Below is a brief excerpt from complimentary research note written by our Consumer Staples analysts Howard Penney and Daniel Biolsi. If you are an institutional investor interested in accessing our research email firstname.lastname@example.org
Fresh produce has grown double digits in 11 of the last 12 weeks, according to the Produce Marketing Association.
Since the beginning of the year, the industry has sold $2.7B more fresh produce at retail, representing 944M pounds.
In the week ended May 31, fresh produce growth decelerated 100bps week over week to 13.2%, similar to the deceleration for the past three weeks, as seen in the following chart.
Fresh fruit is more of an impulse purchase, and the drop in time spent at the grocery store could be responsible for the slower growth compared to vegetables.
Frozen fruit and vegetable growth of 28.8% in the week ended May 31 outpaced fresh sales growth of 13.2%. YTD frozen grew 28.8% compared to 10.4% for fresh.
The smaller sales base of frozen and shelf-stable sales helps explain the difference in growth rate. Frozen produce’s share of total fruit and vegetable sales has steadily fallen since the peak of the stockpiling (when out of stocks were the highest), as seen in the table below.
Produce is a higher than average margin category for grocers, so the robust growth has been a boon to grocers. Fresh produce has been a key category for Sprouts Farmers Market (SFM) during the pandemic.