Tomatoes are the second-most consumed vegetable in the U.S. after potatoes.[1] In our index, tomatoes comprise their own category as there are distinct types of tomatoes with price points that vary from one another, requiring some differentiation to prevent a meaningless blend of data points. Furthermore, the types of tomatoes are best differentiated by their end use.

Beefsteak tomatoes (and other round varieties), widely considered a ‘classic’ tomato by the average consumer, are the largest variety by volume. The ProduceIQ index also includes ‘plum’ type and ‘grape’ type tomatoes in its composition of the tomato category. Plum tomatoes represent a medium sized variety with a thicker skin that can create a thick consistency when cooked. It is most commonly used in sauces, stews.  Cherry and Grape Tomatoes are the ‘cute,’ bite-sized varieties that have skyrocketed in popularity and are the subject of today’s article.

While chefs still overwhelmingly prefer the flavor profile of Cherry Tomatoes to Grape Tomatoes, the oblong sibling has overtaken the more delicate Cherry Tomato in popularity. This is likely due to their low cost at the retail level, which reflects the breeds’ hardiness. Because the oblong, bite-sized variety transports well, it translates to lower spoilage and more profitability.

The Grape Tomato’s comparative advantage in transport (its thick skin) is also responsible for its most frequently used descriptor. The ‘burst’ descriptor, often accompanying a Grape Tomato, refers to its skin-to-juice ratio. The relatively thick skin requires an extra firm bite (by tomato standards) which causes the bursting sensation once the juice is set free. The Grape Tomato has the added flexibility of being able to ‘step-in’ for the plum variety in dishes requiring a thicker consistency (i.e. soups, sauces, etc.). However, most pedestrian tomato shoppers (myself included), pick up a package of oblong tomatoes because they are quite effortless. Instead of rummaging through the utensil drawer looking for that one knife that can cut a tomato, they can be eaten whole as a snack or easily tossed into a salad.

It’s no surprise that as demand for more convenient food has increased, produce breeders would design a tomato that is low on prep-work, easy to take ‘on-the-go’ and tidy to eat. I think of the bite-sized tomato in the same way I do a Cuties® a popular cross between a clementine and mandarin. They require no utensils, are unlikely to go rogue and squirt juice on your clothing and leave little residual on the hands.   

The Grape Tomato we find most regularly in the U.S. is tied to Santa Sweets, Inc., and their Authentic Grape Tomato®. Santa Sweets has global rights to the first Grape Tomato seed, F1 Santa variety. There are currently many varieties of oblong ‘Grape’ tomatoes grown worldwide. Grape Tomatoes have rocketed in popularity since their introduction in the early 90’s. Compounded annual growth rate of Grape Tomato volume has experienced a tenfold increase from 2000-2019.

Summary Statistics for Calendar Years: 2015 - 2019    
     
Average Price/Pound  $                1.07
     
Standard Deviation  $                0.44
     
Min Price/Pound  $                0.57
     
Max Price/Pound  $                2.67

 

Not all Grape Tomatoes are equal. A close inspection of the data shows a tale of two Oblong Tomatoes. The Elasticity chart below (a staple of the ProduceIQ commentary) provides for a high-level assessment of the interaction between supply and demand.

Grape Tomatoes have a well-defined price floor of $0.57/lb. Because tomatoes for the fresh produce market are harvested manually, a grower will not find it cost effective to pick below $0.57/lb sale price.  Processing tomatoes are harvested mechanically.  Grape tomatoes are available year-round with a variety of growers ‘stepping-into’ the market when others stop growing due to seasonal constraints.

In the past years, there’s been growing popularity in greenhouse tomato growing. Hence, we should expect a more consistent year-round supply as well as greater volume of differentiated product. The share of greenhouse-grown tomatoes has been steadily increasing across the U.S., in part driven by the popularity of Heirloom styles and differentiated “garden variety” types. Greenhouse tomatoes typically have higher per unit costs of production than their field grown counterparts. [2]

When supply is fairly constant year-round, we can expect to see greater price stability and predictability. Grape Tomatoes have peculiarly high price deviation (red ellipse). In the absence of the data points inside the red ellipse, we would see a perfectly elastic supply-price dynamic at approximately $0.90/lb. (For an explanation of (in)/elastic supply-price dynamics, see the article on Cherries.)

Observing average prices (aggregated over the past five years) at a weekly basis, we see prices above the $1.07/lb average occurring after the 2nd week of August and persisting through to mid-January. This of course is prime tomato season in Florida and Mexico (two of the largest producers). As mentioned in a prior post, the USDA data set does not allow for matching between price and the region. There seems to be a steady supply of product that sells between $1.70/lb to $2.70/lb consistently, over the past five years. These prices are always seen during the winter months and occur at differing supply levels. Therefore, they are most likely unrelated to seasonal supply issues (scarcity/abundance).

These bite-sized tomatoes are relatively hearty and convenient. They travel well and fit in to consumers’ demand for convenient, healthy food. Grape tomatoes are well suited to large growers as they grow in clusters (like their namesake – the grape).

Mexico offers year-round supply of grape tomatoes and has the advantage of a lower cost of labor for this labor-intensive crop. Florida is the largest grower of grape tomatoes in the U.S. Thanks to Florida’s sub-tropical climate, tomato farms produce nearly year-round; with production stopping during the summer months. Jointly, South Carolina, North Carolina, Tennessee, Virginia and Michigan are also notable tomato growing states; though curtailed to their respective warmest months as tomatoes are susceptible to frostbite.

 

Sources:

[1] https://www.agmrc.org/commodities-products/vegetables/tomatoes

[2] https://www.ers.usda.gov/amber-waves/2005/april/north-american-greenhouse-tomatoes-emerge-as-a-major-market-force/

In this article: Tomatoes

Author Image
Flavia Garcia, Econometric Analyst, ProduceIQ
Flavia Garcia, Econometric Analyst, ProduceIQ
Flavia is driven to make the ProduceIQ Index a reliable proxy for the industry, and useful in identifying actionable market dynamics. Flavia earned an A.B. in Economics at Barnard College, Columbia University; an M.Sc. in Finance and Econometrics at Queen Mary, University of London; and is currently a PhD student at the Vienna University of Economics and Business.