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The corridors of Spanish supermarkets have gone green. They are being loaded with stacks of fresh Mediterranean-style vegetables and mountains of fresh seasonal fruit. Have Spaniards been possessed with a sudden urge to devour fresh food? Far from it, this increasing interest in fresh produce is the response to a widespread movement in the country’s retailing landscape, led – for how could it have been otherwise – by Spain’s largest supermarket Mercadona.

During an enviable expansion period throughout the country in the past decade, every time Mercadona inaugurated a new outlet, an endless number of greengrocers, butchers and other traditional grocery retailers flourished around it. Mercadona quickly worked out the reason behind this phenomenon: Spanish consumers appreciated its ever-lasting low prices and trusted its private label ranges, yet still preferred to purchase fresh fruit, vegetables, meat and fish from traditional grocery retailers. Products sold in laminated packaging discernibly conveyed an image of inferior quality.

The giant retailer therefore initiated an ambitious revamp plan across its fresh produce sections, significantly increasing and fine tuning the space dedicated to these products. This initiative also included a return to bulk bins for fruit and vegetables, the implementation of direct purchases from fish markets and the setting up of traditional-style butcher and fishmonger stands in-store.

Other retailers soon cottoned on to the growth potential within this product area and unveiled similar strategies to facelift their fresh produce sections. Some even went one step further, such as discounter Dia SA and local chain Condis Supermerkats SA, launching new banners fully dedicated to fresh produce, namely Fresh by Dia and Condis Fresh respectively.

A wider range of fresh produce has inevitably led to a reduction in packaged versions. In fact, the effects of the trend towards fresh produce have been largely noticeable in the performance of the related categories within packaged food.

Retail Value Growth in Packaged Fruit, Vegetables, Meat and Seafood in Spain

packaged-produce-spain

Source: Euromonitor International

As Spaniards shift towards fresh produce, the strongest decline within packaged food was seen in frozen and shelf stable fruit and vegetables, which volume sales dropping by 4% in 2015. This is due to a cultural behaviour inherent in the Spanish consumer. Fruit and vegetables represent a substantial part of most recipes in the Mediterranean diet, hence the high importance given to their freshness and quality. The difference in quality and taste between a fresh product and a packaged one is more noticeable in the case of fruit and vegetables than in any other category. For example, no Spaniard could imagine a good Mediterranean salad without a tomato that brings intense flavour and colour to the plate. This explains why volume sales of shelf stable tomatoes (a category within shelf stable fruit and vegetables) plummeted in 2015, dropping by 12%.

Sales of meat and seafood have been more resilient, with close-to-zero volume growth rates in 2014 and 2015. This is due to the fact that most of the investment within the current revamping strategies was allocated to fruit and vegetable sections. Besides, given the current price-sensitive profile of most Spanish consumers, the higher prices of fresh meat and seafood may also explain why the effect on packaged versions has not been so noticeable.

Presenting a wider offer of fresh produce has proven to be successful as it has addressed a need amongst Spanish consumers. In fact, the booming of fresh produce – and consequently the declines in packaged counterparts – is anticipated to continue over the forecast period. However, once this adventure delivers the expected results, what will be the next major battlefield for Spain’s leading grocery retailers?

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