Australian households are buying healthier packaged grocery products thanks to greater health education and awareness, along with supplier innovation bringing in a range of better-for-you alternatives. However, this growing demand for healthy products is yet to be fully realised when it comes to fresh produce.
Total fruit and vegetable dollar sales were relatively flat versus a year ago (+1.3%) and the amount of kilograms consumed by households remained stable. However, solid dollar and volume growth in categories such as fresh packaged salad, blueberries, mandarins and mangoes highlight that despite flat sales overall, there are strong growth opportunities to be found, and real potential for fruit and vegetables to represent a higher portion of shoppers’ spend.
Nielsen’s analysis of the top 20 fruits and vegetables ranks the fresh produce categories that accounted for the largest dollar share of at-home consumption by Australian households over the past year. The full analysis uncovers which categories were the growth engines for the fresh produce industry and which ones might climb further up the rankings in years to come and was published as a 20 page supplement in association with Produce Plus magazine.
Reflecting on the winners and the challenges ahead, we see four important levers of growth for driving future sales of fresh produce; premiumisation, availability, pricing strategy and communication.
Premiumisation - Sales trends over the past year show that there are premiumisation opportunities to be had in fresh produce. Shoppers are willing to pay more for new varieties; and brands or formats that deliver a better eating experience or cater to households’ increasing need for convenience. Growth in premium priced snacking tomatoes over the past year highlights that at least some consumers are willing to trade up to premium products. And in the fresh salad category, ready-to-eat formats such as salad bowls and salad kits have increased as consumers are willing to pay more for meal options that are both convenient and healthy.
Availability - Blueberries were one of the year’s star performers, with dollar sales up by 19.7%. This was primarily driven by an increase in the number of Australians who purchased blueberries in the past year. While prices were lower, the category gained a higher than expected number of new households. Investments in production, and varietal developments, that keep high quality products on-shelf for longer, will continue to be important drivers of growth for fresh produce sales.
Pricing Strategy - Despite significantly higher prices for bananas, most households continued to purchase Australia’s favourite fruit, driving category sales higher. Models that seek to understand the role of price both within and across categories have the potential to boost industry sales and profits. While price is not the only sales driver, a deep understanding of the prices at which shoppers will and won’t buy, is essential for maximising category potential.
Communication - Australian shoppers are increasingly searching for healthy options. Products that are positioned as being healthy and stay top-of-mind for shoppers, are well placed to capitalise. One of the best examples of this is the transformation of the humble avocado to cult-status and millennial must-have. Marketers of products that face challenges must consider what it takes to remain relevant as competition for the health and wellness shopper heats up.
With more and more consumers focused on improving their health and wellness, the market settings have never been better to grow the sales of fresh fruits and vegetables. Potential strategies to help growers and retailers secure the growth opportunity include developing new, premium products; improving product availability keeping high quality products on-shelf for longer; understanding price and capturing value from pricing strategy; and ensuring that all fruits and vegetables are perceived as being healthy and stay top-of-mind for shoppers.