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Future Forecast: Organics 2015

THE ORGANIC FOOD AND BEVERAGE market has seen rapid change over the past decade. In 1997, the year market researcher The Hartman Group published its first strategic analysis of the sector, organics accounted for slightly less than 1 percent of the $500 billion food market. The study predicted explosive growth in the category. Indeed, by 2008 the Organic Trade Association (OTA) reported that U.S. organic sales had grown 17 - 21 percent annually over the preceding 11 years. But then the bottom fell out of the economy and the effect on organic spending began to be seen.

The Market Today

In the fourth quarter 2008, reports of changing consumer behavior began coming in as well as some indications that there was a plateau in overall organic sales and slowdowns in several categories. Hartman’s latest national study, “The Many Faces of Organics: 2008,” shows that aggregate consumer use of organics dropped four percentage points, from 73 percent of the population buying organics in 2006, to 69 percent in 2008. Food recalls, confusion over the meaning of organics and price-point frustration are some trends contributing to the change. Mintel International, a global supplier of consumer information, has also seen sales of organics slowing and, with many Americans struggling financially, does not foresee sales rallying anytime soon.

The Experts Speak

What will the next decade bring? Which categories will emerge as leaders? Who will be the organic customers and where will they shop? We turned to organic and natural foods retailers, distributors and suppliers to share their thoughts on where the organic market will be in the year 2015.

Q & A
John Rorer, owner Richard’s Whole Foods
Sarasota, Fla.

Q.What can we expect from the organic category by 2015?
A. I think we will be seeing a lot more competitive pricing. Although many manufacturers have yet to turn the corner into organics, in six years that will change and prices will start to come down. We will also see changes in farming practices. As organics become mainstream there will be people who want to invest in the category—offering farmers alternative farming techniques and products with less chemicals. Organics will never become the sole offering in grocery; there has to be a leveling off at some point due to supply, demand, expense of ingredients and farmer productivity.

Q. Who will be the 2015 organic consumer?
A. Changes will come from national and cultural trends such as the buying power of the growing Latino and Asian communities. We will also see more young families purchasing organics. Q.What organic categories will emerge as leaders?
A. I see more raw food commodity products becoming popular such as almonds, especially sold in bulk. The market will always follow consumer demand and trends. You have to go after the low-hanging fruit first—see what the holes are in the market and try to fill them.

Q. Will organics survive a turbulent economy?
A. I think we will always be at the mercy of a changing economy. I’ll side with the consumer—they are the ones who have to watch their pocketbooks. A lot of customers want to buy organics but when they see a $5 to $7 price difference, they often go with conventional. In the future, consumers will definitely gravitate towards cleaner products, if not totally organic.

Q & A
Mary Jo Marks, natural and organic category specialist,
UNFI Specialty Distribution Services,
Leicester, Mass.

Q. What do you predict has the potential to be the next up-and-coming organic food product or category by 2015?
A. Kid-friendly packaged refrigerated meals. The conventional market has been expanding on this category and larger retailers are beginning to add these meals to their in-house prepared foods section. As smaller independents and supermarkets look to capture these sales, the refrigerated category will grow. The perception is freshness with ready-to-eat rather than frozen dinners. Success will depend on advertising to parents and kids, price point of organic versus conventional and, of course, taste.

Q.What will influence buying behavior for organics by 2015?
A. Buying behavior is going to be influenced by a real desire to better the environment and quality of life. There will be a refocus on animal cruelty in personal care, as well as frozen meat. Fair Trade will reach new levels with the certification of clothing and fruits and vegetables, similar to Europe. Consumers want products that have a cause—reducing land fill, benefiting farmers and giving back in general.

Q & A
Steve Warnert, director of quality, Amy’s Kitchen,
Santa Rosa, Calif

Q. What organic products will be emerging in the next several years?
A. Gourmet has become a hot area for organics. Artisan products, chocolate, coffee and designer beverages all include organics in their mix. Ethnic foods are also coming on. Fresh produce, milk, cereal and bulk grains should remain strong. Organics have also done well in the convenience categories (frozen, canned/jarred products, dry mixes, etc.) suggesting that many people don’t have time to cook but want something different.

Q.What is organic going to mean to consumers in the future?
A. The meaning of organic has morphed into a broader definition that connects to other ideas such as sustainability, “green”, wellness, better-for-you, etc. People are now adopting some but perhaps not all of these to round out a lifestyle that they can feel good about. Economic downturns are not likely to cause consumers of organics to return to former beliefs or positions they have taken on what is now important to them. In other words, someone who has made a choice to eat whole grains is not likely to return to bleached white flour.

Q & A
Doon Wintz, president,
Wholly Wholesome, a division of the Run A-Ton-Group, Inc.,
Chester, N.J.

Q. What do you think will cause the next transformation in the organic category?
A. We don’t really expect anything radical to happen. The organic movement has been an evolution that has been on a steady pace for more than two decades. The evolution has been simple: Consumers who learn more about what they eat want to eat more natural and organic foods. However, if the same or similar conventional products consumers have come to love are available in organic for a competitive price, the more radical the shift to organic will become.

Q.Who is the 2015 organic consumer? Where does he or she shop?
A. A broader cross section of who is buying now—every ethnicity, age and social status with the greatest factors being education, curiosity and health scares. They will be buying organic foods any place that can give it to them affordably and reliably, which will include everything from the mom-and-pop natural food store to the ‘supernatural’ stores such as Whole Foods to supermarkets, fast food restaurants, upscale restaurants, convenience stores and farmer’s markets.

Nicole Potenza Denis is senior editor of Specialty Food Magazine.