The sales volume of
organic products, which had been growing at 20 percent a year in recent years,
slowed to a much lower growth rate in the last few months, according to the
Nielsen Company, a market research firm.
“Organics continue to grow and outpace many
categories,” the Nielsen Company concluded in an October report. “However,
recent weeks are showing slower growths, possibly a start of an organics growth
plateau.”
For the four-week period
that ended Oct. 4, the volume of organic products sold rose just 4 percent
compared with the same period a year earlier.
If the slowdown
continues, it could have broad implications beyond the organic industry, whose
success spawned a growing number of products with values-based marketing claims,
from fair trade coffee to hormone-free beef to humanely raised chickens. Nearly
all of them command a premium price.
While a group of core
customers considers organic or locally produced products a top priority, the
growth of recent years was driven by a far larger group of less committed
customers. The weak economy is prompting many of them to choose which marketing
claim, if any, is really important to them.
Among organic products,
those marketed to children will probably continue to thrive because they appeal
to parents’ concerns about health, said Laurie Demeritt, the president and
chief operating officer of the Hartman Group, a market research firm for the
health and wellness industry. But products that do not have as much perceived
benefit, like processed foods for adults, may struggle.
Theresa Marquez, the
chief marketing executive for Organic Valley, which sells primarily dairy
products, said she was not worried about core customers because they were so
committed to buying organic.
“I’m not sure the
periphery — those that purchase perhaps only four or so times a month — will
break the industry,” she said in an e-mail conversation after the convention.
“But I am concerned that those periphery customers are important to the growth
of the industry and without them, organic growth is sure to go flat.”
Organic Valley’s sales
have slowed in the last four months, in part because of price increases,
company officials said.
Robert Atallah, the
owner of Cedarlane Foods, which makes organic and natural frozen meals, said
his business had slowed in the last 18 months, a problem he attributed to
increased competition and the economy. He said that he believed a newly
developed line of products could help sales but cannot convince buyers for
grocery chains to commit.
“The morale of buyers is
so low, they don’t want to buy anything,” he said. “It’s a sick feeling all the
way around. People don’t know if their job is going to be there.”
But others said they had
not yet noticed a slowdown and were optimistic that sales would remain steady —
or possibly improve — as consumers ate fewer meals in restaurants and devoted
more time to cooking. Some store-brand manufacturers said they were thriving as
consumers looked for cheaper alternatives to branded products.
Some others said they
were cutting back on organic food to save money.Joni Heard, a 29-year-old
mother of two who lives in central Florida, said that in the past she would buy
organic milk, cheese and produce but had cut back because it was too expensive.
“I’m a stay-at-home mom and my husband — you never know if he’s going to be
laid off,” she said in an interview, explaining that her husband works in
construction. “I can’t justify spending $2 or $3 more for a single item.”
The shift to “NATURAL”
The Natural Marketing
Institute recently reported that consumers state higher purchases of “Natural” versus “Organic” foods and beverages.
“This is driven by a wide range of factors; levels of understanding,
availability, price, and perceived benefits.” *Note: there is not a USDA Standard with third party certification in
place for products with a “Natural” identifier as there is for and “Organic”
label.
Will we see this trend from organic
to ‘natural’ (sustainable) in the fiber market?
Portions originally posted
Here by The New York Times;
Budgets Squeezed, Some Families
Bypass Organics
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