U.S. Online Grocery Sales Climb to $9.9 Billion

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Produce Leaders
September 16, 2024

🌱 Good afternoon, and welcome to today's fresh newsletter! 

👉 In today's email:

  • U.S. Online Grocery Sales Climb to $9.9 Billion in August 2024

  • GreenVenus Unveils Fast-Growing Lettuce

  • Chipotle Tests New Cobotic Innovations

  • Melissa’s: Three Phones, Four Chairs, and a Vision

ONLINE SALES

U.S. Online Grocery Sales Climb to $9.9 Billion in August 2024

In August 2024, U.S. online grocery sales rose by 7% year-over-year (YOY), reaching $9.9 billion, according to the Brick Meets Click/Mercatus Grocery Shopper Survey.

This marked the third consecutive month of strong growth, largely driven by promotions from major retailers targeting subscription and membership programs.

All three key fulfillment methods—Delivery, Pickup, and Ship-to-Home—experienced growth, with Delivery showing the highest increase at 10.2% YOY, totaling $3.9 billion in sales.

Promotions from companies like Instacart, Walmart, and Amazon played a significant role in this surge. Delivery's monthly active users (MAUs) grew by 16%, far outpacing the overall 6% eGrocery growth, while Walmart saw a 9% rise in MAUs.

Walmart also benefited from these efforts, with 30% of U.S. households primarily shopping for groceries there during the June-August 2024 period.

The promotions, which began in May 2024, proved effective during the back-to-school season, offering substantial discounts such as Instacart’s 80% off annual membership and Walmart’s 50% discount. 

These offers led to a 7.9% YOY growth in eGrocery sales from June to August 2024, up from 1.4% in the prior period. Delivery sales surged by 16.1%, driven by a 13.9% increase in MAUs and a 14.9% rise in order frequency.

Walmart’s share of the grocery market grew, while regional grocers faced heightened competition. Experts emphasized the need for smaller grocers to focus on fresh food, private labels, and localized convenience, along with targeted promotions to build customer loyalty.

This data, drawn from a survey of 1,829 U.S. adults, underscores the increasing role of promotions in shaping the online grocery landscape and highlights the challenges regional grocers face in competing with retail giants.

VERTICAL FARMING

GreenVenus Unveils Fast-Growing Lettuce Cultivars Optimized for Indoor Farming

GreenVenus, LLC, a leading agriculture technology company, has launched a new line of fast-growing lettuce varieties specifically bred for controlled-environment agriculture.

These cultivars, designed to thrive under artificial lighting and climate-controlled conditions, nearly double growth speed and biomass compared to traditional lettuce types. This innovation promises to improve yield efficiency in indoor farming, potentially reducing operational costs and resource use.

The vertical farming industry has faced challenges, particularly with high operational costs stemming from the energy required to maintain ideal growing environments.

Additionally, traditional crop genetics have not been optimized for indoor farming conditions, such as specific light spectra and CO₂ concentrations. This lack of optimized plant varieties has limited yields and efficiency in indoor setups.

GreenVenus's fast-growing lettuce addresses this issue, providing a cultivar designed specifically for controlled environments.

This could revolutionize vertical farming, as leafy greens and herbs, the primary crops grown indoors, have historically struggled to produce high yields in artificial settings. By focusing on indoor-optimized plant breeding, GreenVenus is setting a new standard for vertical farming.

Dr. Shiv Tiwari, CEO of GreenVenus, emphasized that the company is also working to develop other crops, including berries, tomatoes, spinach, and other vegetables suited to indoor environments. The goal is to offer a wider range of crops for vertical farming, improving both economic viability and sustainability.

Testing has shown that GreenVenus’s new lettuce varieties, grown hydroponically under artificial lighting, nearly doubled growth rates and biomass compared to conventional varieties.

This could significantly reduce the time and resources needed to produce market-ready crops, cutting energy consumption and operational costs, with positive environmental effects by lowering the carbon footprint.

🫙 How To Store Fresh Produce? | TikTok.com

INNOVATION

Chipotle Tests New Cobotic Innovations to Streamline Food Prep & Enhance Efficiency

Chipotle Mexican Grill has introduced two collaborative robotic (cobotic) innovations at select locations in California to modernize its food preparation processes.

The first is "Autocado," an automated avocado processing machine developed in partnership with Vebu. The second is the "Augmented Makeline," created with Hyphen, designed to streamline food preparation in Chipotle kitchens.

These technologies aim to enhance operational efficiency, improve employee experience, and maintain Chipotle's culinary standards.

The Autocado is being tested at Chipotle's Huntington Beach location, automating the labor-intensive task of cutting, coring, and peeling avocados, preparing them for hand-mashing into guacamole.

The machine processes an avocado in just 26 seconds and accommodates various sizes. By automating this process, kitchen staff can focus on other duties like food preparation and customer service.

Meanwhile, the Augmented Makeline is being trialed in Corona del Mar, California, where it automates the preparation of bowls and salads. Employees continue to assemble burritos, tacos, quesadillas, and kids' meals manually.

Since approximately 65% of Chipotle's digital orders consist of bowls and salads, this system is designed to improve speed and accuracy for digital orders, a growing segment of the business.

Chipotle’s Chief Customer and Technology Officer, Curt Garner, highlighted that these cobotic systems could enhance the operational experience for both team members and guests, while still upholding the company's high culinary standards. Feedback from crew members and customers will be collected to refine these systems further before broader testing.

These innovations are part of Chipotle's larger effort to innovate through its $100 million Cultivate Next venture fund, launched in 2022. Both Vebu and Hyphen have received investment from this fund to advance their technologies.

The goal is to support Chipotle’s mission of "Cultivating a Better World" and help the company reach its target of 7,000 restaurants in North America. 

INDUSTRY SPOTLIGHT

Melissa’s: Three Phones, Four Chairs, and a Vision

Established in 1984, Melissa’s Produce has grown to become the largest distributor of specialty produce in the United States.

Operating out of a 330,000 square foot facility in Los Angeles, the company offers various conventional and organic fresh fruits and vegetables, value-added goods, and boasts a state-of-the-art CCOF/QAI certified organic packing facility. From humble beginnings,

Melissa’s has expanded its reach, providing consumers with fresh produce and engaging them through various outlets for over a quarter of a century.

The company was founded by Sharon and Joe Hernandez, who started the business in a small, rented produce warehouse lunchroom. The original office was modest with just three telephones and four chairs, but the vision was anything but modest.

Named after their daughter Melissa, who now takes an active role in the company, the family-owned business began strictly as a source of specialty produce, selling to retailers in the Southern California region. Through the years, stable growth has been achieved thanks to loyal customers and a dedicated team of employees committed to customer service.

Melissa’s has always placed a strong emphasis on sustainability and ethical practices. The company believes that fresh, flavorful produce should not come at the planet’s or people’s expense.

This commitment is evident in their efforts to minimize environmental impact, maximize efficiency, and build trust through transparency. Partnering with growers who share similar values, Melissa’s supports organic and regenerative farming practices aimed at growing healthy food while preserving healthy soil for future generations.

Their dedication to organic produce is significant, carrying over 100 certified organic products ranging from fresh fruits and veggies to culinary essentials and snacks. Top organic categories include ginger, squash, potatoes, citrus, and cucumbers.

By supporting local and minority-owned growers, Melissa’s contributes to creating a more equitable food system, diversifying the food supply, and providing consumers with more choices.

Innovation and efficiency are cornerstones of Melissa’s operational strategy. The company utilizes a modernized warehouse, computer-optimized trucking routes, LED energy conservation, and explores packaging alternatives to reduce their environmental footprint.

Collaborations with forward-thinking businesses like Pre-Zero, which turns food waste into sustainable animal feed, and H2R Packaging, offering a global standardized labeling system for recycling, showcase their commitment to mitigating waste at every level.

Melissa’s Produce has grown to become the largest distributor of specialty produce in the United States. | Images: Courtesy of Melissa’s

Participation in initiatives like Project Gigaton further underscores their dedication to sustainability. With ambitious goals to reduce greenhouse gas emissions from the global supply chain, Melissa’s reported significant contributions in 2023, including reductions of 732.8 metric tons of CO2 equivalent in food waste, 134.4 metric tons in packaging, and 478.4 metric tons in product use and design.

Community engagement is another area where Melissa’s has made a notable impact. As a family-run business deeply rooted in the communities they serve, they believe that a strong community is the foundation of a prosperous future.

The company partners with over 50 non-profits to extend access to fresh, healthy food.

At a glance, they have donated 800,000 pounds of fresh produce, equating to 950,000 fresh meals, and have raised over $50,000 to support organizations like the Olive Crest Foundation and the Pink Pumpkin Project.

Food accessibility is a priority, with Melissa’s leveraging their trusted supply chain to limit obstacles that prevent access to fresh food.

Longstanding relationships with farmers and regular food bank donations are part of their strategy to ensure communities have the nutrition they need. Additionally, they engage in activations designed to inspire youth to adopt a healthy, balanced diet.

Supporting minority and women-owned businesses is integral to their mission of fostering an equitable and sustainable food system. By doing so, they not only diversify the food supply but also empower these businesses within the industry.

Currently, they support over 20 minority-owned businesses, reflecting their commitment to inclusivity and economic opportunity.

Food safety has always been a top priority for Melissa’s. Since its founding, the company has met or exceeded all local, state, and federal food safety standards, ensuring that their growers and supply network adhere to the same high standards.

In 2012, Melissa’s received the prestigious GFSI-accredited SQF certification from the Safe Quality Food Institute. This certification involves extensive monitoring, including both scheduled and unannounced facility audits, and is recognized by retailers and food service providers worldwide.

The company has hired a team of talented chefs, like Tom Fraker, who crafts delicious creations like this Passion Fruit Sherbet! | Image: Courtesy of Melissa’s

The company follows or exceeds all Good Manufacturing Practices, which define management and manufacturing practices to ensure that food products consistently meet legislative and customer specifications.

Practices include employee training, personal hygiene and safety, food handling production, and allergen control protection.

Melissa’s also employs the Hazard Analysis of Critical Control Points Plan (HACCP), providing a systematic approach to identifying, evaluating, and controlling food safety hazards to protect consumer health worldwide.

Traceability and meticulous electronic record-keeping allow Melissa’s to be agile in responding to any potential issues. The ability to track all movements to and from their facility down to batch, lot, and case number helps protect consumers and customers by preventing problems before they begin.

Melissa’s commitment to sustainability, community engagement, and food safety demonstrates a holistic approach to business that prioritizes not just profit, but also the well-being of the planet and people.

Their actions reflect an understanding that sustainability is an interconnected system, aiming to mitigate climate change, restore natural systems, and promote equity and opportunity for employees, communities, and partners.

TIP OF THE DAY

Host Virtual Farm Tours

Have you thought about how hosting virtual farm tours can strengthen customer relationships and enhance brand transparency?

By offering virtual tours of your farms, you give customers a behind-the-scenes look at the journey their produce takes, from seed to shelf. This transparency builds trust and makes customers feel more connected to your products.

Feature these virtual tours in your newsletters and on social media, using engaging video content to showcase the care and expertise that goes into growing your produce.

You can highlight sustainable farming practices, the harvest process, or even introduce the team working on the farm. Offering live Q&A sessions during the tours can further personalize the experience.

Not only does this boost your brand’s credibility, but it also fosters a deeper connection with customers, making them more likely to choose your produce over competitors.

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