Organic Broadcaster

 

Consumer interest in organic products drives ‘banner year’

By Maggie McNeil

Consumers are eating more organic food and using more organic products than ever before. The U.S. organic sector posted a banner year in 2019, with organic sales in the food and non-food markets totaling a record $55.1 billion, up a solid 5% from the previous year, according to the 2020 Organic Industry Survey released in June by the Organic Trade Association.

Sales of organic food and non-food products shattered major benchmarks and posted new records—the organic market is now more than double its size just 10 years ago. Last year saw increases in every organic category and every part of the store. From organic produce and organic meat, organic pasta sauce and organic spices, to organic house-hold and personal care products, organic bedding and mattresses, consumers were buying more organic.

Organic food sales hit $50.1 billion, breaking through the $50 billion mark for the first time. Organic food products can be found now throughout traditional food retail outlets and are gaining ground in the online and delivery markets. As the organic market has matured and penetrated more deeply into the main-stream, the pace of its growth has slowed, but the 4.6% growth in 2019 was still double the 2.3% growth reported for the overall food market.

Organic non-food sales totaled just over $5 billion, up a strong 9.2%, and easily outpacing the growth rate of just 3% for total non-food sales. As more consumers become aware of the benefits of organic and the positive impact organic can have on their health, they are increasingly including organic non-food items in their overall purchases.

The unprecedented COVID-19 pandemic this year —and its enormous impact on our everyday lives— has had dramatic consequences for the organic sector in 2020. Never before has the food we provide our families been more important, and consumers have turned to the trusted Organic label.

“Our 2020 survey looks at organic sales in 2019 before the coronavirus outbreak, and it shows that consumers were increasingly seeking out the Organic label to feed their families the healthiest food possible. The pandemic has only increased our desire for clean, healthy food,” said Laura Batcha, CEO and Executive Director of the Organic Trade Association. “Our normal lives were brought to a screeching halt by the coronavirus. The commitment to the Organic label has always resided at the intersection of health and safety, and we expect that commitment to strengthen as we all get through these unsettled times.”

Standouts in 2019

Organic produce maintains its top position. Say “organic” to food shoppers and the first things many of us think of are organic apples and strawberries, organic carrots and lettuce. In other words, produce. Organic generally still matters most to us when we’re shopping in the fresh produce aisles. Organic fruit and vegetable sales in 2019 were up nearly 5%, hitting $18 billion, as the category continues to be the star of the organic sector, and often the starting point for organic food buying habits.

Millennials and younger generations have grown up with organic, and remain the growth drivers for this category. Organic produce makes up almost a third of all organic food sales, and organic fruits and vegetables, including fresh, frozen, canned, and dried, have now captured 15% of the overall fruit and vegetable market in this country.

Organic dairy is working its way out of oversupply. Growth was slow for organic dairy in 2019, but late in the year, the category slowly started to move away from the period of oversupply of skim milk and not enough butterfat that hampered growth in 2017 and 2018. Overall, the $6.6 billion category grew at a rate of almost 2%. Organic dairy is holding its own and growing faster than the conventional market, with the overall dairy category growing only 0.2%. Organic dairy and eggs accounted for just over 8% of the total dairy and eggs market.

Organic meat and poultry are showing robust growth. While organic meat, poultry, and fish remained the smallest organic food category in 2019 with $1.4 billion in sales, the segment saw almost 10% growth—the highest growth of any organic food category. Organic poultry remained the organic protein of choice, and the $865 million poultry market made up more than half of the sales for the organic meat, poultry, and seafood category.

Home cooks are spicing up meals with organic condiments. What to have with your organic meat? Organic ketchup, of course, or maybe organic chipotle or curry sauce for the more adventurous. Although it is the second smallest organic food category, the products in the organic condiment category saw some of the biggest growth. Sales of organic ethnic sauces—curry, chipotle, sriracha, Korean BBQ—reached $77 million for the strongest growth rate ever of more than 23%. Organic ketchup sales also spiked in 2019 to $57 million, up almost 16%, thanks to healthier versions of this classic condiment, including sugar-free and low-sugar offerings. Organic spices recorded $345 million in sales with more than 15% growth.

Outside the organic food tent, the non-food organic market is seeing good growth. The organic non-food market crossed the $5 billion mark in 2019 for the first time, and now accounts for just over 9% of total organic sales. Growing concerns about toxins and chemicals not just in our bodies, but also on our skin, in our homes, and in our environment, along with wider availability of products, have created a robust market for the organic non-food sector. Fiber sales—clothing, bedding, mattresses—continued to lead the sector and crossed the $2 billion mark in 2019, up just over 12%. Organic dietary supplements also were a standout, with sales up just over 10% to a record $1.7 billion.

Covid-19 Impacts

The coronavirus pandemic has caused major upheavals in our lives and our work, and in the organic sector. The country is slowly “reopening” now, but for more than three months, we’ve been stay-at-home households. The food we’re purchasing and preparing for our families is not just a source of nutrition, but of comfort and security, and consumers have flocked to the Organic label for their home cooking. Sales of organic food in all categories—and of organic vitamins, supplements, and household products—skyrocketed in the initial panic and stock-building stages, and have stayed high as consumers want the cleanest, highest quality food and products for their families in these stressful times.

Organic produce sales, after jumping by more than 50% in the early days of kitchen stocking, were up more than 20% in the spring of 2020. Other categories experiencing softer growth have been seeing big boosts in demand: the run on groceries meant organic milk was in high demand, for example, and sales of organic eggs skyrocketed. Packaged and frozen organic foods saw double-digit growth as consumers upped at-home meal preparation.

In the early stages of the COVID- 19 outbreak, the Organic Trade Association undertook a multi- pronged effort to look not only at shifting patterns in organic shopping since the crisis began, but also to gather intelligence on the overall retail landscape for organic and to see where the organic supply chain is holding together and where it is being challenged. The association worked with Mercaris Data Service and Category Partners strategic insights company to put together the latest insights and outlooks for the organic sector.

The association also conducted an online flash poll of 3,188 “likely organic” shoppers in late April and early May. More than 90% of respondents indicated that in their current food shopping, organic is more important than ever.

While there were certain growth trajectories taking shape going into 2020, the onset of COVID-19 turned the organic food marketplace upside down. Prior to 2020, the organic market has been growing steadily year over year. The U.S. economy has been battered by the pandemic, and experts say there are a few ways that could play out for organic. Because people are price-sensitive, there could be a slowdown in the growth of organic sales. Or, because people  are increasingly aware of their health and looking  for cleaner products, they may be willing to invest in premium products.

Influenced by COVID, all of the staple categories, from dairy and eggs, to breads, pastas, rice and  grains and baking supplies, such as flour and baking yeast, are expected to see increased growth in 2020, provided supply can meet demand. In the non-food organic market, organic vitamins and immunity- related products are expected to see strong growth, as are organic household products.

“It’s hard to know what’s ahead of us, but consumers will continue to trust in and depend on the Organic label,” said the Organic Trade Association’s Batcha. “Organic producers and processors—indeed the entire organic supply chain—have been working around the clock through this difficult time to keep our stores filled with healthy, toxic-free, and sustain- ably produced organic food and products. Organic is going to be there for the consumer.”

 

Maggie McNeil is Director of Media Relations with the Organic Trade Association, the membership-based business association for organic agriculture and products in North America. OTA is the leading voice for the organic trade in the United States, representing over 9,500 organic businesses across 50 states.

 

 

From the July| August 2020 Issue

 

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