Local and Fresh Foods in the US forecasts sales of these to reach $5bn in 2007, up from $4bn in 2002.
And based on the "exponential growth" of farmers' markets, as well as retail and foodservice initiatives to add more local products to their merchandise mix and menus, Packaged Facts estimates that locally grown foods could turn into a $7bn business by 2011.
The report defines 'fresh foods' as anything that requires refrigeration or has a short shelf life. 'Locally grown foods' are those that need to travel no more that one day from their point of production to their point of purchase.
According to Packaged Facts, consumers equate locally grown food with freshness, and freshness with higher quality. As a result, they are increasingly looking toward the perimeter departments of supermarkets for fresh foods that include locally grown and organic fruits and vegetables, fresh meats, seafood, dairy and baked goods.
Consumers are also turning to these products as they are increasingly concerned about the impact of businesses on the environment, which prompts a desire for 'greener' purchases. Another concern is a loss of confidence in the conventional food safety systems, which turns some people away from a reliance on a heavily industrialized food chain.
"New trends, including 'food miles', 'the Slow Food movement', and even 'locavores' who eat only locally grown foods, are just beginning to take root in the US and we anticipate these and other trends will swiftly drive growth of local and fresh market foods," said Don Montuori, the publisher of Packaged Facts.
Farmer's markets have boomed in popularity in the US, says the report. This is largely due to an increased interest in fresh, healthier, locally grown and produced foods, as well as an increased understanding of the importance of maintaining small, sustainable farms on the fringe of urban environments, it says.
Other retail channels that have picked up on this trend include drug stores, convenience stores, restaurants and academic foodservice.
In terms of the making and marketing of fresh packaged goods, the report states that although major corporations are participating in the trend, many marketers of fresh foods - and especially local foods - are small businesses.
"Such players can have distinct advantages. For instance, they create and market products that logistically are not easily replicated on a large national scale, and they can introduce new products without the months of corporate planning required by larger marketers. They also play an important role in the overall market by providing products that are tailored to local and regional markets," writes the report.
According to Datamonitor's Productscan Online service, in 2006 alone there were approximately 1,200 launches of products labeled 'natural', nearly 600 'fresh' product launches, and 560 'organic products.
While relatively few of these products correspond to Packaged Facts' narrower definitions for 'fresh' and 'locally grown', the figures make it clear that packaged food marketers are aware of - and responding to - the strong consumer enthusiasm for all things fresh, said the report.
Looking into the future, the report suggests that marketers need to decide
where best to merchandise these products.
For example, Kraft Foods is testing its new Fresh Creations salads in the produce department - where Kraft is a newcomer and the line competes with products from better-established fresh salad brands like Fresh Express, Dole, and Ready Pac.
The report, published last month, is divided into four key parts: sourcing and supply; retail channels; foodservice channels; and marketing and new product trends in packaged foods.