Supermarket shoppers see value in value-added produce

Despite being about twice the price of conventional offerings, value-added produce is becoming an increasingly popular choice for convenience-minded shoppers — and further growth opportunities abound.

Value-added selections, which include packaged salads and pre-cut vegetables and fruit, had sales of $14.5 billion in the 52 weeks ending July 14, and account for 16% of total produce dollar revenues and 8% of volume, reports Circana, a Chicago-based market research firm. Pound sales, which were down in 2023, are up 1.4%.

The selections have an average per pound price of about $3.39 versus around $1.72 for conventional produce, states the Power of Produce 2024 report, published by Arlington, Va.-based FMI — The Food Industry Association. Average prices for items on promotion are about $2.81 for value-added and approximately $1.63 for conventional produce, the report notes.

About 73% of households indicated that they sometimes or always buy value-added vegetables and 57% do so for value-added fruit, the report states.

Salad kits are the top-selling value-added produce selection and the fifth-largest vegetable revenue generator in July with dollar sales of $267 million and an increase in dollar and pound sales of 2.8% and 1.2%, respectively, versus a year earlier, Circana notes.

“The products cater to consumers’ growing desire for convenience and healthier eating options without sacrificing quality or freshness,” said Tom Barnes, chief executive officer of Category Partners LLC, an Idaho Falls, Idaho-based fresh food industry research and consulting firm. “Salad kits offer a complete meal solution that is easy to prepare and appealing to busy professionals and health-conscious shoppers.”

Despite the appeal, cost remains an impediment for retailers seeking to maximize value-added sales, Barnes said. “Consumers are often price-sensitive, and these products can be perceived as expensive, especially during times of economic uncertainty.”

The typically shorter shelf life of value-added selections also makes it difficult to maintain freshness and quality, he said, which can result in shrink. “Retailers must carefully manage inventory and consistently rotate products,” Barnes said. “Value-added items often have a lower sales velocity, leading to poor quality on the shelf and eroding profit margins.”

Retailers can generate greater activity by offering a balanced range of value-added options at different price points to appeal to a broader customer base, he said. Cross-merchandising selections with complementary products, such as placing salad kits near dressings or pre-cut vegetables alongside dips, also can drive sales and enhance the perceived value, he said.

In addition, retailers should use analytics to accurately forecast demand and the necessary inventory to reduce waste, Barnes said. “Clear communication of the benefits of value-added products, such as convenience, quality, and health, through in-store signage and digital marketing can also help justify the higher price point to consumers,” he said.