| | Introduction | Who buys organic and where they buy, is evolving | Growth despites supply crunch | Addressing organic farming challenges | Threats to organic farming | Sources
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Introduction
Organic is outgrowing its moniker as a specialty category thanks to a double digit increase in sales last year by consumers across the U.S. according to data from the Organic Trade Association (OTC). “Organics have moved beyond being a niche market,” reports Laura Batcha, CEO of the OTC.
Sales of organic food climbed 11% to $35.9 billion in 2014. While consumers in New England and the Pacific Northwest continue to lead the charge, shoppers in the Mountain and South Atlantic regions were not far behind. Sales penetration is highest in New England at 87% and in the Pacific Northwest at 86% as expected, but sales penetration in the mountain region is close to 82% and South Atlantic reached 79% last year based on the purchase of organic coded products according to Consumer Product Goods (CPG). Texas, Oklahoma, Mississippi and Louisiana also had market penetration by organic products of 75%.
There was also strong growth in areas that historically haven’t seen the growth in the organics market. For example the number one market for organic sales growth in 2014 was Salt Lake City with 34% year-over-year growth, followed by Dallas-Fort Worth, which grew 32% and the Phoenix-Tucson area which increased 31%.
Who Buys Organic and Where they Buy, is Evolving
There is no longer a typical organic consumer. The face of the organic buying family now mirrors the demographics of the US population in terms of ethnic background.
Organic shoppers are more ethnically diverse now than previously. For instance 14% of African Americans buying on a regular basis in 2014 compared to only 7% in 2009.
Fifteen percent of Hispanic households were buying organic in 2014 compared to only 7% four years ago. The vast majority of families (73% ) described themselves as white. This is in line with the US Census population data.
A broader awareness of organics could influence the diversity of shoppers as well. OTA’s survey found 47% of US families were “very familiar” with the USDA organic seal, up from 27% six years ago. Nearly seven out of ten parents say that they are extremely well informed or know quite a bit about organic products. Beyond race, increased awareness of organic helped drive a 10 percentage point increase in the percent of families who buy organic to 83% compared to 2009. The increased diversity may also be partly related to increased accessibility and affordability of the products due to a broader distribution.
In 2014, Walmart launched its Wild Oats organic brand at 3,800 stores in the US with prices roughly 25% lower than its competitors. Sam’s Club also offers more organic products as does Kroger who launched their own line of organic products in 2014.
The big box stores and warehouse clubs often offer lower prices than natural grocery and specialty stores which also helped to increase sales in the market.
Seventy-eight percent of organic buyers now shop the conventional grocery retail category.
Growth Despite Supply Crunch
Laura Batcha also reported that the growth in organic sales in 2014 is “striking” because it occurred in the face of increasing and “very dramatic” supply shortages.
The OTC also stated that currently organic sales account for 4% of total food sales, while acreage devoted to organic agriculture is less than 1% of total US cropland.
There is a huge opportunity for rural communities to fill this demand. In particular organic fruit and vegetables offer potential as they continue to be the largest selling category in 2014 with $13 billion in sales, a 12% increase from 2013.
Organic dairy also offers opportunity with an 11% increase in sales to $5.46 billion in 2014, the largest increase for that category in six years.
Addressing Organic Farming Challenges
The OTA report indicates that there is insufficient production of organic products. There may be several reasons for this. Worry about making ends meet, while in the three year transition period
concerns farmers.
There is also insufficient data about the organic sector concerning what quantities the market needs and what prices will be had, which also hinders the growth of this market segment. The OTA is advocating an organic check-off
campaign to help to address some of these concerns.
Some of the funds collected would go towards research that could answer questions about market demand and production.
Threats to Organic Farming
Cross pollination with GMO crops is the biggest threat to organic farmers. It could quickly put them out of business. Another challenge holding back the growth of organics is the lack of organic farmers, causing an insufficient supply. A third reason for lack of organic farming are the tools used are not as advance or easy to use as those for conventional farming. More research needs to be done to improve organic farming methods and to help farmers improve how and when they plant as well as on how to predict demand.
Sources
Research for this article was obtained from the FOOD navigator-usa.com website. The articles were written by Elizabeth Crawford.
- Who buys organic and where they buy it is evolving - April 3, 2015
- Organic food sales grow 11% in 2014 withpolitically, geographically diverse shoppers - April 20, 2015
- Rise in organic imports signals opportunity for US farmers, OTA says – April 22, 2014
- GMOs, limited technology, dwindling farmers threaten organic growth, Sen. Tester says – April 24, 2014
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