Organic Food Sales Still Growing Despite Economic Woes
Mike Blake via Reuters
After years of phenomenal growth it seems that sales of organic food are slowing. But, here at TreeHugger we're heartened that the industry is still growing despite the current economic crisis. The numbers tell the tale. The market research firm Euromonitor International is reporting that global sales of organic food and beverages reached almost $23 billion in 2007, with the US accounting for around 45% of the total. So, let's say that organic food was just over a $10 billion industry in 2007. Not too bad, but, as Nigel Hunt and Brad Dorfman suggest in their filing for Reuters, while the organic industry is still growing the growth is slowing.
Typical growth rates of 20 to 30 percent for organic food sales in the United States eased in the second half of 2008 as middle- and upper-income families felt the strain of layoffs and declining investment portfolios, said Tom Pirovano, director of industry insights at market research firm The Nielsen Co. Sales in December were up 5.6 percent, year on year, against a 25.6 percent rise a year earlier.
It's a good bet that any industry that is still growing in these economic times is in pretty good shape. Industry watchers suggest that the core organic consumer isn't jumping ship, they're just being more careful with their food dollars.
Ronnie Cummins, national director of the Organic Consumers Association, said occasional buyers of organic produce were cutting back, but regular buyers were lightening up on processed food in favor of organic whole fruits, vegetables and meats.
"They are trying to stretch their money but they are not willing to stop buying organic," he said. "We think in the long run the prognosis is good. The energy crisis and climate change can only really be addressed with organic production."
Hunt and Dorfman go on to show how demand has also slowed in Europe, but the only market where the threat of an actual decline in sales of organic food is in U.K.
In Britain, growth in sales of organic products has slowed dramatically, to an annual rate of about 2 percent from 16 percent, according to Nielsen data for the year to early November 2008.
"What I would expect is for this year to see a small single- digit decline for organics," said Jonathan Banks, U.K-based business insight director with Nielsen.
The challenge boils down to quality. "Organic producers must show their products taste better, are more nutritious and better for the environment. If they tick all those boxes they can sustain a (price) premium," he said.
But even in a possibly declining market there is reason for a positive outlook. Patrick Holden, the director of the UK's Soil Association says, "Organic food with a local story is bucking the recession. This recession has destabilized things a little, but not catastrophically."
What these numbers show is that organic food has gone far beyond a niche market. There is a solid core group of food shoppers that are committed to the organic ideal and they're not willing to skimp at the expense of their health and the health of the planet.