Organic sales growing ‘at a good clip’ thanks partly to consumer interest in animal welfare
Organic sales in the US stretched 8.5% to reach about $47 billion in 2016 with food sales accounting for the bulk at $43 billion, OTA CEO Laura Batcha said at the trade association’s Annual Policy Conference in Washington, DC, in late May.
The growth in food sales represents an 8.4% increase, or $3.3 billion, from the previous year and is “very strong in terms of this market,” which saw pressure from food inflation and price deflation keep the growth of food sales as a whole at a “stagnant” 0.6% in 2016, Batcha said. She was citing new research conducted by Nutrition Business Journal on behalf of the trade group, which is available in OTA’s 2017 Organic Industry Survey.
With this growth, organic food sales have inched “just past about the 5% mark” of total food sales in the US, and can be found in 82% of US households – a 3.4% increase from 2015, said Batcha. She was also quick to point out that many states exceed this with upwards of 90% or more households regularly buying organic products. Even the lowest levels hover around 70%, she added.
Produce and protein drive organic sales
Much of this growth is fueled by Americans’ steady demand for organic fruits and vegetables, which account for 40% of the organic market.
“It is becoming very common place for there to be organic fruits and vegetables in the basket” of American shoppers, Batcha said, noting that they now penetrate 15% of US households in terms of sales.
While fruits and vegetables lead the way, Batcha said growing consumer demand for organic protein is the real star of 2016. According to the survey, sales of organic meat and poultry “shot up by more than 17% in 2016 to $991 million, for the category’s biggest-ever yearly gain.”
OTA expects continued strong demand for organic protein to push sales of the category past $1 billion for the first time in 2017, especially as consumer awareness about animal welfare increases.
“Consumers for those products are concerned not only about what the animals are fed, but with how the animals are treated,” Batcha said. “That is why our industry cares passionately about seeing that organic livestock and poultry practices, aka the animal welfare rule, becomes effective at USDA.”
Old and new challenges threaten sustained growth
Noting that the animal welfare rule, which squeaked past the finish line in the last days of the Obama Administration, has been delayed by the new administration, Batcha stressed that the organic needed the rule to be finalized in order to “stay strong” and meet consumer expectations of the certification.
In addition, to maintain organic’s strong momentum, Batcha said the US needs more organic farmers to help meet the growing demand. For this to happen, though, she said the organic sector needs federal, state and local programs to support organic research and provide organic farmers with more tools to succeed.
The organic industry can also spur sales by providing more frills. For example, while not as big of a driver as protein and produce, the organic condiment category is receiving more love from consumers as well, according to the survey. It found sales of organic dips increased 41% in 2016 to $57 million and organic spice sales “swelled by a big 35% to $193 million,” according to OTA.