Study Shows Organic Food Sales May Have Peaked

A marketing research and consulting firm says that organic food sales may have peaked. A new study by the TABS Group has found that organic food sales are currently enduring low purchase levels as the global economical slowdown hits consumers.

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In the study, TABS found that less than 40% of adults in the U.S. had purchased anything from the major organic categories in the last six months, while non-organic products enjoyed household penetration levels well above 70%, according to Food Navigator USA.

"The findings are consistent with trends we have been tracking in retailer sales data," said Kurt Jetta, president and founder of TABS. "Very few of these products have meaningful sales levels in traditional mass market retailer, even the ones that are very strong in the natural food and specialty channels."

The study, which took place during November 2008 and covered 1,000 participants aged 18 and over, found that organic fresh fruit had the highest purchase incidence at 27%, followed by organic fresh vegetables at 26%.

Mr Jetta added that the majority of retailers that had invested in the organic trend would see "poor returns". "Most of the sales growth in these channels has been driven by increased selection of organic products rather than any inherent growth in consumer appeal," he noted.

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Avatar for Anonymous Anonymous says:

The headline and story are misleading. “Peaked” implies that total organic sales are declining in either dollar or volume terms, but the data provided supports neither of those conclusion Rather, the article says “purchase levels” are low,when in fact the data supports “household penetration levels” are low. Total organic food sales, as a percent of all US food sales, have always been small: growing from less the 1% to about 3% of total food sales annually over the last 10 years, but but with rates of growth far in excess of any other major food category. The article provides no analysis of that condition, and while organic sales growth does seems to be flattening in this environment, the rate of growth still appears, according to other reputable market research, to be outperforming other sectors. (Which is why mainstream grocers jumped on the bandwagon to carry the products in the first place, though they generally failed to make the investments in staff and consumer education needed to sustain this strategy). This is supported by data that grocery stores specializing in the natural and organic foods sector (such as the natural food co-op sector) continue to see total sales growth well in excess of inflationary increases, and out-performing traditional retail sales growth performance. Finally, even if “only” 26 or 27% (or “less than 40%”) of the American public is buying a product, there are a lot of fruit and vegetable producers that could build a business plan rooted in serving “only” 26% or 27% or 40% of American consumers. So what’s the real point here, and where’s the intelligent and critical analysis of your writers in carrying this story? Do you have an agenda at work? Or are you just being sloppy in your language? I expect better of you.

Avatar for Anonymous Anonymous says:

I have to agree with Anonymous, if I could sell something to 27% of the people walking in a grocery store, I could build a pretty substantial business. While I don’t necessarily agree with the gloom and doom tone of the article, I do think that the premiums for organic are starting to dry up.

Avatar for Anonymous Anonymous says:

I too agree with Anonymous and Nick in regards to the misleading headline and tone of this article. Anonymous quotes valid statistics about the Organic segment of the Grocery Industry. And as we see Gen X and Millenials grow into independent households, there will be room for additional growth as they have been raised in a cultur that is far more “Green” than the Boomers. So, Fruit Grower, it is careless for your article to publish with a tone that may discourage Growers from considering the Organic option.
A comment about Organic premiums – both Organic Consumers and Organic Growers understand the necessity of the Premium – The “Premiums” often make up for the reduced crop yields per acre plus the added expense of Certification and Labor involved with Organic Production and Processing and finally the added RISK factor (its far easier to lose an Organic Crop to weather, etc.). So if Premiums go away, so will farmers and ultimately so will Organic on the shelf – leaving 27% of the shoppers without much choice. Regretably its often the middlemen and the mainstream retailers who don’t “get it” therefore are working hard to diminish if not eliminate the Premium. There is a big need for greater education and understanding of Organic at all levels.

Avatar for Anonymous Anonymous says:

Headline gave pause to my sales. Sales that are double last years to date. Wholesalers from surrounding states competiting for limited winter supplies. Record and near record farmers market sales. Everyone puckered up in November. Sure some sales segments are and will remain tight. “Peak”. We’ve thought that before too, kept at it, developed markets, kept growing. Biggest problem is acres converted to organics WITH NO MARKETING PLAN. Brokers are not necessarily your friend, a cut with no risk. There is no ‘premium’ for anyone if return doesn’t even cover cost of production. Prices driven down in this way is one of the biggest problems in the organic market. Tread lightly.

Avatar for Anonymous Anonymous says:

more and more people are calling me to buy fresh, organic, local produce from the farm. They are wanting organic produce, they are forced to be more aware of prices and frugal due to less money available to them.

Avatar for Anonymous Anonymous says:

The article does not bash organic produce nor does it attempt to dissuade farmers from growing organically. It simply states the trend for the current time so no need to over react here. “Premium” products tend to attract a smaller group of buyers. This goes for all things including cars, tv’s and houses. At some point supply and demand will balance out forcing some producers to leave the market. This doesn’t mean organic products will die, simply they will reach maturity in the market like everything else. At that point low performing producers and fly by night operations will cease to exist and truly profitable ones will remain. The only way organic can compete with conventional on a large scale is if the prices are comparable. But if that ever happened it would no longer make economic sense to grow organically due to the higher per unit production costs.

Avatar for Anonymous Anonymous says:

The headline and story are misleading. “Peaked” implies that total organic sales are declining in either dollar or volume terms, but the data provided supports neither of those conclusion Rather, the article says “purchase levels” are low,when in fact the data supports “household penetration levels” are low. Total organic food sales, as a percent of all US food sales, have always been small: growing from less the 1% to about 3% of total food sales annually over the last 10 years, but but with rates of growth far in excess of any other major food category. The article provides no analysis of that condition, and while organic sales growth does seems to be flattening in this environment, the rate of growth still appears, according to other reputable market research, to be outperforming other sectors. (Which is why mainstream grocers jumped on the bandwagon to carry the products in the first place, though they generally failed to make the investments in staff and consumer education needed to sustain this strategy). This is supported by data that grocery stores specializing in the natural and organic foods sector (such as the natural food co-op sector) continue to see total sales growth well in excess of inflationary increases, and out-performing traditional retail sales growth performance. Finally, even if “only” 26 or 27% (or “less than 40%”) of the American public is buying a product, there are a lot of fruit and vegetable producers that could build a business plan rooted in serving “only” 26% or 27% or 40% of American consumers. So what’s the real point here, and where’s the intelligent and critical analysis of your writers in carrying this story? Do you have an agenda at work? Or are you just being sloppy in your language? I expect better of you.

Avatar for Anonymous Anonymous says:

I have to agree with Anonymous, if I could sell something to 27% of the people walking in a grocery store, I could build a pretty substantial business. While I don’t necessarily agree with the gloom and doom tone of the article, I do think that the premiums for organic are starting to dry up.

Avatar for Anonymous Anonymous says:

I too agree with Anonymous and Nick in regards to the misleading headline and tone of this article. Anonymous quotes valid statistics about the Organic segment of the Grocery Industry. And as we see Gen X and Millenials grow into independent households, there will be room for additional growth as they have been raised in a cultur that is far more “Green” than the Boomers. So, Fruit Grower, it is careless for your article to publish with a tone that may discourage Growers from considering the Organic option.
A comment about Organic premiums – both Organic Consumers and Organic Growers understand the necessity of the Premium – The “Premiums” often make up for the reduced crop yields per acre plus the added expense of Certification and Labor involved with Organic Production and Processing and finally the added RISK factor (its far easier to lose an Organic Crop to weather, etc.). So if Premiums go away, so will farmers and ultimately so will Organic on the shelf – leaving 27% of the shoppers without much choice. Regretably its often the middlemen and the mainstream retailers who don’t “get it” therefore are working hard to diminish if not eliminate the Premium. There is a big need for greater education and understanding of Organic at all levels.

Avatar for Anonymous Anonymous says:

Headline gave pause to my sales. Sales that are double last years to date. Wholesalers from surrounding states competiting for limited winter supplies. Record and near record farmers market sales. Everyone puckered up in November. Sure some sales segments are and will remain tight. “Peak”. We’ve thought that before too, kept at it, developed markets, kept growing. Biggest problem is acres converted to organics WITH NO MARKETING PLAN. Brokers are not necessarily your friend, a cut with no risk. There is no ‘premium’ for anyone if return doesn’t even cover cost of production. Prices driven down in this way is one of the biggest problems in the organic market. Tread lightly.

Avatar for Anonymous Anonymous says:

more and more people are calling me to buy fresh, organic, local produce from the farm. They are wanting organic produce, they are forced to be more aware of prices and frugal due to less money available to them.

Avatar for Anonymous Anonymous says:

The article does not bash organic produce nor does it attempt to dissuade farmers from growing organically. It simply states the trend for the current time so no need to over react here. “Premium” products tend to attract a smaller group of buyers. This goes for all things including cars, tv’s and houses. At some point supply and demand will balance out forcing some producers to leave the market. This doesn’t mean organic products will die, simply they will reach maturity in the market like everything else. At that point low performing producers and fly by night operations will cease to exist and truly profitable ones will remain. The only way organic can compete with conventional on a large scale is if the prices are comparable. But if that ever happened it would no longer make economic sense to grow organically due to the higher per unit production costs.