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With health consciousness on the rise and demand for organic produce steadily increasing, industry revenue is expected to benefit. The aging population and an increase in the number of Hispanics and Asian-Americans will also have a positive effect, as these groups tend to purchase more fruit and vegetables. However, despite these positive effects, industry operators will continue to be threatened by traditional supermarkets and big box stores that aim to provide the same variety and quality of produce. For these reasons, industry research firm IBISWorld has updated its report on the Fruit & Vegetable Markets industry.
Los Angeles, CA (PRWEB) August 18, 2012
In the five years since 2007, revenue for the Fruit and Vegetable Markets industry has maintained positive growth, indicating that the recession had a minimal effect on farmers' markets. “Sales follow unique demand trends,” says IBISWorld industry analyst Doug Kelly, “such as the focus on healthy eating and the aging US population.” Total consumption of fruit and vegetables has increased from about 200.5 billion pounds in 2007 to an estimated 204.6 billion pounds in 2012, driving revenue up at an average annual rate of 1.6% to $4.6 billion. Rising food prices, coupled with a rebounding US economy and greater demand for healthy foods is expected to drive revenue up 0.4% in 2012.
Still, the industry faces strong competition from traditional and nontraditional fruit and vegetable retailers like supermarkets and mass merchandisers, such as Walmart. An increase in the share of sales for fruit and vegetables by these retail outlets steals revenue away from industry operators. The Supermarkets and Grocery Stores industry (IBISWorld report 44511) currently accounts for a vast majority of the total retail food market, which does not leave much room for fruit and vegetable markets. According to Kelly, however, “a shifting focus to organic and locally grown produce has helped the industry remain resilient.” In fact, the number of farmers' markets in the country has increased at an average annual rate of 1.3% to 11,905 locations over the five years to 2012. With more competitors in the industry, average profit margins have slimmed slightly over the five-year period. IBISWorld estimates that margins account for 8.6% of revenue in 2012, down from 8.9% in 2007.
The top industry participants form a low level of concentration within the industry. In fact, the Fruit and Vegetable Markets industry is characterized by a high number of small operators, with about two-thirds operating independently. These markets include those that have no paid employees or are self-employed individuals and partnerships. The remaining markets belong to cooperatives or associations, which usually hire the services of paid employees. These employees can include people who process purchases at individual fruit and vegetable stands and cleaning staff. Since most establishments only service local communities, it is not likely that the level of concentration will change in the near future. However, farmers markets located in nearby regions may begin to develop associations, so that they can work together in areas like administration and education in order to operate more efficiently.
The focus on healthy and organic foods will likely drive revenue growth over the next five years, and total fruit and vegetable consumption is expected to rise. To increase Americans' produce consumption, government and private entities will continue to emphasize the benefits of a diet heavy in fruits and vegetables, fueling industry demand. Additionally, the rebounding economy will make consumers more comfortable making higher-priced purchases of organic produce, which will boost revenue and profit.
For more information, visit IBISWorld’s Fruit & Vegetable Markets in the US industry report page.
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IBISWorld industry Report Key Topics
Fruit and vegetable venders sell a variety of produce through stands, farmers’ markets and retail locations where products are sold directly to the public. The industry’s stands, roadside stands and markets are small and individually owned. This unique industry generates revenue from the sale of fruits and vegetables and excludes sales of produce generated from supermarkets and grocery stores.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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