Sales of organic fruits and vegetables are outpacing conventional produce, thanks to creative in-store promotions, merchandising and education.
By Charlotte Barnard
If there are signs of a recovery in the economy, they can be glimpsed in the organic produce category. A significant profit center for the organic industry, the $9.5 billion organic fruits and vegetables category commands 38% of the total organic food market.
According to the Organic Trade Association’s (OTA) 2010 Organic Industry Survey, “The category experienced the highest growth for any organic food category in 2009 with 11% growth.”
While many individual growers and shippers experienced flat or slightly lower sales in 2009, they say sales have rebounded nicely in 2010. They attribute this to a growing number of consumers who view organic produce as a lifestyle choice, bolstered by in-store promotions, value-oriented merchandising, education and community outreach. The rules for good business hold particularly true in challenging times: offer value, provide a great product and be a good partner.
“Economic factors can quickly change anyone’s life,” says Simcha Weinstein, director of marketing for Bridgeport, N.J.-based Albert’s Organics. “We’ve seen a shift in product selection. Shoppers are tending toward staple items [such as bananas, broccoli and lettuce] and giving up more luxury options, such as exotic fruit or asparagus.”
Other suppliers also report that staples such as apples and bananas are thriving. “We are up about 25% from 2009,” says Addie Pobst, import coordinator for CF Fresh, based in Sedro-Woolley, Wash. “We’re not where we want to be but things are looking much brighter.”
Mayra Velazquez de Leon, president of San Diego-based Organics Unlimited, a distributor of organic tropical, says, “Ninety percent of customers buy bananas. It’s one of those fruits people buy weekly.” “For 2010, we see a little increase—1% to 2%.”
Packaged salads is another category segment that is gaining momentum, according to industry officials. Watsonville, Calif.-based Classic Salads reports 25% growth per year leading up to the recession, dropping to 5% last year. Even with this dramatic reduction, organic packaged salads are outperforming conventional packaged salads, according to industry observers.
The difference, says John C. Burge, vice president of sales and marketing, is that the organic segment is still gaining distribution. “Organic packaged salads are 10 years old,” says Burge, “while regular packaged salads are 20 years old. [Organic packaged salads] are probably in the top 20 food categories and didn’t exist 20 years ago, and they have gone from zero to a $3 billion category.”
Partnering with growers and shippers helps retailers maximize selling strategies and move produce at key times.
Collaborating several weeks in advance assures ad placement to guarantee a particular price-point in a particular size, variety, and package. “If we can’t get a variety they want by a particular date, we provide them with an alternative,” says Pobst. “Our production team’s expertise comes into play and we can say with reasonable certainty what will work for their program.”
Strategic partnering translates into other forms of sales support, such as downloadable signage. “Most consumers see ‘fair trade’ or ‘organic’ and it’s too many terms to understand unless they’re really into it,” says Velazquez. “We have point-of-purchase materials on our website that retailers can download to their specs.”
Albert’s Organics has developed its Retail Marketing Program that emphasizes value on key organic seasonal produce items. “We support it with professional signage and a weekly newsletter filled with marketing and merchandising tips and strategies,” says Weinstein.
But what to do when consumers expect deals wherever they shop? Weinstein says recognize that the consumer isn’t soon returning to former shopping patterns, and accept these times as the new framework for business.
“The biggest battle that retailers fight in carrying organic foods is the higher pricing,” he says. “It’s important for the overall image of a store, and for the price image, that organic items be on special at all times—typically changing them every two weeks. The items should either be popular year round items, or seasonal items that are peaking.” Weinstein also recommends promoting organic as the less expensive alternative. “For so long we have heard how much more organic foods cost. This only refers to the initial cost at the register. Those who sell organic foods should actively promote the costs to our environment as well as to health and the health care system.”
Sales and value bags are an increasingly effective way to get consumers to buy, according to industry executives. “What’s true in a good economy is even more true in a bad economy,” says Burge. “People are shopping with that ad in their hand more than ever.” He adds, “Do what you’ve been doing, but ramp it up with promotions like ‘buy one get one free.’”
The three-pound bag is particularly effective for staples such as apples and bananas. “These are really motivating for the shopper who wants organic but is cost conscious,” says Pobst. Organics Unlimited offers banana bags for ripe bananas with recipes on the back. Officials say consumers enjoy a value purchase and stores don’t have to throw out ripe bananas. It’s important to have a personal presence in the store, according to observers. Jan Berk, vice president, sales and marketing, for Oxnard, Calif.-based San Miguel Produce, says, “We often provide food demos in store to help consumers learn how easy it is to prepare our Cut ‘n Clean
Experts say organic consumers tend to crave a wide variety of flavors and types, which also grab the food enthusiast. With regard to apples, new can be old— specifically, heirloom. “Cover your bases with mainstays, the Granny Smiths and other basics,” says Pobst. “Then bring in heirloom varieties because they are new, exciting and pique the interest of consumers who might walk by otherwise.” He says names such as Pink Lady, Winesap and Honeycrisp grab consumers’ attention.
Experts say the same strategy applies to tropical fruits, including the dependable banana and its cousin the plantain, which is enjoying an upsurge in popularity. Some more unusual types of produce, such as donut peaches, may not sell in great volume, but they go a long way in creating visual interest and establishing a store as a destination.
While they might not be top sellers, Pobst says unusual produce can help create fun and excitement. Since many stores already offer a wide selection of organic packaged sales, the next wave would be the kit segment, says Burge. “In the conventional salad world those kit items have exploded; eventually it will go into organic packaged salads, albeit at a higher price since everything has to be organic, including the condiments and organic chicken or cheese.”
Heightened nutritional awareness among shoppers helps to drive food trends, such as the current one for kale, chard and other greens. Health and convenience packs a one-two punch: “Perhaps the most important aspect of these leafy specialty greens is their powerful health benefits,” says Berk. “With these concerns, consumers are looking at simple and convenient ways to get dark leafy greens into their diets more often.”