Ongoing inflation continued to impact organic fresh produce sales in the first quarter of 2023 as overall dollar sales grew by slightly less than 1%, and volume declined by 3.4% from the same per year-over-year period, according to the Q1 2023 Organic Produce Performance Report released by Organic Produce Network (OPN) and Category Partners.
Overall, the total produce department gained 2.6% in dollars for Q1 2023 compared to the same period in 2022 and declined by 1.3% in volume. Sales of organic fresh produce totaled nearly $2.4 billion for the first quarter of 2023, while overall volume topped 703 million pounds. Conventional produce dollars rose higher than organic dollars by about 2% and declined in volume by a smaller degree than organic. The average price gap between conventional and organic is now the largest it has been in the last four years.
“In an inflationary period, we see this standard of growth for dollars and decline for volume repeated for most organic and conventional items. When we look at pricing, conventional produce average price per pound grew by 4.3% compared to the first quarter of 2022, while organic produce average price per pound rose by 4%,” said Tom Barnes, CEO of Category Partners. “With rising prices, we may be seeing more selective organic shopping from consumers as they substitute conventional items for higher-priced organic items.”
Organic tomatoes were the most noticeable example of substitution as their price per pound increased by almost three times the amount of conventional, resulting in a volume decline of 8%. Organic grapes had an incredible quarter with a 37.3% increase in volume and a 40.2% increase in dollars. The first quarter is deep into the import season for grapes. Imported organic grapes are closing in on entering the top 20 organic categories in Q1 with $22 million in sales for the quarter this year, which places them in the 22nd spot by dollars.
Prepackaged salads and the berry category (strawberries, raspberries, blueberries, and blackberries) led the quarter as the top organic produce categories in dollars, accounting for nearly 40% of all sales.
Organic onions generated the largest percent increase in dollars at 10%, followed by bell peppers, lettuce, and herbs. Inversely, avocados posted the largest decline in dollars, while apples also posted noticeable declines.
In the first quarter of this year, 15 of the leading 20 categories posted declines in volume, with only seven of those 15 categories displaying positive year-over-year dollar growth. Organic apples posted the largest year-over-year decline in volume (by total pounds) of the leading categories, followed by bananas and carrots.
Despite the flat dollar growth and minor decline in volume across the country, OPN Co-founder and CEO Matt Seeley is bullish on the long-term prospects for growth of organic fresh produce. “Inflation and supply chain challenges have impacted pricing in the short term; however, organic fresh produce will remain an important component of weekly food shopping as consumers look for healthy, safe, and nutritious products for their families,” he said.
Source: Organic Produce Network