit segment, significantly skewed fruit pricing downward.  In fact, the other eight of the top 10 fruits all registered percentage increases in average price per pound. 

The bottom line is that organic fruit and vegetable sales continue to increase in California at retail, though the market is becoming more mature with about 63 percent  of stores carrying the category, up from 43 percent  five years ago, and roughly the same as a year ago.