Organic produce sales growth tops 14% in 2020
Source: FOODDIVE / Pic: FOODDIVE / Author: Jessi Devenyns
Brief:
Sales of organic produce rose 14.2% in 2020, representing an increase of $1 billion to $8.5 billion, according to the 2020 Organic Produce Performance Report sent to Food Dive by the Organic Produce Network and Category Partners. By contrast, conventional produce sales rose 10.7%.
The top three categories with the largest sales increases were packaged salads (15.4%), berries (strawberries, blueberries, and raspberries) at 12.2%, and apples (11.1%). However, the largest year-over-year sales increases were in herbs and spices (up 26%) and potatoes (up 21%). Organic grapes were the only produce item out of the top 10 categories where sales declined with a 6% decrease.
The pandemic has pushed organic sales up over the course of the last year, and although the Organic Produce Network expressed its optimism that this growth may continue in 2021, other reports have shown that there will be challenges facing the category that may limit ongoing growth, including threats to consumer income, uncertain supply chains, livestock processing and imports.
Insight:
This burst of interest in organics is a boost to an industry where growth has moderated in recent years as household penetration increases. From 2010 to 2016, the average growth rate of the category was 10%, but increases have settled into mid-single digits since then. Although sales have continued to grow annually, by 2018, organics were struggling to gain market share despite topping $50 billion for the first time.
However, the pandemic helped demand pick up. Organic produce sales rose more than 20% in the spring of 2020, according to June data from the Organic Trade Association.
Despite the pandemic causing economic strife with millions grappling with unemployment, organic food sales have continued on this upward trajectory. Compared to conventional products, organic options are typically more expensive than the conventional choice, but as health is now at a premium for many consumers, foods like organic products that are associated with clean labels and better-for-you ingredients have become increasingly popular.
Going forward, the OTA anticipates that as supply chain turmoil moderates but the desire for healthy alternatives continues, it will lead to further increases in sales.
“There are wide swaths of the U.S. where organic fruits and vegetables have limited distribution and narrow assortment in many conventional supermarkets,” said Steve Lutz, a senior vice president at Category Partners in the release. “There remain significant growth opportunities both by gaining distribution but also in supplying latent consumer demand.”
Still, uncertainty about the longevity of this growth lingers. A report from Mercaris warned of potential shortages of organic products due to port closures and possible global currency fluctuations through 2021. Concerns surrounding the potential for economic constraints to temper consumer enthusiasm for organic produce were countered by the OTA.
In its release, the association noted that the fourth quarter — after months of weathering a pandemic — organic produce sales topped $2 billion, with dollars increasing 15% compared to a gain of only 10% in conventional alternatives. Sales volumes similarly increased 14.4% for organic produce as compared to a 7.9% increase for conventional options.