CHICAGO, Ill. – Sales of organic food and beverages in the U.S. are shifting down a gear after more than a decade of pedal-to-the-metal growth.
Retail sales amounted to $13.8 billion US in 2005, according to a manufacturer survey conducted by the Organic Trade Association.
That is up 13 percent from the $12.2 billion sold in 2004, but a far cry from the historical pace of growth. Organic sales had been expanding 20-24 percent each year since 1990.
Caren Wilcox, executive director of the OTA, said it was inevitable that the percentage change in sales would slow as the total dollar value climbs.
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But she failed to note that the 2005 sales figure fell $700 million short of the OTA’s own projection of $14.5 billion.
The OTA’s forecast for 2006 is for $16 billion in sales, a 16 percent increase over 2005 levels.
While the pace of sales is slowing, the organic share of overall food purchases is rising, accounting for 2.5 percent of all retail food sales in 2005, up from 1.9 percent in 2003.
Almost all large retailers and many smaller ones have devoted shelf space to organic brands, said Wilcox.
“We’re going gangbusters,” she said.
Her assertion is corroborated in the findings of a U.S.-wide on-line survey of 2,109 consumers conducted by The Hartman Group.
The report, released on May 8, states that 73 percent of those surveyed buy organic products once in a while, up from 55 percent in 2000, the last time a similar survey was conducted.
“There is an enormous increase in occasional purchases,” Harvey Hartman, chief executive officer of the Hartman Group, told delegates attending the All Things Organic conference here.
But at the heart of the market is a core group of shoppers, the 23 percent of consumers who buy organic products on at least a weekly basis.
Nearly half of the survey respondents who buy organic products do their shopping in natural food stores, up from 29 percent in 2000.
Grocery stores are losing sales to other marketing channels like supercentre/discount stores, where 15 percent of respondents said they shop, compared to nine percent five years ago.
That trend is likely to explode in future surveys.
“We believe there is going to be an enormously profound effect as Wal-Mart enters this marketplace,” said Hartman.
Another finding of the survey was that consumers are increasingly searching for the United States Department of Agriculture’s organic seal on products they buy.
“They don’t exactly know what that means. They don’t exactly want to know what it means. But they feel good that someone is regulating it,” he said.
And while most organic products are located on the outskirts of grocery stores where the produce, meat and dairy products are found, there is some initial adoption of processed and packaged goods aimed at children.
Youth are also behind an emerging trend in the dairy and meat aisles where parents are getting nervous about what is contained in conventional products.
“Avoiding hormones has really become more and more important,” said Hartman.
