Organics: let the good times roll
Organic product sales grow at their fastest pace in five years, says OTA research.
Organic foods and nonfoods look like the California Chrome of the supermarket industry. In 2013, their sales growth outpaced that of conventional products: organic food sales sped ahead 11% and nonfood sales 13% vs. a 3% advance for comparable conventional items.
The collective effect: organic products tallied $35.1 billion in U.S. sales, up nearly 11.5% in 2013, reports the Organic Trade Association (OTA) in its 2014 Organic Industry Survey, conducted and produced by Nutrition Business Journal. This rate has escalated from 4.6% growth in 2009 and 7.4% growth in 2010, yet “is unlikely to return to the 18% average growth experienced from 2003-2008,” the study says.
Probably true. Yet the OTA survey projects “growth rates over the next two years will at least keep pace with the 2013 clip and even slightly exceed it.”
And separate research corroborates there is a clear lane ahead for organics growth. In its United States Organic Food Market Forecast & Opportunities, 2018 report, TechSci Research predicts that organic food sales will grow at about a 14% compound annual growth rate between 2013 and 2018. “The increasing awareness of health benefits coupled with the per capita income are stimulating the demand for organic food” in the U.S., says TechSci. It notes the U.S. is home to about 17,750 organic farms, and cites OTA 2012 estimates that 8 out of 10 U.S. parents reportedly purchase organic food.
Organic food and farming continue “to gain in popularity, says Laura Batcha, executive director and CEO of OTA: “Consumers are making the correlation between what we eat and our health, and that knowledge is spurring heightened consumer interest in organic products.” Organic food sales in 2013 posted $32.3 billion or 92.1% of total organic sales. Non-food organic products include flowers, fiber, household products and pet food; their sales reached almost $2.8 billion in 2013, up nearly eightfold since 2002. Organic foods now represent more than 4% of the $760 billion annual food sales in the U.S., says OTA.
Where is this growth occurring? According to OTA:
- Organic fruit and vegetable sales rose 15% to $11.6 billion in 2013. The $1.5 billion in new sales comprised 46% of the organic sector’s $3.3 billion in new dollars. Organics now account for more than 10% of the nation’s fruit and vegetable sales.
- Other double-digit advances were posted by organic condiments (up 17% to $830 million), organic snack foods (up 15% to $1.7 billion), organic breads and grains (up 12% to $3.8 billion), organic meat/poultry/fish (up 11% to $675 million), and organic packaged and prepared foods (up 10% to $4.8 billion).
- Single-digit growth occurred in organic dairy (up 8% to $4.9 billion) and organic beverages (up 5% to about $4.0 billion).
Despite hefty gains and optimistic projections through most of this decade, OTA cites three challenges that could eventually impede growth if left unaddressed:
- U.S. farmland isn’t being converted to organic at a pace ample to meet current demand.
- Supplies of organic feed and organic grain are tight and expensive.
- Consumers are still confused about the meaning of certified organic.