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Organic becomes mainstream, says Mintel

By Lorraine Heller , 13-Nov-2007

The organic food market in the US has received a strong push from recent health and food safety concerns, according to a new report by Mintel.

Released yesterday, the report states that "the organic movement has most definitely burst onto the mainstream".

 

 

"This isn't a niche market full of environmental health nuts and affluent yuppies anymore. Organic is now part of the picture for everyone from the Hispanic immigrant mother to the hip suburban teen next door. With health issues and food contamination cases in the news, many people have begun looking for safer, more natural food and drink," said Marcia Mogelonsky, senior research analyst at Mintel.

 

 

 

Market growth

 

 

The market researcher values the organic food and beverage industry at nearly $6bn. Organic food sales have increased 132 percent since 2002, while organic beverage sales have risen 97 percent in the period.

 

 

 

According to a consumer survey by Mintel, just over half of all Americans said they have purchased organic foods in the past year, while over a quarter bought organic beverages. This compares to 34 percent of consumers who reported buying either organic foods or organic beverages in 2002.

 

 

 

Industry has also stepped up to this increased demand, said Mintel.

 

 

 

According to the group's Global New Products Database (GNPD), there has been a "steady increase" in new organic product development. Some 1600 products were launched in the US last year, compared to 732 in 2002.

 

 

 

In retail stores, over 300 private label organic products are currently available, and entire departments are being dedicated to the category.

 

 

 

Challenges

 

 

However, such strong growth rates are naturally unsustainable over long periods.

 

 

 

According to Mintel's forecasts, the organic market will continue to see consistent growth, but at a declined rate. The group forecasts that organic food sales will rise 59 percent by 2012, while the organic beverage market will grow 65 percent in the period.

 

 

 

"Organics will undoubtedly continue to thrive, but there are hints that the industry may face increasing challenges. Private label brands offer cheaper prices than traditional brands, so while their rapid expansion into organics may encourage more people to buy more organic products, but it could actually hurt market growth," said Mogelonsky.

 

 

 

Other challenges to the industry include the higher prices that turn some consumers away. According to Mintel's survey, around two-thirds of Americans said they would purchase more organics if these were cheaper.

 

 

 

This suggests potential interest in less expensive private label brands, "which seem poised to change the face of organic retail," said Mintel.

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