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Organic still not mainstream

By Sarah Hills , 05-Jan-2009

Organic foods are yet to gain mainstream acceptance by US consumers according to a new study by a marketing research and consulting firm in the consumer products industry.

The organic trend was once a niche market and it has become more widespread over the years as major food companies have developed organic product lines.

But there are signs that it has reached a plateau and the study by the TABS Group found that less than 40 percent of adults claim to have purchased anything from the major organic categories in the last six months.

Meanwhile non-Organic products have household penetration levels of well above 70 percent, according to the researcher.

President and Founder of the TABS Group, Dr Kurt Jetta, said: "There is a significant gap between the hype and reality of consumer purchase behavior with regards to organic products.”

According to the study, organic fresh fruit had the highest purchase incidence at 27 percent, with organic fresh vegetables close behind at 26 percent. Organic dairy products and eggs and milk had a purchase incidence of 18 percent and 17 percent of US adults respectively.

Frozen organic products such as vegetables, fruit and ice cream, had low purchase levels at five to six percent.

Jetta said: "The findings are consistent with trends we have been tracking in retailer sales data.

"Very few of these products have meaningful sales levels in traditional mass market retailers, even the ones that are very strong in the natural food and specialty channels."

He added that while a few retailers have had success with organic products, most of the ones that have invested heavily in this trend will see a poor return on that investment.

Jetta said: "Most of the sales growth in these channels has been driven by increased selection of organic products rather than any inherent growth in consumer appeal."

Organic growth

The market for organic foods and beverages was worth an estimated $7.2bn in 2008, compared to $3bn in 2003.

But in November a Mintel report said that growth in the organic food and drink market, which had been widely regarded as somewhat resilient to tough economic times, is expected to slow along with the economy as consumers struggle financially.

Year-over-year, Mintel said it has seen sales growth slowing and it projects that sales of organic products will not rally anytime soon.

Similarly, a recent report from The Hartman Group indicated that the organic trend has reached a plateau as consumer interest turns to other food categories such as fresh, local and fair trade.

Marketing drive

Meanwhile, the Organic Trade Association (OTA) announced in November a new consumer marketing and public relations campaign to boost awareness and consumption of organic produce. This is aimed at reaching more than 25m consumers in 2009 across North America.

The TABS Group Organic Product study, which covered beauty care items as well as food, was conducted in November among 1,000 respondents aged over 18.

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