Walking through the grocery store, consumers have more choices than ever to meet their needs. These choices go beyond product type, package size and flavor. As consumer interest in fresh food heightens, so does the focus on product offerings. While not historically prominent in the produce department, brands now play an increasingly important role in the department’s success.
In the past, retailers stocked produce items with a farmers market look and feel; however, as consistent quality and trust has grown in importance among consumers, so has the opportunity to offer branded produce products. And as a result, brands have predominantly increased their presence within the produce department over the last five years.
Between 2012 and 2016, the total produce department grew $13.2 billion. And within that period, branded produce dollar share increased 7.7 percentage points, now representing 38.5% of total produce dollars.
In the 52 weeks ended Sept. 30, 2017, branded produce dollar sales grew by 8% from the previous year. Private-label, also referred to as store-branded, allows retailers to offer consistent quality at less-expensive price points. In the case of private-label produce, it has shown growth, compared to unbranded produce, which has seen declines across the total department.
Branded produce has also found growth in the produce snacking category. Representing a $1.1 billion market, branded produce snacks represent 72% dollar share of the total produce snack category, amounting to $44 million in growth from the previous year.
Despite the success of branded produce in recent years, the 2017 Nielsen Category Shopping Fundamentals report indicates that 55% of consumers don’t have a specific brand in mind before they purchase fresh produce. So how are brands dominating so much in this space?
The answer is by adopting to meet consumers’ evolving needs, particularly in the areas of health and wellness, convenience and innovation. Thirty-two percent of consumers want produce that is organic and doesn’t contain artificial ingredients. Thanks to their ability to communicate label claims on packaging and through larger marketing efforts, brands can clearly communicate exactly how products meet shoppers’ changing needs.
Consumers are more connected than ever, giving produce brands an opportunity to engage directly with shoppers. Despite the significant dollar share of branded produce across the total fresh department, media spend on fresh produce is highly disproportionate. In fact, two brands account for 77% of produce media spend, and less than 10% of produce brands (with at least $1 million in sales) spent any budget on advertising in the last year.
Brands have the power to influence consumer decisions across the store. For produce growers and retailers alike, there are several opportunities to capitalize on the growth of brands. First, produce brands can leverage the reach and loyalty of consumers who are in stores shopping for fast-moving consumer goods (FMCG) brands, while FMCG brands can take advantage of the growth and frequency of produce shoppers. Developing branded produce products can help expand consumer education around label claims, which would lead to a more comprehensive marketing strategy to engage directly with shoppers about what qualities matter most to them that influence purchase decisions. Lastly, the role of branding will continue to elevate the value of fresh foods sold across the retail space.
Insights for this article were derived from: