Volume pressure sharpens as produce inflation climbs higher in August

Food inflation remains extremely high and consumers are feeling the pain. They are making changes to their restaurant engagement as well as their grocery purchases, according to the August IRI survey of primary grocery shoppers.

The price per unit across all foods and beverages in the IRI-measured multi-outlet stores, including supermarkets, club, mass, supercenter, drug and military, accelerated further to an increase of 14.3% in the four weeks ending August 28th, 2022 versus year ago.

This is up from 13.3% in July. August inflation was +16.6% in the center of the store (grocery) and +13.3% for perishables. Compared with August 2019, prices across all foods and beverages were up 27.4%.

“Inflation has been accelerating since early fall 2021, drought conditions are severe, consumer confidence is low and grocery patterns are switching very rapidly,” Joe Watson, VP, Retail, Foodservice & Wholesale for IFPA.

“Amid the continued disruption, IRI, 210 Analytics and IFPA remain committed to bringing the industry the latest trends and analysis in fresh produce.”

The four August 2022 weeks brought $57.7 billion in total food and beverage sales, which was up +8.7% versus year ago. This was about the same year-on-year increase as seen in July. August 2022 dollar sales were up +25.7% versus August 2019 — the pre-pandemic normal. P

erishables, including produce, seafood, meat, bakery and deli, had average dollar performance, but center-store item sales increased a little over 10%.

Year-on-year gains were inflation-boosted, with unit sales down -5.0%. Unit declines have averaged between 4% and 5% for several months now.

Additionally, units dropped below 2019 levels for all areas of the store. Yet, prices having increased more than 27% versus 2019 and units down a mere -1.3% shows that consumer demand at retail remains strong.

Fruit and vegetable sales

The overall volume pressure in fruit is echoed by nearly all the big sellers, said Jonna Parker, Team Lead Fresh at IRI.

“Berries, that have been an incredible pandemic powerhouse, fell 5.6% behind year-ago levels,” she said.

Berries in the US market | Volumes (in KG)

Source: USDA Market News via Agronometrics.
(Agronometrics users can view this chart with live updates here)

According to David Watson, senior vice president of sales and marketing, “While it’s true we are seeing hot weather push the greens harvest earlier, it is the same as last season for the industry and reds don’t color as fast when it’s that hot. But for our company, Molina farmed Sweet Globes and Scarlet Royals and we have had excellent consistency in size, color and Brix. A good volume of our Sweet Globe crop has been going to export this season as the size was really large and the Brix was well over 18, 19 and 20 going out.”

“For Fresh Farms, our quality improves every season, as we continue to transition into the newest varieties, and those vines become more established,” said Aron Gularte, a sales representative at Fresh Farms. “These include Ivory, Sweet Globes, Great Greens and Autumn Kings for green, and Scarlet Royals, Krissy and Allison for reds, and Autumn Royals for blacks. All of the product is harvested from prime locations scattered throughout the Central Valley of California.”

Watson said that things are settling in now and good supplies will be available for promotions for retailers and foodservice.

“Grapes are a great category to promote this time of year as we have ample volumes and excellent quality,” he said. “Retailers can really boost their store traffic by keeping displays full of all three colors and of course offering the candy varieties when available to extend the category and delight the customers with flavors they may have not tried before.”

Gularte agreed, adding, “A couple of things we can recommend to retailers to maximize sales is to promote. Retailers can highlight the visual appeal to customers by displaying all three colors, and allowing plenty of shelf space. It’s no secret that grapes are among the top grossing dollar volume for produce, so with proper merchandising magic, September can be a top sales month. Because of unusual challenging weather events, we expect this to change by the first of October, so now is the time to advertise.”

Watson said Fresh Farms saw great retail demand on its Candy Hearts in July though the third week of August. “That grape was big, delicious, fragrant and has a unique flavor from other reds,” he said. “These types of varieties can really turn on your grape table for extra sales and is fun for the customers to discover.”

Fresh Farms expects to finish the season strong with possibly less fruit in the marketplace than last season going into November and December, when it will then start its grape deal in Peru.

The News in Charts is a collection of stories from the industry complemented by charts from Agronometrics to help better tell their story.

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