Solid growth for the US organic food market is expected to continue until 2018, according to a new report that puts a compound annual growth rate (CAGR) of 14% on the sector.
The new “United States Organic Food Market Forecast & Opportunities, 2018” report adds that the Western US is driving much of the organic food market revenues on the back of growing domestic production and increasing awareness.
“The organic food market contributed about 4% to the country’s overall food market in terms of revenues during 2010,” said Karan Chechi, research director at TechSci Research.
“Furthermore, the retail organic food market is an emerging trend in the country. Therefore, with the increased consumer food expenditure of about 7.67% during 2010-12 the demand for organic food through retail sales medium is anticipated to increase,” he added.
Demand for organic products is increasing, and about 81% of American families reported to be purchasing organic food at least some times, according to 2012 estimates from the Organic Trade Association. In addition, domestic organic food production has increased about 240% between 2002 and 2011, compared with 3% in the non-organic food market.
‘Sales topping $81.3 billion in 2012’
The predicted growth is consistent with those reported recently by Information Resources Inc. (IRI) and SPINS, which found that with natural/organic retail sales reaching $81.3 billion in 2012, up 13.5% from the year before.
The growth could be significantly larger, however, given that two small “power shopper” groups, together comprising 18% of consumers, account for almost half of all sales of natural/organic products. This leaves 82% of consumers who still haven’t reached their buying potential in this fast-growing CPG segment.
The two firms surveyed 5,000 consumers for the study, and found that two leading purchasing segments—dubbed true believers and enlightened environmentalists—make up for 46% of all natural/organic product sales.
“Manufacturers and retailers have a significant opportunity to better understand and tap into the needs, wants and motivations (of the true believers and enlightened environmentalists)—not only to drive sales volume but also to continue to deliver the innovative products that shape our industry,” said Tony Olson, CEO of SPINS, in a statement.
“At the same time, it is important to motivate shoppers in other segments to expand their knowledge of natural/organic products to stimulate buying behavior and ensure long-term growth.”
However, numbers from Nutrition Business Journal put the organic food and beverage market in the US at $29.2 billion in 2011, with growth projected at 9.4%, as compared to an anticipated growth in the low single digits for conventional food and beverages.