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As organic gains prominence, shoppers increasingly seek lower cost and higher value

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By Elizabeth Crawford

21-Aug-2017
Last updated on 21-Aug-2017 at 18:30 GMT2017-08-21T18:30:34Z

As organic gains prominence, shoppers increasingly seek higher value

Rising sales and household penetration of organic is a double-edged sword for the industry in the US as more Americans have started looking for lower prices, bulk packaging and easier access through direct to consumer channels, according to purchasing data collected by Ekowarehouse.

“The US is, by far, the largest market” for organic products with sales reaching $43.3 billion – more than half of the $82 billion sold globally, according to Sonalie Figueiras, the CEO and co-founder of Ekowarehouse, which is a global platform for sourcing certified organic products.

She added during a webinar hosted by the Organic Trade Association Aug. 17 that with 82% of US consumers buying organic regularly, it has become more than a niche category -- an issue it struggled with in the past.

But now, she said, “the issue is now value,” and the quickly dropping price that US consumers are willing to pay for organic.

To illustrate the potential impact of this shift, Figueiras pointed to Whole Foods Market’s struggles prior to an announced acquisition by Amazon.

“Prior to the buyout, Whole Foods had lost 30% of its share price because it was just losing customers constantly and that is because of this impression that Whole Foods was selling organic products at a very high price,” she said.

She noted that while organic might have been difficult to find when Whole Foods started, it is now available at a variety of channels that have lowered prices as a way to compete with each other.

For example, she pointed to Brandless.com which offers a variety of certified organic products that are sold for $3 or less on the premise that it doesn’t have a “brand tax.”

New player Thrive Market also is “a big success story,” Figueiras said. She explained that by acting as a direct-to-consumer wholesale buying club, the retailer is able to lower the cost to consumers of organic by 25-50% what they would spend in brick and mortar stores.

But, she adds, what is most interesting about Thrive’s model is “a lot of their consumers are in the Midwest or Southeast – so it is not just the coasts” that are buying organic anymore.

Top organic sellers

Driving this growth in organic is the rise of vegan, vegetarian and plant-based eating, Figueiras said. She added consumers also are turning to organic for safety reasons and because they trust organic brands and USDA organic certification.

These drivers also are influencing the top organic product searches by retail buyers on Ekowarehouse, she said.

At the top of the list are “no big surprises,” including coconut oil, which Figueiras said “is not going anywhere and still remains incredibly popular.”

But inching up the list in 2017 is coconut milk powder, which is growing as a solution to the demand for vegan and non-dairy products, she said.

Other top-sellers include diverse plant-based proteins, especially brown rice, pumpkin seed and pea, “rather than just the regular hemp or regular rice protein,” she said.

“Superfoods also obviously are not going anywhere,” with acai in the number two spot for top organic searches, along with maca and cacao as common searches, she added.

Finally, she said, the company’s search data reveals “rishi mushrooms and adaptogenetic herbs are experiencing a moment, as are spices, because there is a big movement in the beverage world to make performance beverages and mood enhancing beverages, so all these spices and herbs and superfoods play a role in that.”

Looking forward, Figueiras said the best way to maintain the current momentum behind organic is to continue educating consumers about the many benefits of organic and communicating that the label is verified, accurate and can be trusted.

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2 comments

Organic foods price gouging

I have been an organic farmer for over 30 years and know for a fact that the cost to produce organic foods is not hugely more than conventional methods. The high cost of organic food comes from greedy producers. For instance: I can grow and sell a slicing tomato for 1/2 the cost usually found at Farmer's Markets or grocery stores. But since I know that there are many veterans, seniors, and low income people that frequent food banks cannot even afford the 1/2 cost, I prefer donating my excess organic produce to the local food bank.

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Posted by Eldon Roush
25 August 2017 | 14h522017-08-25T14:52:00Z

Bulk Packaging?

Can you please expand on what Bulk Packaging means?

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Posted by Joey
23 August 2017 | 16h162017-08-23T16:16:26Z

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