Ongoing inflation continued to impact organic fresh produce sales in the first quarter of 2023 as overall dollar sales grew by slightly less than 1 percent, and volume declined by 3.4 percent from the same per year-over-year period, according to the Q1 2023 Organic Produce Performance Report released by Organic Produce Network (OPN) and Category Partners.
According to the report, the entire produce department gained 2.6 percent in dollars for Q1 2023 compared to the same period in 2022 and declined by 1.3 percent in volume.
Organic fresh produce sales totaled nearly $2.4 billion for the first quarter of 2023, while overall volume topped 703 million pounds.
Conventional produce dollars rose higher than organic dollars by about 2 percent, declining in volume by a smaller degree than organic. The average price gap between conventional and organic is now the largest in the last four years.
Results of The Q1 2023 Organic Produce Performance Report
The Q1 2023 Organic Produce Performance Report uses Nielsen IQ syndicated data to track and report organic fresh produce’s performance— specifically the 20 leading organic categories. The report suggests that rising prices may cause consumers to be more selective in their organic shopping.
“In an inflationary period, we see this growth standard for dollars and decline for volume repeated for most organic and conventional items. When we look at pricing, conventional produce average price per pound grew by 4.3 percent compared to the first quarter of 2022, while organic produce average price per pound rose by 4 percent,” said Tom Barnes, CEO of Category Partners. “With rising prices, consumers may be seeing more selective organic shopping as they substitute conventional items for higher-priced organic items.”
Organic tomatoes were the most prominent example of substitution as their price per pound increased by almost three times the amount of conventional, resulting in a volume decline of 8 percent. Most other categories with large differentials in price increase (compared to conventional) did not see significant drops in organic volume.
Organic grapes had an incredible quarter, with a 37.3 percent increase in volume and a 40.2 percent increase in dollars. The first quarter is deep into the import season for grapes.
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Imported organic grapes are closing in on entering the top 20 organic categories in Q1 with $22 million in sales for the quarter this year, which places them in the 22nd spot by dollars. A 40 percent increase in dollars and a 37 percent increase in volume means that imported grapes are a category to keep an eye on.
Prepackaged salads and the berry category (strawberries, raspberries, blueberries, and blackberries) led the quarter as the top organic produce category in dollars, accounting for nearly 40 percent of all sales.
Growth Prospects for Organic Fresh Produce
Current trends show both conventional and organic produce volumes shrinking year over year. At the same time, while volume for conventional produce is below 2020 and organics are on par with 2020, both are consistently gaining in dollars.
For the first quarter of 2023, half of the top 20 organic categories posted increases in dollars. Organic onions generated the most significant percentage increase in dollars at 10 percent, followed by bell peppers, lettuce, and herbs. Inversely, avocados posted the largest decline in dollars, while apples also posted noticeable decreases.
In the first quarter of this year, 15 of the top 20 categories posted declines in volume, with only seven of those 15 categories displaying positive year-over-year dollar growth. Organic apples posted the largest year-over-year decline in volume (by total pounds) of the top categories, followed by bananas and carrots.
Despite the flat dollar growth and a minor decline in volume across the country, OPN Co-founder and CEO Matt Seeley are bullish on the long-term prospects for the growth of organic fresh produce.
“Inflation and supply chain challenges have impacted pricing in the short term; however, organic fresh produce will remain an important component of weekly food shopping as consumers look for healthy, safe, and nutritious products for their families,” Seeley said.
The Q1 2023 Organic Produce Performance Report covers total food sales in the US, including all outlets (i.e., supermarkets, mass merchandisers, club stores, dollar stores, convenience stores, and military commissaries) over January, February, and March of this year.