Americans have many choices when it comes to supermarket purchases: store brand, commercial brand, organic, etc. – but what is the cost difference and does it vary across the nation? Industry research firm, IBISWorld, investigated grocery costs in Los Angeles, New York City and Chicago to gauge consumer spending across the U.S. for the average grocery cart.
On average for all food-brand categories (store, commercial and organic), Chicago is the cheapest of the three analyzed regions, coming in at $115.73. New York was the most expensive at $122.6, while Los Angeles was slightly cheaper at $121.66. Consumers with the lowest grocery bill ($92.04) are those in Chicago purchasing store brand products. This compares with $104.54 and $105.84 for New York City and Los Angeles, respectively.
Chicago did however have the most expensive organic bill, coming in at $142.95, and Los Angeles had the cheapest at $135.80. This is due to Los Angeles’ proximity to Mexico as well the high volume of food production in California. With the biggest selling area of organic groceries being fresh produce - expected to account for 42 percent of sales this year - and California accounting for 53.8 percent of the nation’s melon and vegetable production, it is no surprise Los Angeles shoppers have cheaper organics.
“Large supermarkets have bypassed wholesaling activities as much as possible, and by taking greater control of the entire supply chain they have been able to minimize the cost structure for store brands versus competing products,” said George Van Horn, senior analyst with IBISWorld. “Organic markets still look to ‘own the supply chain’, but they operate on a much smaller scale, resulting in markups.”
According to IBISWorld’s findings, the average organic grocery cart is about 18 percent more expensive than a grocery cart primarily filled with commercially branded products. But the organic grocery cart is a staggering 37.6 percent more expensive than a basket primarily filled with store branded products.
“Despite the high price of organic products and the recession restricting budgets, the organic food market is still growing by four percent in 2009,” adds Van Horn.