Organic market has not yet reached peak

- Last updated on GMT

Related tags: Organic food

Organics are bigger now than ever before but the trend is set to
get bigger still, according to experts, as institutions such as
universities, schools, corporate campuses and even hospitals hop on
board.

"I think this business is a sleeping giant,"​ said Thomas Harding, president of organic consulting firm AgriSystems International, at IFT last week. "And there are strong signs that the giant is awakening."

According to the Organic Trade Association's​ 2004 Manufacturers' Survey, the organic foods industry reached $10.8 billion in 2003 and has grown at an average rate of 19.5 percent per year since 1997.

And market researcher Euromonitor​ predicts that sales of packaged organic foods alone will be worth $8.6 billion at retail by 2009 - up from 5.1 billion in 2003.

It is a trend bourn out by the latest financial results released by natural and organic food retailer Whole Foods Market​, which has 170 locations across the United States. Last week it reported that an increase in sales to $1.1 billion in 3Q 2005, compared to $0.9 billion in the prior year period, and a 27 percent increase in operating profit to $6.7 million. It opened three new stores within the quarter, and plans to open another five by the end of the fiscal year.

But on the manufacturing side, Ed O'Neill of the Food Processing Center advised companies to think carefully about the kinds of products they launch, as the new generation of organic consumers do not necessarily want to do away with the convenience of non-organic products.

"Organics must fill the same needs and niches that non-organic products currently dominate,"​ he said.

Organic food, it seems, no longer has the reputation for being the preserve of health-obsessed individuals, but it is an acceptable lifestyle choice for a larger, more mainstream slice of the population - if only they can afford it.

For organic foods come at a premium, and higher pricing is usually seen as a hurdle for the food industry.

But according to O'Neill, it is consumers who have higher disposable incomes who are more likely to buy organic anyway, and they seem quite happy to be paying a little bit more for the knowledge that their foods are pesticide-free.

But not everyone in the industry is sharing Harding and O'Neill's high hopes.

Last month a Maine district court ruling banned all synthetic ingredients in products labeled organic and obliged dairy farmers to feed their cows 100 percent organic feed during the transition to organic led to fears that prices could raise to prohibitive levels and actually slow growth in the sector.

At present regulations allow dairy farmers who want to go organic to feed their cows 20 percent conventional feed and 80 percent organic feed in the first nine months of the transitional year.

And for a product to be labeled 'organic', it must contain over 95 per cent organic materials. A 'made with organic' product must contain over 70 per cent. The new ruling however means that an 'organic' product must be 100 per cent from organic sources.

George Siemon, CEO of Organic Valley​, told Foodnavigator-USA.com that the ruling could discourage producers from going organic:

"My concern is that if food makers are no longer about to label their products as organic because they use, say, sugar that has been produced synthetically, they might be tempted to use less organic material."

For those that do, however, Harding stressed the importance of adhering to federal requirements on organic certification, seeking professional advice if necessary.

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