Add A-Peel To Organic Banana Sales

Organic bananas are in demand, and telling a value-added, sustainability story to customers can trigger even more sales.

Originally printed in the September 2021 issue of Produce Business.

Bananas are a top fruit for U.S. shoppers, coming in third behind apples and grapes among the top 10 fruits in dollar sales in 2020, according to the Washington, DC-headquartered United Fresh Produce Association’s (UFPA) FreshFacts on Retail, Year in Review. Yet, this bright yellow fruit was No. 1 in household penetration at 85%.

American consumers are also keen on organics. The overall organic food industry surged in 2020, as the organic industry grew at a record pace of 12.8%, the highest growth in the past decade, based on the 2021 Organic Industry Survey released in May by Washington, DC-headquartered Organic Trade Association.

Combine these two factors — the appeal of this tropical fruit and growing trend for organics — and organic bananas are a product ripe for even greater sales growth.

And consider this: Organic bananas represented 11.1% of retail banana category sales in the 52 weeks ending Aug. 1, 2021, according to Nielsen Total U.S. data, as provided by New York, NY-headquartered Nielsen. Dollar growth was double-digit (12.6%) during this time versus single digit (2.7%) for conventionally grown bananas.

“We sell more organic bananas than we do conventional by a long way,” says John Savidan, senior director of produce and floral for Gelson’s Markets, a 27-store chain headquartered in Encino, CA.

DEMAND & DEMOGRAPHICS

Strong demand and growth continue in the organic banana category, says Robert Adams, president of One Banana North American Corp, in Coral Gables, FL, a family-owned tropical fruit grower, shipper and distributor with operations in the U.S., Guatemala, Europe, Peru and Ecuador.

“Consumers are interested in organics, especially so during the pandemic, as some believe that organics are a healthier option,” says Adams. “All bananas, organic and conventional, are high in nutrients like fiber, potassium, vitamin B6, vitamin C and other antioxidants and phytonutrients, and as such are part of a healthy diet.”

The momentum organics have gained over the past few years is likely to continue.

“We sell more organic bananas than we do conventional by a long way.”

— John Savidan, Gelson’s Markets

“Organic percentage distribution points have also increased, meaning that the total organic banana offering is found more consistently every week across U.S. supermarkets,” says Jamie Postell, vice president of sales for Chiquita North America, headquartered in Fort Lauderdale, FL.

“Although conventional bananas are the value anchor segment of the banana category, it is fair to say that the increase in demand and distribution of organic bananas is primarily led by young consumers.”

Millennials and younger generations want organic and remain the growth drivers for the organic banana category, agrees Mayra Velazquez de León, president and chief executive office for Organics Unlimited, in San Diego, CA. “However, given the popularity of bananas, with about three-quarters of customers purchasing bananas, organic bananas’ appeal is truly universal, with a high likelihood of purchase across all demographics.”

YEAR-ROUND AVAILABILITY

Like conventional bananas, organically grown fruit is produced, shipped and available year-round. This always-on consistency has contributed to the wide appeal of conventional and, now more recently, organic bananas. What has changed over the years is the diversification of sourcing regions.

Dole Food Company’s first organic farm was in Honduras 25 years ago; however, its organic banana production is now concentrated in Latin America, primarily in Colombia and Ecuador with additional sourcing in Peru and Mexico, according to Bil Goldfield, director of corporate communications for the Charlotte, NC-based Dole, with a claim of the largest grower and distributor of premium organic bananas in the U.S.

“Reflecting the increased demand for organic bananas at the consumer level, the acreage devoted to organic bananas on our plantations and locally owned partner farms continues to rise as a percentage of total production,” says Goldfield.

The Exp Group LLC, based in North Bergen, NJ, will source its organic bananas from Ecuador to sell exclusively in North America under the Bonita brand.

“This (organic bananas under this label) is a new item for us,” says Anthony Serafino, executive vice president and principal, whose company has long imported conventional bananas sold under other brands. “We’ll be distributing on the Eastern Seaboard, primarily New England and the Mid-Atlantic, and then look forward in the future to expanding to a national footprint.”

Four years ago, One Banana began its organic farm in Peru, which is now one of the largest organic banana farms in the world. The company also sources from Ecuador and Mexico.

“Retailers expect organic bananas to be available consistently on a year-round basis and we can supply them,” says Adams.

The climate in Ecuador and Peru is ideal for organic banana production, according to Emily Gove, in sales and strategy at Equal Exchange Fresh Produce (OKE USA), a Bridgewater, MA-based company that sources fair trade, organic bananas exclusively from small-scale farmers in these two countries. “The areas are relatively dry, meaning there are fewer threats to growth from fungi and pests than in other tropical areas. Therefore, producers do not need to resort to the harsh pesticides and chemicals to produce a healthy crop.”

Gove adds the company has noticed significant changes in the supply chain this year, which could threaten banana demand in the next few years. With TR4, a banana fungus, found on multiple sites in Peru, exporters and countries along the supply chain are more cautious about allowing the transit of banana shipments. This came to a peak in late spring, causing major delays in supply and resulting in supply challenges for organic bananas in the U.S.
Organics Unlimited sources 90% of its organic tropical fruit — Cavendish bananas, as well as plantains and coconuts — from a network of small farms and growers in the Colima region of Mexico.

“Proximity to the U.S., only three days from the border, makes Mexico the most local option that any produce department in America can get, allowing us to harvest-to-order and ensuring the lowest carbon footprint when it comes to organic bananas,” says Velazquez de León, who adds that the company plans to expand acreage to grow its Organics Unlimited, GROW and Fair Trade Certified label organic bananas year-round for the U.S., Canada and Japan.

Chiquita sources its organic bananas from the Dominican Republic, as well as Ecuador, Peru and Mexico.

CHALLENGES & OPPORTUNITIES

One of the challenges in retailing organic bananas is sticker shock. In 2020, the average price of organic bananas was over 26% higher than conventional, or 71 cents per pound versus 56 cents per pound, respectively, based on the UFPA’s FreshFacts on Retail, Year in Review.

“Customers either buy one or the other (conventional or organic), and they choose the organic either because in general, they are an organic shopper or because they find the organic bananas last longer and are willing to pay more for this,” says Marc Goldman, produce director at Morton Williams Supermarkets, a 16-store chain based in Bronx, NY.

The biggest marketing challenge for organic bananas continues to be educating consumers on the reasons for a price premium relative to conventional, says Dole’s Goldfield. “Our goal has long been to translate this premium, traceable to higher growing costs, into tangible consumer health, environment and societal benefits.”

For example, adds Goldfield, the applications and handling of organic bananas must follow the protocols outlined in the U.S. Department of Agriculture’s National Organic Program (NOP). “Consumers understand that organic bananas will generally taste the same as conventional varieties and provide all the same attributes they already love about America’s favorite fruit, but have less understanding of the increased costs associated with more hands-on labor and premium growing inputs.”

Most major organic banana companies have also implemented extensive social responsibility and environmental programs. Telling these value-added tales to consumers provides educational and impulse sales opportunities, as these types of programs have long been important to organic shoppers.

“Since bananas are ubiquitous and often taken for granted on store shelves, it can be difficult for the average consumer to differentiate organic bananas, and to justify the slightly higher cost,” says OKE USA’s Gove. “More education around organic and fair trade production’s benefits to people, the environment and our health is needed in the banana industry to gain a loyal consumer following.”

At Organics Unlimited, the company offers point-of-sale materials that retailers can download and customize, plus it offers trips to its farms in Mexico to show retailers how their sales efforts are making a positive impact in these communities, says Velazquez de León.

“By highlighting these programs, retailers can boost banana sales and empower shoppers with the knowledge that their purchases are making a difference in the world.”

She says the retail community can help by being willing to sell bananas at “fair prices rather than perpetuating the notion in consumers’ minds that less than 90 cents a pound is providing a fair price for growers.”

“Some retailers pay a fair price for produce and, in turn, offer that fruit at a reasonable retail price. Other supermarkets, however, continue to offer organic bananas to their customers at a low-ball price that does not reflect production costs.”

SELL MORE

What merchandising techniques will help retailers sell more organic bananas? Grocery shopping is a visual process for most, and customers will gravitate toward what catches their eye, says Organic Unlimited’s Velazquez de León. “Make sure that organic bananas are properly displayed and have appealing signage. Displays should always be clean and stocked attractively. Being able to recognize conventional from organic produce is very important to the consumer.”

Gelson’s Markets’ Savidan says the stores have large banana displays either on an end cap, island cube, or under large canopy style high-rise tables. “We also have a few locations that use the hanging trees, but they tend to obstruct the customer’s visual perception of looking across the entire department.

Displaying organic next to conventional bananas is an effective way for retailers to realize additional sales in the organic category, says Dole’s Goldfield.

“Recent data shows that placing your organic display next to your conventional encourages a ‘trade-up mentality’ amid consumers. As the category grows and the pool of consumers who are committed to organic bananas expands, so too does the argument for a dedicated organic set. We’ve found that a separate display for organic results in larger and more frequent organic produce purchases — not just for bananas, but for all organic fruits and vegetables,” Goldfield says.

Secondary displays of bananas at the checkout or beside complementary products such as breakfast cereal, yogurt and milk, as well as brown-bag staples during back-to-school months, work as well for organic bananas in garnering impulse sales as they do for conventional, adds Goldfield. Since bananas pair with so many foods, this list of potential promotional partners is extensive.

Finally, creative merchandising can include incorporating bananas into nonproduce or seasonal displays, like back-to-school or Earth Day, says OKE USA’s Gove. “October is both fair trade and co-op month, which is a great opportunity to expose customers to more values-based products across departments. Since bananas do not need refrigeration, they are a unique and colorful fit for this type of values-based merchandising.”