As we crest the first half of the calendar year, Vanguard shares seven top trends facing the produce industry in 2022.
1. Supply chain pain
Delays in transit times doubled. Ocean carriers opted out of ports, increasing logistics costs and complexity with growers having to resort to costly increased freight rates. Shortages persisted for equipment, chassis and drivers. This in turn would leave retailers with four weeks’ worth of shipments arriving in the same week and carriers refusing to reduce demurrage. Costs across the board have increased 300-400 percent with no relief anticipated until Q2 of 2023.
2. Managing COVID congestion
What the global supply chain needs is stability, agility and support. All actors must be agile in managing their supply chains and we need to know that regulatory frameworks are stable and functioning. The crew change crisis remains and this appeals to all governments to recognize seafarers as key workers and prioritize vaccination.
3. Increased ag input costs
Labor, packaging materials, ag inputs such as fertilizers, fuel, seeds, rootstocks and transportation are all seeing increases of 30 to 40 percent. Immense effort is being exerted to spread these increases across all members of the supply chain, but not all commodities have a cooperative supply/demand balance to drive this through.
Certain growers are finding themselves in a “supply exceeds demand” environment for their crops, which is forcing them to suppress their sales prices and absorb greater amounts of the input costs.
4. Inflation hits the grocery store
Inflated fresh produce prices are driving some consumers to buy frozen/canned options. Although online ordering, curbside pick-up and home delivery have declined since 2021, they are here to stay.
Consumers continue to purchase online to manage their budgets. Cart subtotals allow them to view pricing prior to checkout, which reduces impulse purchases. Packaged produce continues to see consumer preference – 72 percent preferred packaged produce in 2020, now 82 percent in 2022.
5. A focus on health continues
Superfoods like avocados, berries and pomegranates are well sought after. While consumers are more price-sensitive, preferences for “pure, organic and sustainable” plant-based options continue to grow. “Ugly” fruit may find a home in the food service industry.
6. Super empowered consumer
Consumers expect more engagement. Functional foods, freshness and authenticity of local foods appeal, but freshness always wins. The most popular fruits in 2022 are bananas, grapes, watermelon, strawberries and pineapples. Sweet corn, tomatoes, potatoes, green beans and garlic are proving to be the most popular veggies.
7. Foodservice not quite roaring back
While restaurants have reopened, they are challenged with high prices on product offerings and a tight labor market. Hours of operation are restricted by understaffing and the inflated prices are driving consumers’ appeal to purchase their own groceries. Consumers are now more comfortable with “meals at home” and eating out less.