Products beyond the produce aisle are going organic. Organic breads, packaged cereals, snack bars, cookies and more are getting more shelf space, thanks in part to acquisitions by larger companies with more reach into additional areas of the country and the store. Stores and restaurants that specialize in organic foods are more popular than ever.
And with increasing concerns about genetically altered foods, there is a movement away from foods and beverages that are "made to be better for you," explains says Harry Balzer, senior vice president, chief food industry analyst and author of the NPD Group’s "Eating Patterns in America" report. NPD’s latest research finds 57 percent of Americans are concerned "modified" foods pose a health hazard, up from 46 percent a decade ago.
"It is looking like we want more of our foods and beverages to be natural,” Balzer says. "We’re looking for foods and beverages to be as they were meant to be. It is part of the new 'healthy food revolution' happening in this country."
In terms of hard numbers, however, market research firm Mintel Group reports organic sales have actually leveled off. "Considering the typically higher cost of organic foods and beverages, consumers are increasingly hard pressed to justify the added expense," says William Roberts Jr., senior food and drink analyst at Mintel. "As such, sales have hit something of a plateau, where they likely will remain until consumers have a clear reason to turn to organics."
Mintel says organics' main selling point "is the perceived notion that the products are healthier, yet consumers appear confused about the benefits of organics versus products labeled 'natural,' suggesting that manufacturers have failed to communicate organic benefits to potential consumers" – and to current or past ones. Organic brands will need to address consumers in a more open and transparent way to maintain credibility, cites the firm's recent study, "Organic Food and Beverage Shoppers (U.S., March 2015).
"Despite organic sales and accessibility at all-time highs, consumer confusion about organic benefits remains significant," admits Laura Batcha, executive director and CEO of the Organic Trade Assn., Washington. "Consumers need to know the facts about organic so they can make the smartest choices for themselves and their families."
However, she points out the news in August about rising recalls of organic food is also misleading because it lumps organic food with other products that don't share similar properties and overstates the recall percentages.
Mix of consumers
NPD Group finds the natural foods store channel is best at luring people looking for organic foods and beverages. One of NPD's consumption behaviors reports indicates produce-minded consumers are the most devoted to organics, but others are willing to give it a try.
"Currently there is a mix of organic consumers," says Trey Muller-Thym, president of Thymly Products Inc., Colora, Md. "We are starting to see the soccer moms enter the segment. They are concerned about what their kids eat, so that will help fuel the continued growth."
Research conducted last year by The Hartman Group in its "Organic & Natural 2014" study indicates 73 percent of U.S. adult consumers buy organic products at least occasionally and organic usage is holding steady, with more than a third of consumers using organics at least monthly (based on past three-month usage). It also says core organic purchasers say they do so to avoid chemicals, pesticides and herbicides, they want to support farmers who take the time and integrity to farm organic and many do it for the environment. Click here or on the graphic to enlarge
According to figures from OTA, sales of organic food in the U.S. have risen by almost 25 percent since 2012, and the number of organic products on the market is increasing steadily, as is demand. According to the OTA, consumer demand has grown by double-digits every year since the1990s, with organic sales at more than $39.1 billion in 2014, up 11.3 percent from 2013. That's a milestone 5 percent share of the total food market. Organics are projected to climb double digits again in 2015, the OTA reports. The increase in demand has directly led to an increase in supply.
The U.S. organic food and beverage market is set to perform solidly through 2020, states TechSci Research, which compiled a new report that pegs organic foods' compound annual growth rate (CAGR) at 14 percent. Retail chains are helping to bolster sales, according to TechSci, because they're creating more awareness and introducing various private label organic products at lower prices. Major retail chains such as Whole Foods Market, Tesco and Walmart are adding organic product lines to give consumers more choices, says TechSci's "Global Organic Food Market Forecast & Opportunities, 2020."
More product introductions
Meshing with this trend, companies like Hormel are inventing ways to pare down complicated ingredient panels and create more organic products that speak to more consumers. "A growing number of consumers are choosing natural and organic products," noted Jeffrey Ettinger, chairman, president and CEO at Hormel Foods, in May when the company acquired Applegate Natural & Organic Meats, Bridgewater, N.J. "The Applegate team has built a great brand, and consumers can rest assured there will not be any changes to the way Applegate meats are raised and produced."