Q2 Report: Inflation Hits Organic Produce

Higher retail prices for organic produce during Q2 generated an increase in organic dollars and contributed to a decline in volume, according to the Organic Produce Performance Report

Fruits and Vegetables at City Market in Riga

Monterey, CA– Total organic fresh produce sales increased during Q2 2022, according to the Organic Produce Performance Report issued by the Organic Produce Network (OPN) and Category Partners. Sales of organic produce totaled $2.4 billion for the quarter and the retail price increased 3.7%. Organic volume decreased by 2.8%.

organic produce sales 2022Compared to the same period the prior year, total organic fresh produce saw a price increase of 6.7% for Q2. Concurrently, total standard produce’s average price increased by more than 9% and total sales were $18.1 billion.

Four Year Performance Comparison, Dollars - Q2 2022All regions across the U.S. reflected increased sales and decreased volume for the quarter. The Northeast had the weakest organic performance during Q2, at a 0.4 percent increase, and volume dropped by 6.1%. The South continued to show the most improvement, with a fairly low ACV compared to other regions. Regional Performance - Q2 2022

The report suggests consumers are watching grocery spending due to inflation of higher priced items. “Seeing a decline in organic volume for Q2 suggests food budgets are under stress in many US households,” said Tom Barnes, CEO of Category Partners. “It’s common to see budget-centric consumers trade down, substituting for lower-priced conventional items or shifting from a high-priced organic item to a cheaper organic alternative from another category.”

Four Year Performance Comparison, Volume- Q2 2022“Bananas are one of the lowest-priced organic fruits and have the smallest price spread between conventional and organic,” Barnes said. “For the quarter, while nearly every other organic fruit declined in volume, bananas increased in both dollars (+4.3 percent) and volume (+4.0 percent). So for budget-focused consumers still wanting to buy organic, bananas provided a cost-effective option. Suppliers need to be aware of shifting consumer purchase drivers and develop strategies to keep shoppers buying.”

Categories by Volume - Q2 2022Despite the minor decline in volume, OPN Co-founder and CEO Matt Seeley said, “While there are likely some difficult months ahead, the long-term potential for continued organic fresh produce growth remains unchanged. 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.” In addition to bananas, berries (strawberries, blueberries, raspberries, and blackberries) led the way in dollar sales, at $430 million.

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The report is available at OPN’s website, here.