Oct 13, 2021Produce sales shift with inflation
September continued where August left off. The stellar 2020 performance for fresh produce was secured by better trip conversion and an increase in spend per trip.
In 2021, engagement remained high with only small decreases that could be attributable to farmers’ markets, road side stands and other alternative formats opening back up.
“The multi-month normalization of consumption and grocery shopping patterns came to a halt in August hand-in-hand with an uptick in COVID-19 case counts,” said Jonna Parker, Team Lead Fresh with IRI.
“In September, the IRI survey of primary grocery shoppers once more found an elevated share for at-home meal preparation, at 79%, compared to the July low of 76.6%.”
At the same time, the survey found that more people returned to buying groceries online. During the height of the pandemic, as many as 20% of trips were online. This dropped to a low of 11% in July. In August, the online share of trips increased to 13% and in September the share reached 14%. “Generally speaking, an opportunity gap remains for fresh produce when comparing how often center-store items land in online baskets versus perishables,” said Parker. “However, produce is leading the way for fresh items, representing 12 out of the top 15 fresh items in household penetration when regarding online baskets among our panelists. While there is room to improve, consumers are starting to rely on their local grocer to pick the fresh produce for them, which is an important area of growth in coming weeks, months and years,” she added.
Between the changes in consumer consumption and buying patterns, high inflation and severe supply chain disruption and constraints, fresh produce retailing remains in flux. IRI, 210 Analytics and the Produce Marketing Association (PMA) have teamed up since March 2020 to document the ever-changing marketplace and its impact on fresh produce sales.
The first nine months of the year brought $504 billion in food and beverage sales. September marks the return to year-over-year sales growth in dollars, up 0.1%. Dollar gains in most categories were boosted by robust inflation, but unit and pounds did start to trend close to 2020 levels also. Perishables, including produce, seafood, meat, bakery and deli, had the highest year-over-year gain during the first nine months of 2021, at +0.9%. Frozen foods had the highest increase versus the pre-pandemic normal of 2019, at +22.6%.
Fresh produce engagement remains high
The stellar 2020 performance for fresh produce was secured by better trip conversion and an increase in spend per trip. In 2021, engagement remained high with only small decreases that could be attributable to farmers’ markets, road side stands and other alternative formats opening back up.
- 8% of American households purchased fresh produce at least once in the first three quarters of 2021. That is virtually unchanged, down a mere 0.3% from the same period in 2020.
- Fresh potato sales were down 4.8% during Q3 2021 from the previous year, but were still up 15.2% from Q3 2019.
- During January through September, fresh produce buyers averaged 56.4 product trips, which was down 0.6% but still highly elevated versus 2019.
- Shoppers spent an average of $8.55 per trip, that was up 1.4% over the same period in 2020.
- For the first nine months, shoppers spent a total of $482.34 per buyer, which was up 1.6% over 2020.
Food prices in both the retail and restaurant settings are seeing significant inflation. IRI-measured price inflation shows that prices continued to rise over and above their elevated 2020 levels for total food and beverages. In September, both total food and beverages and fresh produce had inflation averaging 5%-6% over the same weeks in 2020.
“Consumers are noticing that their weekly groceries are more expensive, as is gasoline and virtually everything else,” said Joe Watson, VP of Membership and Engagement for PMA. “But one statistic from the USDA Economic Research Service (ERS) caught my eye last week. And that was that Americans spent 7.8% less on food in 2020 than the year before as a result of eating more meals at home versus eating out. With food-away-from-home inflation growing even faster than retail inflation, shoppers are continually reminded that home-cooked meals are both less expensive and often healthier. These are important messages for retailers to underscore amid inflation along with subdued promotional activity.”