Has the organic market plateaued?

In 1997, The Hartman Group published its first strategic analysis of the rapidly changing organic market with the aptly titled report The Evolving Organic Marketplace. The report accurately predicted not only a fast-changing corporate game board within a vibrant subset of consumer packaged goods (where large conglomerates would begin to dominate a fragmented market through acquisition of small, pioneering brands), but also correctly envisioned the explosive growth of the organic category. At the time, organics was just under 1 percent of the $500 billion food market, but Hartman correctly predicted organics was capable of growing several times beyond that size. Fast forward to 2008, and U.S. organic food sales have grown 17 percent–21 percent annually since 1997, compared to 2 percent to 4 percent growth for total U.S. food sales, according to The Organic Trade Association (OTA). Examining its most recent trade data, the OTA reported in 2007 that organic foods accounted for roughly 2.8 percent of food sales in 2006, reaching $16.7 billion and making up over 95 percent of all organic product sales. But beneath all the hyperbole about the dramatic growth of the organic market, rumblings of slowdowns in certain organic categories — or at least a suspected plateauing of overall organic sales — have begun to surface. This peak in organic sales is evidenced in Hartman’s latest national study, The Many Faces of Organic:2008 where aggregate consumer use of organics, though not statistically significant in overall decline, dropped four percentage points from 73 percent of the population buying organics in 2006, to 69 percent in 2008. There are factors that may lead to a slowing in organics. They include: The economy; consumer interest may be waning as “organic” comes to mean so many things to consumers that it represents no one thing for everyone; “fresh products” have become more important; there has been increasing debate among government, industry and activist organizations over the USDA certification process and definition of “organic.” While the market as a whole may be plateauing, core consumers are even more loyal, especially if they have children. Other pluses include: intensified media coverage, concerns over food recalls, and expansion of organic options within mainstream brands. Hartman Group

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