Local foods: A sales boom on par with “organic”?

Will local foods overtake organic foods in popularity? Some members of the industry think so based in part on consumer demand now at an all-time high. Data from a November 2014 proprietary Packaged Facts National Consumer Survey published in Shopping for Local Foods in the U.S. found that 53% of the 2,271 adult respondents specially seek out locally grown or locally produced foods. Among the primary reasons for purchasing locally grown or locally produced foods, 60% of consumers who purchase local products say they do so because the products are fresher. In addition, more than half (52%) of consumers say they buy local products to support local businesses, and 44% of consumers say the products taste better.

For retailers, foodservice operators, and food marketers, “local” has become a shorthand descriptor that makes food sound high quality, fresher, more authentic, trustworthy, environmentally friendly, and supportive of the local community. It lends additional credibility to the products, particularly when the farmer or producer is identified in marketing materials with a good back story. This being the case, there’s been a surge in consumer demand for locally produced foods over the past 10 years, along with widening availability. The U.S. Department of Agriculture (USDA) notes, “The abundance of farmers’ markets and the emergence of larger scale retailers carrying local products (and promoting them) is a healthy indicator of market responsiveness to consumer demand.”

Food hubs, networks that allow local and regional farmers and producers to connect with larger volume markets, are playing an increasing role in the distribution of local foods. The farmers’ market count is up 35% since 2010, with almost 8,000 farmers’ markets operating in the United States as of August 2014, according to the U.S. Department of Agriculture. Mainstream retailers are trying to tap into the local foods trend by adding more local products to their stores and highlighting local products through marketing and display. What’s more, while local and regional grocers may be in the best position to find products from local vendors and market them with authenticity, large national and multi-regional retailers including Kroger, Safeway, Meijer, and even Walmart also have identified local foods as one of their priorities. Packaged Facts’ consumer survey found that more than two out of three consumers who buy locally grown or locally produced foods do so in supermarkets/grocery stores, and almost half buy these products at farmers’ markets.

Yet, despite increased consumer demand, an increasing presence on grocery store shelves, and media hype, locally sourced food is just a tiny fraction of the nation’s total food supply, and Packaged Facts does not expect local foods to come anywhere near organic foods sales-wise in the near term. In our July 2014 report, Natural and Organic Foods in the U.S., we project that total U.S. retail sales of organic foods and beverages will reach $34.0 billion in retail sales in 2014, advancing to $59.9 billion in 2019. By comparison, we calculate that local foods generated $₁₁.7 billion in sales in 2014, or 1.8% of total retail sales of foods and beverages, and project that retail sales of local foods will approach $20.2 billion in 2019, or 2.4% of total retail sales of food and beverages.

This blog is based partially on research featured in Packaged Facts’ Shopping for Local Foods in the U.S.  Add this report to your own intelligence library and receive a 5% discount during our promotional period effective through May 15, 2015. Use code PFLOCAL2015.