U.S. Organic Food Sales Continue Their Rise Despite Challenges
Despite continued challenges from higher prices, a new study conducted by SPINS has found that organic food sales in the United States have continued to rise in both volume and dollars. A survey by the Organic Trade Association also determined that 81% of parents are now buying organic foods.
The SPINS data, along with additional survey data, was reported in this June’s Natural Foods Merchandiser Magazine.
Organic food sales in 2012 grew 11% over 2011, from $23.8 billion to $26.3 billion. Fruit and vegetable sales grew from $8.8 billion to $9.9 billion from 2011 to 2012, a 13% rise. Organic snack foods grew 15%, organic dairy grew 7%, beverages grew 10%, and condiments grew 16%.
The Organic Trade Association survey, U.S. Families’ Beliefs and Attitudes, found that more parents are buying organic than three years ago. The previous survey, done in 2009, found that 73% of families were buying organic at least some of the time. The 2012 survey found the number had jumped to 81%. And 97% of those parents say they are buying organic fruits and vegetables.
This reflects the massive jump in sales of organic baby care products, which increased by 34% from the year before.
Organic supplements also recorded massive growth, jumping by 20% over 2011.
With all this good news, organic food sales still have challenges. A recent NMI study found that only 33% of U.S. consumers understand what the USDA organic seal means – and what organic means in general. And 75% of those surveyed think organic foods are overpriced. And a majority of consumers think there is an authenticity issue with the USDA seal.
While some retailers are combating these challenges by offering more education, the challenge of higher prices for organic foods is more difficult because of the omnipresence of the natural food distribution system. The natural and organic food distribution system – dominated by United Natural Foods, Inc. – control much of the distribution for organic food brands sold to natural food and supermarkets, and this distribution adds a 25-33% margin on top of the food producer’s wholesale price, in addition to requires the food producer to pay advertising costs and other costs to be placed in the distributor’s catalog. Meanwhile most conventional food brands are sold directly into supermarket warehouses or are typically distributed with 15% or less margins.
To combat this, some retailers like Trader Joes, Alfalfa’s, Whole Foods and Sunflower Markets are doing more private label branding for their organic foods. This cuts out the “middleman” distribution system that adds at least 40% to the price of an organic food item.
The painful reality is, the slightly increased costs of producing organic foods is only a sliver of the increased cost of organic foods. For many years, everyone through the distribution system – including the retailers – have put higher margins on organic products.
The challenges of higher pricing are detrimental to the expansion of organic foods, and this is reflected by the fact that organic food sales shrunk by 1.5% in the United Kingdom last year – primarily due to higher prices and the fact that supermarkets began decreasing shelf space for organic offerings.
The reality is, if we do not expand our organic food production dramatically from its current levels – of being less than 5% of total food sales – our planet is doomed. From soil erosion to dead zones to nitrates in our drinking water to pesticide-caused cancers, we are ruining our current health and condemning the health of our sons and daughters and their sons and daughters. The evidence is in and mounting that pesticide and herbicide exposure is the cause for many types of cancers and other diseases (type “pesticides” into the search bar at the right to see some of this evidence).
The key then is to lower the cost of organic foods by bypassing the natural food distribution model currently spiking organic food prices. This can be done by buying food at farmer’s markets and buying private label (store brands) organic products when they are available.
Marshall L. Organic Gains: How much can organic grow amid continued consumer confusion. NFM, 2013 June.
This issue of price could be deadly
eight in ten parents surveyed are buying organic foods at least some of the time.