Organic Berries: Supply and Demand Grow Sales

Health benefits keep consumers coming back for more as the category continues to surge.

There’s been a huge buzz over the health benefits of berries. No wonder these sweet nuggets of nutrients collectively rank as the No. 1 category in produce, contributing a whopping 9.4 percent of department sales for the 52-weeks ending February 21, 2016, according to IRI/FreshLook Marketing data as supplied by the Watsonville, CA-based California Strawberry Commission (CSC). Add to this factor the health halo of organics, and it’s easy to see why this segment of the category itself represents nearly one-tenth (9.9 percent) of sales, based on 52-week data ending February 27, 2016 by the Nielsen Perishables Group.

“Organic berries continue to demonstrate strong demand among U.S. consumers,” says Frances Dillard, director of marketing for Watsonville, CA-headquartered Driscoll’s, which claims to be the category leader for organic berries with more than 50 percent of the market. “Since 2010, household penetration increased by 29 percent (or 4 million) new category buyers. In 2014, more than 14.3 percent of households consumed organic berries of all types. For 2014 sales growth, Nielsen reported a category growth of organics at 14 percent versus 10 percent for conventional.”

“We do not currently carry a full variety of organic berries as we are a limited SKU discount format,” says Scot Olson, director of produce and floral for the southern division of Grocery Outlet, an Emeryville, CA-based discount retailer with 238 independently owned and operated stores in six states. “However, it has become very clear that our customers are interested in having us provide an organic berry option at all times if possible. We carried organic strawberries, blueberries and raspberries and have had good sell-through on these items.”

Production Forecast to Grow

More Millennials coming into the market as household shoppers are driving organic berry growth — generating an upsurge in plantings to keep pace.

“Consumers today expect to be able to get fresh delicious produce anytime, regardless of season, and organic berries are no exception,” says CarrieAnn Arias, senior marketing manager for Dole Fresh Vegetables, headquartered in Monterey, CA. “To meet this demand, there has definitely been an increase in organic berry plantings in most major growing areas during the past few years. We are working on plans to increase production of organic berries throughout the year.” Organic strawberries grow in California year-round, but the heaviest production is from April through September.

“California grows more organic strawberries than anywhere else in the world. Organic acreage is about 10 percent of total strawberry acreage this year. Most of the organic acreage is in Santa Maria and the Watsonville/Salinas districts. Proprietary varieties make up more than 50 percent of the organic acreage, followed by Monterey, a University of California variety, and a number of others. New varieties are in continuous development in the industry as breeders work to improve flavor and quality for consumers, and yield and pest resistance for farmers,” says Chris Christian, senior vice president of the Watsonville, CA-based California Strawberry Commission (CSC).

Driscoll’s announced last summer a broad expansion of organic nursery plant production following seven years of research and a commitment to providing all of its USDA- certified organic growers with organic nursery plants.

“Approximately 10 percent of our organic strawberry production in Watsonville and Salinas today comes from certified organic plants. Driscoll’s is the only brand with an organic strawberry nursery certified by the California Certified Organic Farms (CCOF). The company has an ambitious expansion plan for all of its organic berries,” says Dillard. Florida supplies most of the nation’s organic strawberries from December to March.

“About 10 percent of our overall strawberry crop out of Florida is organic,” says Gary Wishnatzki, president, chief executive and owner of Wish Farms, based in Plant City, FL. “We continually look for varieties that will grow well in organic systems, such as those with resistance to fungus and stronger root systems. Of course, flavor and appearance are No. 1.”

Blueberries, Raspberries & Blackberries

“Acreage for growing organic berries is increasing for blueberries, blackberries and raspberries due to meeting the increase in consumer demand,” says Dole’s Arias.

“We can get organic blueberries, but it seems like never enough to promote,” says Richard Stiles, director of produce and floral at Redner’s Markets, a Reading, PA-based chain with more than 40 Warehouse Markets and 20 Quick Shoppes in Pennsylvania, Maryland and Delaware.

Organic blueberries sold in the U.S. market are grown in Florida, Georgia, North Carolina, New Jersey, Michigan, Oregon, Washington, California and the Canadian province of British Columbia from March through September. Imports arrive in the fall and winter from Peru, Argentina, Chile and Mexico.

Peru grows a lot of conventional blueberries, and we might see an expansion in organic acreage,” says Jim Roberts, vice president of sales for Naturipe Farms, headquartered in Estero, FL. “Peruvian organic blueberries, like those coming out of Argentina, require cold treatment before they can enter the U.S. market.”

Sun Belle, Inc. headquartered in Schiller Park, IL, has a strong organic blueberry program in Chile, says company founder and president, Janice Honigberg. “Almost 10 percent of our blueberries out of Chile and 5 percent of our blueberries overall are biodynamic. This is a holistic farming method that is more stringent than organic. Biodynamic is a new concept in produce. It’s something we’re letting shoppers know via our labels,” says Honigberg.

Photo Courtesy of Naturipe

Mexico is another area growers are looking at to cultivate organic blueberries.

“Expansion in this region adds availability in the winter supplementing the South American market. This new market provides great opportunities to decrease transportation time from growing regions to market. At this time, we are focused on conventional, and once we are stable in this new region we can expand into organics,” says California Giant’s Jewell. Organic raspberries sold in the U.S. are primarily grown in California and Mexico, while blackberries come from California, Georgia, North Carolina and Mexico.

“We are looking at growing organic raspberries and blackberries in Baja California and Central Mexico. The goal is to provide a year-round supply of all organic berries,” says Sun Belle’s Honigberg. Last year, Naturipe harvested its first crop of organic blackberries in Florida and Georgia during a seven-week window that spanned from early May to July. The company plans to do the same in 2016.

Position to Sell

“Retail marketing and merchandising is one of the most effective ways we’ve seen demand driven for organic berries. That is, more retailers are carrying organic berries more often and they are merchandising the organics next to the conventional so consumers know this option is available,” says Wish Farm’s Wishnatzki.

There are two schools of thought as to how organic berries are best displayed at retail.

“Overall sales tend to be higher when organics are integrated in a display next to conventional. This is because there is a large group of consumers (more than 50 percent) that will buy organics based on economy.

When the products are side by side, it’s easier for these customers to compare. Within the set, some retailers like to put all organic berries on one side

Photo Courtesy of Well-Pict

and conventional on the others. Others like to put the organic and conventional strawberries together and similarly with the blueberries and raspberries for an attractive ribboning effect,” says Naturipe’s Roberts. Customers shopping for organic will often specifically look for these items in a dedicated “organic” display within the produce section.

“I personally like organic berries in an organic section,” says Jim Grabowski, director of marketing for Well-Pict Inc., headquartered in Watsonville, CA. “This is where the true organic shopper shops.”

Grocery Outlet offers its organic berries in such a dedicated display. “Our stores have a 4-foot refrigerated section specifically for organics. Here, there are usually 40 to 60 SKUs in organic, including berries,” he says. Integrated or segregated, grower/shippers agree the best way to sell more organic berries is in refrigerated and eye-appealing displays.

“Berries typically sell well, especially when in season; however, they are not necessarily considered a staple item on produce shopping lists like the old standbys of apples, oranges and bananas,” says Simcha Weinstein, director of marketing for Albert’s Organics, based in Swedesboro, NJ. “Berries must typically rely on impulse, which means where they are located in the retail environment and how well they look play a very large role in how they will sell.”

Pricing Comes Down To Earth For Organic Berries

Price can be a make-or-break factor when it comes to retailers carrying, as well as customers buying, organic berries. That’s because the cost of fruit farmed in this manner — according to federal guidelines addressing factors such as soil quality, pest and weed control and use of additives — is usually higher, sometimes much higher, than its conventionally cultivated counterpart. However, this dynamic is poised to change.

“We can expect organic berries to have higher prices, because of the higher costs associated with growing them,” says Chris Christian, senior vice president of the Watsonville, CA-based California Strawberry Commission (CSC). “Most notable is the fact yields for organic production averages only 50 to 60 percent of conventional yields. According to IRI/Freshlook Marketing data for the year ending February 21, 2016, organic strawberries cost about 40 to 50 percent more per pound in supermarkets compared to conventional.”

Supply is the main factor affecting the price, according to CarrieAnn Arias, senior marketing manager for Dole Fresh Vegetables, headquartered in Monterey, CA. “In other words, due to the limited volume of production, organic berries typically cost more than conventional berries. Winter is traditionally the most expensive period for organic berries because supply is lowest with early spring and summer being more plentiful and therefore the least expensive time of the year.”

Land is another issue that influences price. “The challenge for us as farmers is sourcing good ground in the right locations to grow organics, or the ability to commit to a three-year transitional period of letting ground go fallow when organic ground is not available,” explains Cindy Jewell, vice president of marketing for California Giant Berry Farms, in Watsonville, CA.

Beyond land, growing organically can be expensive. “Inputs are higher; for example, the cost of the plants themselves, the allowable sprays needed for pest control, and the price of organic fertilizer,” says Gary Wishnatzki, president, chief executive and owner of Wish Farms, based in Plant City, FL.

Consumer research cited by the CSC’s Christian indicates shoppers expect to pay a premium for organic strawberries. The question is often how much extra?

“When a 1-pound clamshell of organic strawberries gets to be more than $4.99, we typically pull it from our offerings,” says Scot Olson, director of produce and floral for the southern division of Grocery Outlet, an Emeryville, CA-based discount retailer with 238 independently owned and operated stores in six states. “Other than that, we like the 1-pounder for organic strawberries as it provides customers a shopping experience similar to when they purchase conventional. This helps transition the customer who is on the fence and wants to go for the organic but is uncertain that it is a good enough value to pay more. When consumers get the same amount of product when paying more, that helps bridge the gap between conventional and organic,” he says.

That price gap between organic and conventionally grown berries is poised to narrow in the future. “With the consumer demand for organic berries growing steadily, pricing for organic can be closer to conventional berries as supply increases or surges during the year,” says Dole’s Arias.

Richard Stiles, director of produce and floral at Reading, PA-based Redner’s Markets, says, “There isn’t a lot of price discrepancy anymore between organic and conventional berries, especially in the summer. As a result, we see consumers more willing to try organic this time of year, especially when we have them on promotion.”