Demand for Organic Peppers Growing

Peppers are the No. 2 organic vegetable and rising.

Organic pepper sales stood at $174 million in 2022, according to Category Partners research, in second place behind lettuce among organic vegetables at the nation’s retailers, but it will take continued promotion to regain that spot.

Organic Produce Network statistics show, for 2024 first quarter, 11 of the top 20 categories posted increases, with apples seeing the largest increase in organic volume at 16.6%, followed by bananas at 13.2%. The network is a coalition of major corporate retailers and organic growers large enough to supply them.

But other produce categories saw losses during Q1, including organic prepackaged salads, lettuce, kale, and squash all seeing declines in both volume and dollars. And, according to the Organic Produce Network, organic bell peppers saw the biggest drop in volume at almost 15%, down from last year at the same time.

Organic bell pepper sales declined the most in the Northeast region.

SUPPLY AND DEMAND BASICS

“The prices were high at retail because the supply was short,” explains Francisco Clouthier, founding owner of Maui Fresh International, Los Angeles, CA. “It’s getting a little better with the supply coming in from Mexico.”

Clouthier’s family started farming tomatoes and peppers in the Sinaloa Valley over 60 years ago, and, soon after, opened San Rafael Distributing — a sales company in Nogales, AZ. In 2004, Clouthier opened a wholesale company in Los Angeles, and in 2007, created Maui Fresh International, a major national shipper of peppers. According to Clouthier, around 20% of the company’s peppers are organic.

“Demand for peppers, especially organic varieties, continues to grow as consumers prioritize fresh, healthy options and seek convenient packaging.”
— Raul Acevedo, Fox Packaging, McAllen, TX

Other industry insiders look for demand for peppers, especially organic varieties, to grow as consumers prioritize fresh, healthy options and seek convenient packaging. “The outlook for pepper production is strong, with continued growth in various pepper varieties and pack sizes to meet increasing consumer demand,” says Raul Acevedo, sales representative for Fox Packaging, McAllen, TX.

“Most pepper growers in the United States are concentrated in key states like California, Florida, Georgia, New Mexico and Texas,” Acevedo adds. “Additionally, a significant portion of peppers are imported and packed just across the Texas border.”

Organic peppers have rebounded from the recent modest slump, which was caused by supply issues.

“Markets have been good for the last six months, but a year ago, they were hit pretty hard,” says Javier Vargas, president of Cache Produce LLC, Winters, CA. “Right now, there is demand for organic bell peppers. Green is the most popular color, followed by red and yellow.”

Cache Produce harvests 2 million cartons of organic vegetables a year from fields in the Sacramento Valley, Salinas, Santa Maria and Mexico.

California and Florida lead bell pepper production in the United States, along with Georgia, Michigan, New Jersey, North Carolina and Ohio helping fulfill demand.

Imports have become more important as demand for peppers continues to grow. According to U.S. Department of Agriculture (USDA) Economic Research Service statistics, bell pepper imports from Mexico during the winter increased 69% from 2008 to 2020. Imports from Mexico are lowest during the summer when most of the U.S. crop is harvested. But the USDA reported those imports, too, increased 742% from 2008 to 2020. Spring and fall imports more than doubled from 2008 to 2020.

Despite the recent modest slump, caused by supply issues, analysts are bullish on the prospects for peppers, both conventional and organic.

“Global bell peppers market is anticipated to rise at a considerable rate during the forecast period, between 2024 and 2031,” according to 360 Research Reports. In 2023, the market grew at a steady rate, and “with the rising adoption of strategies by key players, the market is expected to rise over the projected horizon.”

RIDE THE MINI WAVE

The market for organic peppers, in particular, appears strongest among retailers serving generally well-off demographics.

“We sell more organic than conventional,” says Karim Wahhab, produce manager for Draeger’s Market in Los Altos, CA. Draeger’s is an independent chain with four markets serving upscale neighborhoods in the San Francisco Bay Area.

Green, red, and yellow bell peppers are the largest sellers, but the colorful packages of organic mini peppers have also carved out an important niche. “The mini peppers are also very important,” says Wahhab.

Organic mini peppers are also important in the produce department at Grove Market, a small independent store serving the affluent coastal community of Pacific Grove near Monterey, CA.

“We do a bag of mixed organic mini peppers only,” says Steve Mason, produce manager at Grove Market. “We sell a case of 12 1-pound bags a week.”

MERCHANDISING

Retailers need to know their own customers to answer the age-old “display with other peppers or display with other organic produce” question. One additional strategy is to display organic peppers next to other items that would also be in salads, entrees, or other dishes.

“Effective merchandising includes creating colorful displays and cross-promoting organic chile peppers with complementary products like ingredients to make salsa — garlic, cilantro, onion, tomato and even avocados,” advises Victoria Lopez, marketing, and business development manager at Fox Packaging.

“Organic peppers also merchandise well near salad displays or hummus, to appeal to a clean lifestyle demographic. Fox’s Stand-Up Combo bags provide breathability, supporting freshness. Providing educational information on packaging about the health benefits of chile peppers will help boost sales.”

The best companion products depend on the variety of peppers. “Cross-promote chile peppers with salsa ingredients, stir-fry vegetables, taco ingredients or soy sauce,” says Lopez. “For bell peppers, consider pairing them with onions, garlic, herbs and spices. Packaging with recipes that promote meals, and pairing combinations can further drive sales.”

Merchandising can encourage consumers to try more varieties of peppers, and to use them in new ways.

“By promoting peppers year-round and providing educational information about the health benefits, different varieties, and flavor and heat profiles, retailers can encourage more consumers to try different types and incorporate them into their meals,” says Lopez.

Lopez says seasonal promotions play a key role in boosting chile pepper sales throughout the year. “In the fall, chile peppers can be featured in Sunday football game-day promotions as an essential ingredient for fresh salsa. During the winter, highlight chile peppers in Super Bowl promotions for salsa and guacamole recipes. Spring brings an opportunity to promote chile peppers as part of Cinco de Mayo celebrations, while in the summer, chile peppers can be marketed for grilling season, adding a spicy kick,” she says.

VALUE-ADDED PACKAGING

A trend worth following is convenience packaging for organic peppers, according to the State of Organic Produce 2022 report.

“In 2022, there was increased attention to the role of value-added packaging for organic peppers,” according to the report. “We expect this to continue, given shoppers want to save time with a quick grab-and-go option.”

“Peppers, which come in a variety of vibrant colors, need proper packaging to maintain freshness and visual appeal,” stresses Fox Packaging’s Acevedo. The package should display the peppers, promote shelf life, and deliver information.

“Fox Packaging’s solutions support the product shelf life by incorporating our mesh into the design, allowing the product to naturally respire and last longer,” says Acevedo. “Flexible packaging solutions like Fox Packaging’s Fresh Mesh and Stand-Up Poly bag cater to this demand, offering convenience while extending the product’s freshness.”

For the last 15 years, Fox has produced Fresh Mesh produce bags in sizes from 1 to 5 pounds. These bags breathe and can even be misted.

Some major organic pepper shippers report they continue to sell bulk boxes. “Most of our organic peppers are in 11-pound boxes,” says Clouthier. “Demand is steady.”