Terms like “local” and “organic” remain powerful selling points that drive double-digit sales in the produce department. In the past five years, dollar sales of organic fruit have increased by 123 percent, while organic vegetables have grown by 92 percent, according to the Organic Trade Association (OTA).
“Organic fruits and vegetables remain the biggest of all organic categories, with sales of $14.4 billion in 2015 [including frozen and canned], up almost 11 percent,” says Maggie McNeil, director of media relations for Washington, D.C.-based OTA, with fresh produce alone accounting for $13 billion. “Almost 13 percent of the produce sold in this country is now organic. We don’t see this trend slowing down.”
While opportunities for continued growth abound, at the same time consumer research shows that some shoppers are confused about the benefits of natural and organic products. What’s more, they’re hungry for knowledge about how and where their food is grown.
“Consumers are looking to farmers’ markets and local, specialized retailers as destinations for learning about natural and organic products, and as a way to connect with local producers,” notes Bellevue, Wash.-based The Hartman Group in its “Organic & Natural” 2016 report. “Those are two areas that food retailers might consider focusing on as a way to make themselves more unique when it comes to organic and natural products.”
Two rapidly expanding grocery chains in the United States are doing just that — delivering as destinations for organic and local produce while at the same time offering in-store and online nutrition education that helps shoppers eat and live more healthfully.
Educating and Coaching Consumers
The fast-growing Lakewood, Colo.-based Natural Grocers by Vitamin Cottage, which operates more than 135 stores in 19 states, employs a health coach at every store. In addition to providing ongoing nutrition classes on topics ranging from eating more organic fruits and vegetables to healthy proteins to alternatives to sugary beverages, the coaches lead a variety of classes at local schools and businesses in their communities.
On a mission to establish itself as “America’s Health Education Expert,” Natural Grocers recently redesigned its Good4u Health Hotline monthly circular. Available in print and online versions, the magazine is distributed to consumers via direct mail and in-store. Circulation is expected to exceed 750,000 by year’s end.
This health-expert-meets-retailer model is resonating with consumers. According to Natural Grocers, its net sales increased 12.9 percent to $705.5 million in fiscal 2016, and sales were up again, by 9.4 percent, for the first quarter of fiscal 2017, compared with the same period in 2016. Anticipating continued growth, Natural Grocers has signed an additional 16 leases on stores set to open in 2017 and beyond.
With more than 1,600 stores in 35 American states, German hard-discount grocer Aldi, with U.S. headquarters in suburban Chicago, is also thinking organic and fresh as it expands its reach.
“We have increased our fresh produce offerings across all of our stores over the years, and currently carry a wide variety of fresh fruits and vegetables, including organic bananas, tomatoes, avocados, apples and salad mixes,” notes Aldi spokeswoman Liz Ruggles. All of Aldi’s organic products are clearly labeled with easy-to-spot organic seals.
“Due to our great-quality groceries and everyday low prices, we’re one of the fastest-growing retailers in the U.S.,” continues Ruggles. “By the end of 2018, we will have nearly 2,000 stores from coast to coast, bringing the Aldi experience — and our fresh and organic produce — to 45 million customers.”
To educate and encourage customers to get off to a healthy start in 2017, Aldi launched Hello, Healthy, an online resource available through this month, to introduce customers to the many better-for-you foods found at its stores. Shoppers can access meal plans, recipes, tips and inspiring videos at www.aldi.us.
The grocer also works with a team of dietitians, known as the Aldi Advisory Council of Registered Dietitians, who share their Dietitian’s Picks, including organic produce, gluten-free options and kid-friendly choices that are handpicked for their nutritional value. These products feature the Dietitian’s Picks emblem on the supermarket’s website.
Banana Boom
You could say that produce is “going bananas”. In fact, there’s a double-digit growth pattern in organic produce and other fruits. “Bananas, berries and salads drive organic velocity,” OTA observes, finding that the organic banana market has reached $165 million, soaring by more than 30 percent in 2015 alone.
With organic shoppers increasingly demanding healthy organic snacking options, OTA reports that sales of organic dried figs, dates, baby carrots, Pink Lady apples, blackberries and bananas are all posting double-digit sales increases.
“As consumers become more aware of their health and the changing environment, we envision the demand for organic products grown in a sustainable manner will continue to rise,” notes Mayra Velazquez de León, president and CEO of Organics Unlimited, in San Diego.
Since its inception in 2005, the GROW Fund, a nonprofit program developed by Organics Unlimited, has raised more than $2 million in aid for communities in Mexico and Ecuador through retailer and distributor support. A percentage derived from the purchase of each box of GROW organic bananas is earmarked for the GROW Fund. Organics Unlimited believes that success depends on education and effective messaging.
“Because it’s such an important part of our mission and vision, we integrate our social-responsibility messages into all aspects of our marketing and branding, including banana stickers, POP, trade advertising, social media and more,” explains Velazquez de León.
Last year, the company revised its messaging so that banana stickers for both Organics Unlimited and GROW communicate the core values of cultivating communities and farming in a responsible, sustainable and eco-friendly way.
“One of the most important things that retailers can do is educate their employees on the benefits of organic produce so they can communicate that to customers in stores,” affirms Velazquez de León. The company offers POP materials to help retailers and buyers educate sales teams and customers about the benefits of GROW organic bananas.
Organic Salad Tradition
When Fresh Express Inc., in Salinas, Calif., decided to expand its salad line to include organic salad kits, tradition was top of mind.
“Consumers are demanding products in the organic segment that have been available in the conventional segment for years,” asserts Michael Golderman, Fresh Express marketing brand leader. Specifically, this means products like organic chopped kits and complete bowls.
Knowing that Caesar is the top-selling kit in the value-added salad category, ranch is the overall best-selling salad dressing, and balsamic vinaigrette is the No. 1 organic salad dressing, Fresh Express took an educated guess that its recently introduced organic kits and chopped salads would be a hit.
The line of Organic and Chopped Kits consists of Classic Caesar, Pomegranate Cranberry, Sweet Dijon Onion, Sunflower Ranch, Balsamic Vinaigrette and Asian Sesame Ginger.
“Organic has gained four share points since 2012 — going from 20 percent of value-added salads to 24 percent,” notes Golderman. “Organic value-added salad blends has been a $1 billion-plus business for three years in a row.”
Source: ProgressiveGrocer