President of FreshSmartSolutions, Inc.
According to consumer and retail market research firm, the NPD Group, 58% of primary household shoppers report that liking a store’s produce offerings is one of the reasons they regularly shop at that particular store. We know from other studies that fresh foods drive two-thirds of shopping trips, and the produce department – more than any other – provides the complete range of sensory experiences to your shoppers.
Produce Sales Grew in 2012
The produce department did well in 2012, with total produce department dollar sales growing more than 4%, driven by strong performances in several categories.
According to Nielsen Perishables Group (NPG) for the 52 weeks ending 11/24/12, the five largest-selling produce categories by dollar sales were berries (+13.2% vs. YAG), packaged salads (+4.3%), apples (+8.7%), bananas (+2.9%) and grapes (+5.8%). And within the berry category, strawberries accounted for the greatest share of category sales, their growth fueled by larger package sizes. The 32-ounce package now accounts for nearly 20% of strawberry sales, and volume sales for this package size increased 17% in 2012.
Avocado volume sales increased 34%, fueled by a 19% decline in their average retail price. Avocado supply rotates from California to Mexico to Chile during different times of the year and with a large Mexican crop, factors are in place for avocado’s momentum to continue in 2013.
Convenience and Portability are Key Drivers
Value-added produce items such as fresh-cut fruit and pre-washed vegetables continue to proliferate, gaining wider distribution as well as increasing dollar sales. NPG reports that value-added fruits increased dollar sales by 8.8%, driven primarily by the fresh-cut fruit segment, which accounted for roughly three-quarters of value-added fruit dollar share. Value-added vegetables’ growth outperformed their fruit counterparts, with a 10.2% increase in dollar sales and a 10.6% volume increase.
NPD’s 2012 Snacking in America study once again acknowledged fruit’s position as the most popular snack food (ahead of chocolate and potato chips) as well as the fastest-growing snack category. This is evident in the acceleration of produce items offered in convenient, portable packaging like apple slices-to-go, blueberries in single-serving pouches, and baby carrots with popular snack food flavorings.
Organics Maintain Momentum
Organics continued to grow in sales, accounting for 12% of total produce dollar sales in 2012, according to NPG data. Organic produce is the largest segment of organic food sales, accounting for over one-third of all organic food sales and more than twice the size of the next-largest segment (dairy). Organic vegetables increased dollar sales 12.1% and organic fruit increased dollar sales by 23% in 2012.
Small Produce is Big
One final trend to watch: small is bigger than ever in the produce department! Proven performers, such as baby carrots and grape tomatoes, have been joined by new offerings gaining distribution and increased sales, from marble-sized potatoes to baby pineapples. In addition, the Cuties brand (offering two different types of mandarins) has scored a major hit with their kid-sized, easy-to-peal appeal. And with their move into national TV support, you should expect to see sales continue to climb in 2013.
Merchandising for Healthy Profits
Retail dietitians have a huge opportunity to work with their produce departments in creating a truly win-win situation: increasing produce sales while helping your shoppers make healthier food choices. Here are three merchandising ideas to get you started:
Don Ladhoff is a recognized expert in retail and shopper marketing. As President of FreshSmartSolutions, Inc., he leads the development of retail solutions for a diverse group of companies and commodity boards spanning the perishables, packaged food, and technology categories. Don works closely with leading retailers in every major category, including grocery, club, mass, drug, and specialty channels to strategize and implement his clients’ programs. To learn more, visit www.freshsmartsolutions.com.