The Organic Market

Health and sustainability are driving the organic consumer.

By Gregory Stephens, RD

According to data from the Natural Marketing Institute (NMI), Harleysville, PA, organic food and beverages make up roughly 95% of the entire organic market, which includes other categories such as clothing/linen, personal care, pet products and household goods.

As shown in Figure 1, U.S. organic food and beverage sales reached nearly $17 billion in 2006, a 22% increase over 2005. Although the growth rate will most likely level off, conservative estimates show organic sales doubling in the next five years.

Organic users are driven by factors such as medical and environmental concerns when selecting foods and beverages, but it is their concern for overall health that is the key driver. More than half of organic users indicated that they first started using organic foods and beverages in order to promote overall health. Further, three-quarters of organic users want their grocery stores to carry foods that are naturally high in vitamins and minerals. They are not only looking for foods that are naturally nutritious, but they are also seeking fortified foods.

Label Monitoring: Positive and Negative Ingredients

Organic users, by nature, are going to exhibit higher monitoring behavior than the general population. They are more health oriented, as their values lean toward eliminating pesticides and additives, promoting sustainable growth and desiring a healthier environment and society.

Organic users are not only looking to avoid negative ingredients such as pesticides and additives, but they also show a strong desire to add positive ingredients like fiber, whole grains and vitamins. That they are also checking the overall nutritional facts panel on food and beverage products reveals their need for foods that contribute positively to their health. Therefore, companies marketing to organic users must stress that foods are both full of positive ingredients and free of the negative ingredients organic users wish to avoid.

Organic users are also more likely to be concerned with preventing heart-related health conditions than non-users, and they have probably changed their diets as a means of prevention. According to NMI data, eight out of 10 organic users have used heart healthy foods/beverages in the past year.

New organic product introductions with whole grain ingredient claims have seen a steady rise since 2001. In 2006, over 100 new organic products were launched in the U.S. containing whole grain ingredients.

NMI research has shown that beyond heart healthy products, organic users are actively looking to foods and beverages with ingredients that have a variety of health claims, such as:

•calcium for osteoporosis prevention
•dietary fiber for cancer prevention
•antioxidants for cancer prevention
•zinc for a strong immune system

But health claims alone are not enough to entice organic users to purchase products. As seen in Figure 2, only one-quarter of organic users prefer to buy foods and beverages with health claims, even though they perceive a deficiency in ingredients that have health claims. However, the addition of clinical research does provide some reinforcement to purchase foods and beverages with health claims, as half of organic users feel pro-ven clinical research has considerable impact on believability.

Vegetarian, Soy, Low/No-Fat & Sweetener Options

As organic users seek healthy foods, they are also attracted to vegetarian and soy options. In fact, almost two-thirds of organic users are using vegetarian foods/beverages versus only 18% of non-users. Not only are organic consumers using more, they are increasing their usage—22% of organic users increased their usage of vegetarian foods/beverages over the past year.

Soy foods and beverages are also being consumed by organic users significantly more than non-users. In fact, they are nearly five times more likely than non-users to be using soy products.

The reduction and removal of fat from consumers’ diets continues to be an important part of food selection—over 70% of consumers are using low fat, fat free or trans-fat free products. Organic users are even more likely to use these products, with more than eight out of 10 organic users purchasing products with one of the fat benefit characteristics.

Trans-fat free is a relatively new product attribute that consumers are seeking, stimulated by media coverage of its negative effects and increased release of educational information from the medical community. Trans-fat free product usage grew from 43% in 2004 to 71% in 2006, a compound annual growth rate (CAGR) of 28%!

NMI research has also shown that organic users are much more concerned than the general population (primary grocery shoppers) about sugar content. In fact, they are almost 40% more likely to check package labeling for sweetener information.

Organic vs. Locally Grown

While it is important for organic marketers to capitalize on the healthy food opportunity, it will be critical as the industry moves forward that they do not lose sight of the values of core users. The organic experience is as much about supporting local farmers and sustaining the environment, as it is about eating healthy.

One-quarter of organic food and beverage consumers have purchased products from a farmer’s market in the past year, and nearly one-quarter of natural food users started using organic products to support local farmers. Further, 26% of the general population indicates it is important for their store to have locally grown produce. This is encouraging for local farmers and co-ops, as well as the big corporations, because there is clearly room for both in the organic industry.

The overall household penetration of organic products is 57%, up only slightly from last year. While greater penetration was expected, we know that many consumers don’t recognize the organic label, especially within portable products such as fresh juices and nutrition bars. Some consumers of these products simply purchase on taste and convenience and have no recognition that the product is organic.

Increased selection and availability have driven increased frequency of usage and 20%+ sales increases over the past year. And it is frequency that could be key to increased sales in the future.

There will be expansion of emerging categories such as clothing, linens, lawn and garden, as well as continued growth of new personal care and food and beverage products from which to choose. The future is bright for those marketers who speak the language of organic correctly, and connect their brands on an emotional level with integrated organic product users. NW


Data sources for this article include The Natural Marketing Institute’s 2007 Organic Consumer Trends Report and The 2007 Health & Wellness Trends Report, as well as other proprietary NMI sources.