ORLANDO — In an Oct. 27 session of the International Fresh Produce Association’s inaugural convention, Anne-Marie Roerink, principal of San Antonio-based 210 Analytics, told attendees that the “rollercoaster ride” the produce industry has been on in recent years shows no signs of slowing.
The ups and downs on that ride include:
- Inflation (food inflation now stands at 14%)
- Supply chain issues
- Russian sanctions affecting supplies
- Extreme pressure on income (record debt, lowest savings rate)
- A more home (and thus retail) centered world
One result of these and other factors converging is that category growth has flattened out to 4-5% in recent months over last year, down from 11.5% when similar periods from 2020 and 2021 are considered, according to IRI data.
But the future of fresh produce is far from bleak, Roerink said.
“Retail profit leaders bet on fresh, and produce plays a very prominent role.”
A focus on fresh — particular in produce and meat and poultry — drives more transactions and bigger transaction size; commands higher margins; is accompanied by higher sales/labor hour and lower staff turnover.
Industry profit leaders who emphasize fresh make 3 to 5 times the average net profit before taxes.
Produce is among the top trip drivers for brick-and-mortar shoppers, Roerink said. Fifty-five percent of trips to the store, she said, include produce purchases.
Inflation is of course never far from consumers’ minds these days, including when they buy fresh fruits and vegetables.
Ninety-five percent of consumers are concerned about higher prices. In fresh produce, look for smaller pack sizes as a way to keep price points down.
“Creating value perception will be crucial in ’23,” Roerink said.
Getting creative with promotions — and doing more promotions — is a perfect way for retailers to do just that, she added.
Think of having a “happy hour” sale, for instance. Or follow the lead of industry standard-setter Wegmans, which runs promotions bundling fresh produce with other fresh department items and letting customers know exactly how much they’ll be saving over a restaurant meal.
“We’re finally seeing growth in promotions,” Roerink said.
Promotions are especially ticking up for fresh vegetables, Roerink said.
Twenty-two percent of vegetables are now sold on promotion, up 8.4% from the same time last year. About 35% of fruit is sold on promotion, up 1.7%.
Retailers also can add value to their produce departments by upping their online merchandising games, she added.
“Retailers are amazing at merchandising instore, not so amazing at merchandising online. Online, there are no limitations to adding more information, vs. instore, where there’s very limited real estate on-pack and instore.”
By highlighting quality, nutrition and versatility, Roerink said, retailers can help overcome consumers’ price concerns.
Eighty-one percent of shoppers, for instance, like seeing new varieties of produce that introduce new flavors or sizes
Almost six of ten consumers say price matters most when they’re making their fresh produce purchasing decisions, but other reasons also score high, according to new proprietary 210 Analytics research.
Fifty-three percent choose quality, 51% nutrition, 42% versatility and 41% ripeness.
Value-added sales are also hot, Roerink said, generating $10.2 billion in sales, accounting for 14.4% of total produce sales, up from 12.4% the year before.