Citation
di Matteo, K., Retzloff, M. and Knudson, B. (1999), "US organic industry overview", British Food Journal, Vol. 101 No. 3. https://doi.org/10.1108/bfj.1999.070101cab.002
Publisher
:Emerald Group Publishing Limited
Copyright © 1999, MCB UP Limited
US organic industry overview
US organic industry overview
Support for the organic label
54 percent say an official seal of national certification as organic would make them more likely to buy organic produce (Shopping for Health Survey conducted by Rodale Institute, PREVENTION Magazine and the Food Marketing Institute, January 1997).
74 percent of the environmentally-oriented Americans prefer environmental claims be certified (The Evolving Organic Marketplace, Hartman and New Hope, Fall 1997).
85 percent strongly favor nationwide labeling standards for organic food. The popularity for labeling standards crosses demographic groups, with at least eight out of ten adults in every group favoring the setting of nationwide standards (Lake Sosin Snell Perry & Associates, Inc. nationwide poll, April 1998). Business facts
The organic industry continues to expand. Here are some statistics regarding this burgeoning market:
- 1.
Natural Business' 1998 Financial Market Overview reported that organic food sales were $4billion for 1997, and that natural foods are the fastest-growing segment of the retail market.
- 2.
Based on statistics from Natural Foods Merchandiser, the organic industry has posted a double-digit sales growth of 20 per cent or greater for the ninth consecutive year.
- 3.
Packaged Facts, a New York City-based market research firm, predicts that sales of organic foods and beverages will increase by more than 150 per cent to $6.6 billion by the year 2000.
- 4.
According to the Food Marketing Institute's The Food Marketing Industry Speaks (1995):
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42 per cent of mainstream stores carry organic produce;
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25 per cent of shoppers buy natural or organic foods at least once a week from supermarkets;
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75 per cent of senior management believe that organic and natural foods are an upcoming trend.
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- 5.
According to a 1995 United States Department study, over 5,000 US farmers are using organic methods, and the majority of these growers were producing fruits and vegetables. Texas is the leading state with over 10 per cent of its farms, or 18,000 acres, certified organic in 1995.
- 6.
Leading companies are recognizing the importance of organic production. For example, one leading active-wear company's goal to buy only 100 per cent organic cotton is now a reality - their entire 1998 line of cotton clothes are made with certified organic cotton, from pique knits to canvas and twill.
Key purchase criteria for organic products
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Healthfulness - 80 per cent.
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Availability in regular supermarkets - 69 per cent.
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Environmental friendliness - 67 per cent.
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Price - 64 per cent.
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Convenience of preparation - 53 per cent.
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Appearance of product or package - 43 per cent.
Effects of price premiums
Purchase a lot more if same price as conventional - 83 per cent. Willing to pay 10 per cent more - 69 per cent. Willing to pay 20 per cent more for completely organic - 32 per cent.
Organic demand rising
Aging "Boomers" and "Baby Boomlets" foster nutritional concerns. "Organic" values are spreading: ecology, health and nature are seen as being more important. Organic product appeal improves and organic products now have better taste and appearance. More easily-prepared organic foods are coming to market.
Barriers are lowered
Retail availability widens with regular grocery stores, natural food supermarkets, specialty stores and direct sales. Product proliferation expands available categories and producer and distribution economies reduce price premiums. National certification overcomes confusion and distrust (The Evolving Organic Marketplace, Hartman and New Hope, Fall, 1997).
Consumer attitudes about organic products
Associate organic with "Good Old Days" when food was grown the way nature intended. Organic produce is better for the environment (Citizens Fund, Richmond VA Focus Group, April 1995).
Organic products contain no pesticides or other chemicals. Connect organic products with health, freshness, natural ingredients and the absence of chemical additives and preservatives. Positive about the idea that organic production is better for the environment (Midwest Organic Alliance, Minneapolis IVIN Focus Group, July 1995).
67% buy organic products because they are safer for the environment. 62 % buy organic products because they are safer for farmers (HealthFocus Trend Survey, 1997).
78% expressed the belief that organic products are substantially better for the environment. 44% of consumers identify organic products with restrictions on chemical materials. 36% of respondents volunteered the idea that organic meant natural (close to nature) rather than artificial (The Evolving Organic Marketplace, Harman and New Hope, Fall 1997).
Consumer profile facts
Organic sales are booming - here is a look at who's buying, and why:
- 1.
Of those polled nationwide, 31 per cent reported they purchase organic food at least once or twice a month. 85 per cent strongly favour nationwide labeling standards for organic food (Lake, Sosin, Snell, Perry & Associates, Inc., April, 1998).
- 2.
A total of 23 per cent of shoppers use organic products twice a week or more often (up from 18 per cent in 1990), according to a 1997 HealthFocus Trend survey. A further 69 per cent are extremely or very concerned about pesticides in foods.
- 3.
A total of 43 per cent of consumers say they check a product's label for organic claims at least some of the time when making the decision to purchase the item for the first time. (Shopping for Health Survey, the Rodale Institute, Food Marketing Institute and Prevention Magazine).
- 4.
According to the 1997 report, The Evolving Marketplace, by Hartman and New Hope, 46 per cent of US consumers claim to be interested in purchasing organic products. Of those polled, 80 per cent listed healthfulness as a key criterion in making purchases, and 67 per cent listed environmental friendliness as a key criterion.
- 5.
According to the 1998 Fresh Trends Report, published by The Packer:
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26 per cent of shoppers have bought natural or organic produce in the previous six months;
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purchases of organic produce are highest among those aged 18-29 at 31 per cent;
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75 per cent of organic buyers report they are extremely or very satisfied with their purchases;
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consumers living in the west topped the list of regional buyers of organic produce with 34 per cent of westerners purchasing organic, compared with 21 per cent of all consumers in the north central region of the USA, and 26 per cent of shoppers in the northeast and south.
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Consumer profile
Purchasers of organic foods are less price sensitive. They buy less on deal than purchasers of mainstream foods or non-organic, natural foods:
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29.5 per cent of mainstream foods are purchased on deal;
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23.8 per cent of non-organic, natural foods are purchased on deal;
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16.1 per cent of organic foods are purchased on deal.
Organic food purchasers spend more overall. Their total food budget is larger, on average, than budgets of mainstream or non-organic, natural foods purchasers:
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Households buying organic food items spent an average of $405.30.
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Households buying non-organic, natural items spent an average of $395.90.
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Households buying mainstream items spent an average of $342.00.
Organic food purchasers are more loyal. They are more loyal to the segment than purchasers of non-organic, natural foods:
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$1 of every $8 was spent on organic food items;
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$1 of every $11 was spent on non-organic, natural food items (SPINSI/ACNielsen Organic Report, 1997).
Food facts
Growing in popularity, organic foods are being prepared by everyone from gourmet chefs to soccer mothers. Here are some facts that explore the rise in the use of, and the appreciation for, organic foods:
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Restaurant & Institution's 1 January 1998 report, A Year to Flavor, lists organic produce as one of the year's biggest trends, stating: "Organic foods will play a burgeoning role in foodservice".
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Nine in ten shoppers who eat organically grown produce rank it as excellent or good in terms of long-term health benefits and nutritional value, according to the Food Marketing Institute/Prevention magazine's Shopping for Health, 1997.
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In Food & Wine magazine's 1997 Chef's Survey, administered by Louis Harris & Associates, 76 per cent of those chefs surveyed responded "Yes" to the question, "Do you actively seek out organically grown ingredients?".
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According to the National Restaurant Association, organic items are now offered by about 57 per cent of restaurants with per person dinner checks of $25 or more. In addition, 29 per cent of restaurants with prices in the $15 to $24 range also offer organic items.
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The winner of the "Award of Excellence" in the "Chef of the Year" category at the annual International Association for Culinary Professional's 1997 Awards Ceremony was chef Nora Pouillon, of Restaurant Nora in Washington, DC. Pouillon estimates 95 per cent of the ingredients used at Restaurant Nora are organic.
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Renowned chefs who advocate using organic ingredients include: Alice Waters, Nora Pouillon, Rick Bayless, Jesse Cool, Stan Frankenthaler, Peter Hoffman, John Ash and Charlie Trotter.
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In 1998 Swissair became the first air carrier to serve organic foods to passengers. The change came after surveys showed that customers wanted food that is "fresh and natural".
Katherine di MatteoMark RetzloffBill Knudson