Despite more organic food and beverage products on grocery store shelves, all is not healthy in the world of pesticide-free, additive-free edibles. In fact, Chicago-based Mintel predicts that market growth rates for organic food and drink will decline, especially as the economy struggles.
Although the market for organic foods and beverages was expected to reach $7.2 billion in 2008, an increase of over 140 percent from the $3 billion recorded during 2003, sales are slowing and will not rally anytime soon because of the economy.
Senior Analyst Marsha Mogelonsky sees two major cost-related challenges for organic manufacturers -- rising food prices and private label brands. According to Mintel, the price of all food at home increased more than 7 percent in the past year. "To cope with higher prices, many shoppers are simply opting not to buy pricey organic or premium brands," explains Mogelonsky.
Consumers are also saving money by reaching for private label organics, which have exploded in recent years. Mintel's Global New Product Database (GNPD) tracked over 540 new private label organic foods in 2007, a massive increase from the 35 new products seen in 2003. Furthermore, when Mintel asked survey respondents about the difference between name brand and private label organics, three in five (60 percent) said it didn't matter, that they reached for "whatever is available" when shopping. Private label posts an increasingly large threat to branded organic lines.