Dive Brief:

• Retail produce departments generated $60.8 billion in sales in 2018, up 1.7% over 2017, according to the latest edition of Fresh Facts on Retail, a report from the United Fresh Produce Association and Nielsen. That was the lowest growth rate among all perishable categories, including meat, seafood, deli and bakery. In the fourth quarter 2018, produce brought in more than $14 billion in sales — up .9% over the year-ago period — and accounted for 32% of all fresh sales in Q4 of 2018, 

• Value-added, organic produce and staples like blueberries, avocados and packaged salads led growth for 2018. In Q4, avocados, berries and broccoli were key drivers of produce sales as consumers kept health benefits top of mind. Organic produce sales neared $1.5 billion in Q4, growing 11% year over year.

• The report found that shoppers spend around $60 per trip when fresh produce is in their basket and $47 without produce. About 50% of grocery trips do not include produce, according to the report.

Dive Insight:

Fresh produce sales are still growing at a healthy pace, though retailers and suppliers may wonder why the growth rate for 2018 lags other perishable departments. In 2017, according to United Fresh, produce led the pack in sales growth.

As the organization notes, volume sales declined among commodities like apples, bananas, potatoes and tomatoes, indicating that "merely offering healthy products may no longer be enough to drive consumer purchases." The strongest performers were premium options like packaged salad along with value-added and organic varieties.

This slowdown is a reminder that produce is subject to the same quick-shifting consumer preferences that have troubled other categories — and that items need their store positioning, marketing and promotions tended to regularly. IRI officials recently noted that sales growth in the fresh perimeter last year dipped below that of center store for the first time this decade, reflecting a lack of innovation as categories like frozen meals make bold moves.

Fresh produce continues to be a priority among shoppers, and grocers have an opportunity to boost their offerings and capture bigger spends from consumers who seek fresh fruits and veggies at the store. As the competition intensifies with nontraditional grocers like Aldi and Alltown Fresh expanding into fresh produce, strong produce departments are becoming a requirement.

The latest Fresh Facts report also evaluated sales of “value-added” fruits and vegetables, which includes pre-cut or pre-seasoned fruits and vegetables and packaged salads. While value-added fruits and packaged salad sales declined in Q4, value-added vegetables saw increased growth, reflecting the growing popularity of meal prep and convenience.

Many grocery stores are currently working to enhance their produce departments and attract shoppers who want high-quality, fresh produce. Newly converted Martin’s Food Markets, which will open in April, will feature farm fresh produce departments with more than 300 items. Aldi’s much-buzzed about expanded fresh assortment has upped the competition, and grocers like Sprouts Farmers Market and Whole Foods that built their business on fresh produce have not slowed down.

Retailers will want to pay particular attention to their organic produce offerings, as sales of organic produce grew more than 8% to reach $5.6 billion in 2018. While organic seems to be widely available in many stores today, there is still room for improvement.      

To win the produce purchase and see bigger baskets from customers, grocery companies will need to continue refining and improving their produce offerings. Fresh food has to be a priority, and with so many groceries offering well-rounded produce departments, no one can afford to ignore the category.