The Food Marketing Institute (FMI) has released its first “The Power of Produce” report, which explores changes in shoppers’ produce purchasing trends and behaviors at retail.
The new study highlights the full path to purchase, from mega trends and pre-trip preparation through the actual purchase and consumption, followed by shopper suggestions to improve the produce department.
- In-Store Perspectives—Produce is a planned purchase, but with a great opportunity for impulse. While fruit and vegetables are well-researched list items for many shoppers, 57 percent estimate that they frequently or almost always purchase unplanned items when in-store, making produce a great category to help grow the basket.
- In-store execution crucial—While price and promotions attract shoppers to the store, once there, they emphasize the need for clear signage, clearly marked prices, variety, freshness, good organization and product availability. When faced with an out-of-stock item, more than 40 percent forego the produce purchase rather than substituting.
- Appearance beats price in purchasing decision—For both fruit and vegetables, the top purchase considerations are freshness/quality, followed by price, which underscores the importance of providing value vs. low prices alone.
- Alternative channel concepts take some of the fresh produce dollar—Fifty percent of shoppers will occasionally purchase produce at farmers’ markets. They are the primary produce destination for 6 percent of shoppers and the secondary destination among 26 percent.
- Value-added grows ahead of conventional—Value-added produce (chopped, sliced, halved, washed, etc.) grew 13 percent over 2014 vs. 3 percent growth for unprepared produce. About half of shoppers purchase value-added produce with some regularity, but 38 percent remain on the sidelines for cost reasons or preferring to cut/wash/prepare produce themselves.
- Megatrends affect the produce purchase—In a direct comparison, local wins out in a fruit-purchasing scenario where conventional, local and organic are all equally priced. Six-in-10 shoppers encourage their stores to add more organic and local items.
- Produce snacking and juicing growing meal occasions—Dinner remains the biggest opportunity for vegetables. Snacks and breakfast are the biggest occasions for fruit. The study suggests growth potential in juicing and snacking for both segments. Thirty-eight percent of households say they are eating more produce for snacking while 27 percent say they are eating more produce for juicing/smoothies
- The Millennial opportunity—Millennials are driving new growth, with greater interest in organic and value-added produce, as well as juicing and snacking. Many look to their stores to be a helping hand with product information, recipes, staff assistance, sampling and cooking demonstrations as they seek both convenience and fun, new items.
- The new parent opportunity—Children are an important point of entry to increased produce consumption and organic produce purchasing. Parents often see produce as the shortcut to a nutritious diet for their children, as at least one-third consider healthy eating in general and intake of sufficient fruit and vegetables a big challenge when it comes to their kids. This underscores the importance of new mom/kid outreach programs at the store level.
- Winning with produce—The produce department’s most valued features are quality, freshness, cleanliness and value for money. While these tend to be highly rated items as well, the ratings do show small importance-performance gaps, signaling room for improvement
Produce is big business
Produce has a very high household penetration, at 98 percent for fresh fruit and 99 percent for fresh vegetables, according to Nielsen. Individual produce items with some of the highest household penetration are potatoes, bananas, onions, tomatoes, carrots and apples, at eight in 10 households or more. In a typical year, American households buy fresh produce more than 45 times or just under once a week, and they spend an average of $327 per household annually.
Secondly, according to IRI, vegetable sales ring up $28.6 billion and fruit another $29.4 billion every year. Add to that sales from freshly-squeezed juice ($15 million), salad bars ($446.5 million) and peripherals ($1.5 billion) and total produce adds more than $60 billion to the food retailing industry’s bottom line, as measured over 2014 across multi-outlet channels including grocery, mass, club, etc.
Importantly, where many categories struggle to grow in today’s market, produce is showing growth in both dollars and volume, at 4.2 percent and 0.6 percent, respectively.
Nearly all produce segments show solid dollar growth, from conventional produce holding its own at 3 percent or more, to double-digit increases for organic produce. Total vegetables increased sales 4.2 percent over 2014, slightly ahead of fruit, which increased dollars by 4.1 percent. In 2014, fruit and vegetables added $2.4 billion in new dollars for the retailing industry. Representing 92 percent of total produce dollars, conventional fruit and vegetables accounted for 72 percent of the total new dollars, underscoring the powerful growth of the organic produce segment.
In terms of volume, growth has been flat for much of the store in the past three years. In 2014, total store units were off 0.1 percent. In comparison, total produce increased pound sales by 0.6 percent. Vegetables fared slightly better and increased pound sales by 0.8 percent compared with 0.3 percent for fruit. Consumers purchased a total of 40.4 billion pounds of produce in 2014. The majority share goes to conventional produce, at 92.2 percent. This was 225 million more pounds of fruits and vegetables sold than in 2013, with most of the growth coming from organic.
Fruit shows definite signs of seasonality with higher-than-average sales for the second and third quarters, representing 26.7 percent and 25.9 percent of the total annual sales when looking over the past four years. This may make the summer season the best opportunity to encourage new buyers to enter the category and prompt increased and impulse purchases among current buyers through cross-merchandising, secondary displays, promotions of popular summer fruits, etc. Staying connected with these shoppers in the fall and winter months through introductions to other fruits may be a good way to elevate sales in the lower-than-average months.
Growth is looking strong in year-to-date 2015 as well, with 3.3 percent first quarter growth in dollars and 0.8 percent growth in pounds compared with the first quarter in 2014.