To market, to market to buy fresh food

Everything old is new again. Consumers in Western countries are increasingly turning to fresh food markets – not that weekly outdoor markets ever went away in Europe. According to a 2018 Future Food article, the US has seen more than 2000 markets open in the past couple of decades, with a 20 per cent jump to 7000 in 2011 alone. And in Australia, there are more than 170 markets, with some attracting 6000 people per day.

So what’s behind the growth of markets? And who’s shopping at them?

A market by any other name

While any retailer focusing on fresh food seems to call itself a market, or more confusingly “farmers’ market”, broadly there seem to be two models:

1. Individual vendors and suppliers brought together in one place, outdoors or indoors. Weekly European street markets in villages are outdoor examples. In Australia, there’s Adelaide’s Central Market and Melbourne’s South Melbourne Markets.

2. A  single-brand retailer (which may have multiple stores) selling product from multiple suppliers. Think Harris Farm in Australia or Sprouts Farmers Market in the US.

The US confuses things by including what they call “natural food stores”, which range primarily organic products, such as Big Bear Natural Foods, Kimberton Whole Foods, Local Foods and Good Harvest Market.

At any rate, the commonality is that there are limited non-food grocery categories and there may be a focus on local and/or organic.

Where do supermarkets sit in this, then? Some are certainly trying to get in on the act.

Texas-founded Whole Foods Market, owned by Amazon since 2017, still bills itself as “America’s Healthiest Grocery Store”. A USDA-certified organic grocer, it features products, brands and suppliers local to individual stores.

New York-founded Wegmans, while being a typical supermarket, has its own farms which supply veggies to several of its stores, and its website provides shoppers with a running schedule when local fruit and vegetables will arrive at stores in each state. 

Wegmans has consistently delivered higher growth than many other US supermarkets in the past decade. Its fresh produce sales have grown at least 10 per cent annually for several years and the fastest growing segment is organic.

Growth driven by local and organic.

Globally, there’s a conflicting picture as in total, fresh is down in favour of food service, but this varies by country. Ironically, millennials are partially behind the growth of both food service and fresh. While Gen Ys are driven by healthier and sustainable choices, they are more likely to shop online, eat out and have smaller wallets than older generations. Being experientially driven, however, they favour physical-store shopping experiences.

Fresh is increasingly interpreted to mean locally grown and provenance is becoming very important. Consumers want to know where and how their food is grown and are increasingly prepared to pay for quality.

“Locavores”, in the US parlance, have gone mainstream, evidenced in the almost tripling of local foods sales from US$4 billion to US$11 billion in a nine-year period. “Local” was the most influential product claim as far back as 2012, according to the US National Association of the Specialty Food Trade.

The definition of “local” changes per country and group. In the US, food advocates usually define local as produce grown up to 100 miles away; the federal government defines it as up to 400 miles away. At any rate, it’s not shipping produce from Sydney to Perth.

The other major trend is organic and while not all organic food is local, there is a link to zero-waste stores, which are often local.

The growing number of health problems has made more consumers aware of the ingredients that they consume. Globally, organic fresh food is forecast to grow at 15 per cent CAGR from 2019 to 2023. In the US, sales of organic fruit and vegetables quadrupled in a 10-year period. In Europe, the organic market grew 11 per cent in 2017 and per capita consumer spending on organic food has doubled in the past decade. Globally, European countries account for the highest shares of organic food sales as a percentage of their respective food markets, with Denmark being the first country worldwide to surpass the 10 per cent mark at 13.3 per cent organic share.

Back on home turf, a Mobium Group study in 2018 found that more than six in 10 Australian households buy organic products in a given year, with 12 per cent considering themselves “highly committed” to organic purchases – in fact, 40 per cent of their annual grocery spend goes towards organic food (and household products). According to the study, the organic market was worth $2.4 billion in 2018, and the retail market at $1.6 billion, which had increased 88 per cent since 2012.

Where to from here?

An article from The Australian Financial Review from earlier this year indicated that food sales growth from supermarkets is at four-year highs as more consumers eat at home, and trade up on quality. US industry publication Food Dive suggests that fresh and perishable foods account for nearly half of dollar sales growth in fast-moving consumer goods.

Fresh food markets – whether single-brand retailers such as Harris Farm or individual vendor conglomerates outdoors or indoors – will continue to grow as more consumers look to shop local and organic. The local is moving from the niche to the mainstream.

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