Branded produce is ripe for more sales
- Between 2012 and 2016, the branded produce dollar share increased 7.7% to represent 38.5% of total produce sales, according to a new Nielsen report. During those four years, the overall produce department grew $13.2 billion.
- In the last year, branded produce sales grew 8%, while unbranded produce sales fell 8.6%. Private label fruits and vegetables increased 0.9%.
- In the $1.1 billion produce snacks market, branded options represent a 72% dollar share of the category, growing $44 million from the previous year.
Many consumers probably couldn’t name their favorite brand of carrot or apple, but they’re choosing them over non-branded equivalents.
The usual strengths of brands, like trust and familiarity, are not applicable in the produce department. Nielsen’s new report finds that 55% of consumers don’t have a specific brand in mind before they purchase fresh produce. Instead, they rely on the information that brands share on their labeling — like if an item is organic, and what vitamins and nutrients it contains.
Meanwhile, big brands are losing ground to increasing popular store brands. Shoppers who tried out private label products during the recession stuck with them when the economy rebounded. Kantar Retail's grocery analysts have predicted private label growth between now and 2022 will outpace the previous five years. And considering that much of the branding on produce is not prominent, consumers likely don't know which bag of carrots they are putting in their carts. Instead, they decide based on the price and condition of the vegetables.
Branded produce has become a winner thanks to giving consumers information they want about their product, and innovating new ways to enjoy it. In the $1.1 billion produce snacks market, branded options represent 72% dollar share of the category. The reason behind this is two-fold. Most companies that prepare snack-ready produce package it differently and don't leave their products loose. A bag of precut celery sticks is more likely to feature a brand or logo. They also offer shoppers value-adds and tend to pair them with an interesting side, like a dip or cheese.
Some produce brands, like Dole, have taken advantage of branding to try to target kids. Last year, the produce company inked a contract with Disney, allowing popular characters to appear on product packaging and displays. As part of the deal, some of the mega-studio's characters are part of store displays. More recently, cross-promotions offer recipes to make healthy produce-based treats with a "Star Wars" theme.
Looking ahead, branded produce has room to grow. Despite representing 38.5% of total produce sales, most brands don't advertise. A large traditional media spending spree is not necessarily in order, but fruit and vegetable brands could invest in targeting consumers through social media, which would especially resonate with younger millennial shoppers.
Center-store brands that trying to fight back against private labels may want to look to the produce department for inspiration. Focus less on the actual brand name and more on what the product offers, and shoppers may respond with similar favor.