USDA report examines organic sector’s ‘revamped marketing’

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Organic food Organic farming

The US Department of Agriculture (USDA) has compiled a report on the marketing of organic food, which it says aims to respond to a dearth of information on the fast-changing sector.

Although certified organic acreage has doubled in the US since 1997, organic food sales have quintupled over the same period, from $3.6bn to $21.1bn last year. US organic demand has outstripped supply since the early 1990s – when many organic suppliers were forced to sell their products on conventional markets due to a lack of consumer demand.

But this new USDA report says that the way organic foods are sold has undergone a dramatic shift; in 1997, most organic foods were sold through natural food stores, but by 2008, more than half of all organic foods were sold through conventional supermarkets, club stores and big-box stores.

“The retailing of organic products in 2008 bears little resemblance to retailing organic products in the late 1990s,” ​the report said.

And the type of organic food that people are buying has also broadened. Although produce still accounts for most of the organic food sold in the US – at 37 percent – organic packaged and prepared foods, beverages, dairy, breads, and grain now account for 63 percent of organic food sales, up from 54 percent in 1997.

Changing face of organics

The report said that American consumers’ appetite for organic foods “revamped organic food marketing”​ as those manufacturers that had traditionally sold organic foods faced new competition from conventional retailers, and others were swallowed up by conventional firms.

The proportion of adults buying organic foods every week now stands at 19 percent, up from just three percent in the late 1990s.

“The effect of structural change at the retail and manufacturing levels has been twofold: there are more firms participating in the sector and the average size of these firms is larger,”​ it said.

Pricing problems

However, price remains a barrier for many people, with 73 percent saying that organic foods are too expensive, although it is less prohibitive in some sectors, such as baby food and fresh produce.

“However, anecdotal evidence suggests that, in the second half of 2008, consumers began substituting cheaper conventional products and private label organic products for branded organic products in response to weakening macroeconomic conditions,”​ the report said.

It also examined the inability of organic farms to keep up with demand for organic ingredients from food manufacturers and consumers.

The USDA said that this was “for reasons not completely understood”​ although it added: “Potential organic farmers may opt to continue using conventional production methods because of social pressures from other farmers nearby who have negative views of organic farming, or because of an inability to weather the effects of reduced yields and profits during the transition period.”

The number of organic product launches increased from 290 in 1997 to 1,107 in 2007, when the most frequent launches were beverages, prepared foods, and snacks.

Private label organic launches increased from 35 in 2003 to 540 in 2007, USDA said.

The full report can be accessed online here​.

Related topics Suppliers Organics

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