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According to Los Angeles-based industry research firm IBISWorld, which investigated grocery costs in Los Angeles, New York and Chicago to gauge consumer spending across the United States, Chicago’s prices were the cheapest on average for all food-brand categories (store, commercial and organic) of the three analyzed regions, coming in at $115.73. Los Angeles was the most expensive, at $124.43, while New York was a bit cheaper, at $122.66.
The firm found that the consumers with the lowest grocery bill ($92.04) were those in Chicago buying store brand products, vs. $104.54 and $110.64 for New York and Los Angeles, respectively.
The Windy City had the highest organic bill, however, coming in at $142.95, while L.A. had the lowest, at $137.52. IBISWorld attributed the City of Angels’ relatively inexpensive organics to its closeness to Mexico, along with the high volume of food production in California. With the fastest-growing segment of organic groceries being fresh produce -- expected to account for 42 percent of sales this year -- and California responsible for 53.8 percent of U.S. melon and vegetable production, it makes sense that Los Angeles offers lower-cost organics, the company noted.
“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 vs. competing products,” said IBISWorld senior analyst George Van Horn. “Organic markets still look to ‘own the supply chain,’ but they operate on a much smaller scale, resulting in markups.”
IBISWorld found that the average organic grocery cart is about 18 percent more costly than a grocery cart mainly filled with commercially branded products, but that the organic grocery cart is a whopping 37.6 percent more expensive than a basket mostly filled with store brand items.
“Despite the high price of organic products and the recession restricting budgets, the organic food market is still growing by 4 percent in 2009,” observed Van Horn.