Groceries Finding Profitability Rising in Produce, Especially Organics

Submitted by mpbolda on
Mark P Bolda

An article from the Wall Street Journal this past week underlines how much fresh produce sales are rising in the US and what value these present to the nation's groceries.  Up 2 billion dollars from last year, produce sales for 2019 are looking to be a total of $62 billion. This is a bright spot for grocers who have been hit with the costs of the build out for e-commerce and the trend away from packaged products, formerly pretty profitable, by consumers.  In turn groceries are expanding produce sections, offering specialities like Cosmic Crisp apples (had a friend over for Christmas who was absolutely wild about these) and Cotton Candy table grapes (love them), and growing herbs directly at the store to keep them fresher longer.

What's more, the popularity of organic food is really surging, just recently crossing the 1 billion dollar mark in annual sales at the nation's largest grocery chain Kroger.  The table from the Organic Trade Association included below, provided to me by our Organic Farming Systems Specialist Joji Muramoto, only underlines how this category is growing in popularity with consumers - just last year up 6 % in sales over 2017, and that's after several years of even higher gains. 

That this major food sector is experiencing such popularity is good to know, and is in line with my thesis that grocers are certainly not sitting still and eventually will kick the shit out of recent entrant Amazon, which just doesn't have the deep experience necessary for success here (not to mention growing scrutiny by the US government for quasi-monopolistic behavior and a CEO increasingly distracted by Hollywood, rocketry, space travel and the ins and outs of running a nationally distributed newspaper).  Shipping fresh produce, unlike shipping cans, boxes or bags of processed food, is a complicated business that takes more than just a technological fix to master, involving refrigeration in storage and in transit, never mind the value of relationships with your vendors (i.e. the farmers) and keeping up with the zigs and zags of the ever fluid fresh produce industry.

 


Source URL: https://class.ucanr.edu/blog/strawberries-and-caneberries/article/groceries-finding-profitability-rising-produce-especially