- As retailers expand their organic produce offerings to satisfy increasing consumer demand, there are concerns it could lead to a constrained supply chain and possible price hikes, according to Supermarket News.
- Organic food, especially produce, is no longer the domain of Whole Foods and other health-oriented grocers. Instead, organic owns a bigger share of shelf space with mainstream retailers, including Walmart and Kroger, and discounters such as Aldi.
- Organic produce now makes up about 15% of all the fruits and vegetables Americans eat. The Organic Trade Association reported organic produce sales grew 8.4% in 2016 to $15.6 billion. Produce represents about 40% of all organic food sales.
“Organic for a long time was considered a niche, with a strong focus on quality,” Jeff Fairchild, produce director at 20-store New Seasons Market in Portland, Oregon, told Supermarket News. “But what’s happening is that the big chains — companies like Walmart and Costco — are pushing on the price side, so it’s definitely changed a lot.”
Retailers across the board are ratcheting up their organic food offers. Next to Whole Foods — whose lackluster performance lately has been widely publicized — Costco is recognized as the nation’s second largest seller of organic food. Costco now sells more organic produce than Whole Foods, while Kroger sells more than $16 billion worth of natural and organic foods.
Midwest-area supercenter operator Meijer owns a stake in a rapidly expanding small-box concept Fresh Thyme. Even discount grocer Aldi has committed to providing a more natural food selection, including an expanded organic produce offer.
This widespread availability of organic fruits and vegetables — and organic foods in general, especially at lower price points than typically found at Whole Foods and other natural food specialists — is great for the industry and a growing base of consumers wanting to eat healthy. There is a concern that the existing organic produce supply will not be able to keep up with increased interest from retailers and consumers. Supply problems and price increases could be inevitable.
More farmers will need to get on board, but transitioning to organic farming is a long and expensive process. To help ease the process, the U.S. Department of Agriculture partnered with the OTA earlier this year on a new transitional certification program that could make it more enticing for farmers to make the switch. It could end up being a good short-term solution, provided consumers will understand what transitional certification means — and if they will be willing to pay higher prices for food bearing that seal.