US sales of both food and non-food organic products reached $24.6 billion by the end of 2008, a significant 17.1% increase over 2007 sales despite tough economic times, according to the Organic Trade Association (OTA), which released final results from its 2009 Organic Industry Survey.
The study, which measured the sales of US sales of organic foods and beverages as well as non-food categories such as organic fibers, personal-care products and pet foods, found that sales of organic products continue to post resilient, strong growth during 2008, even as consumers shop carefully and seek the best deals.
Organic food, which comprises 93% of all organic products sold, saw sales grow 15.8% in 2008 (vs. 4.9% growth for total US food sales) to reach $22.9 billion. As a result, organic food sales now account for approximately 3.5% of all food product sales in the US, while the level of organic food penetration has nearly doubled in the past five years, OTA said.
Additional findings about organic food categories:
- The fruit and vegetable category accounts for the largest portion of organic food sales. This one category represents 37% of total organic food sales in 2008.
- The second largest categories are beverage and dairy, crepresenting just more than 14% each.
- The strongest growth in 2008 is in the categories of breads and grains (35% over 2007) and beverages (40%).
- Organic food producers sell to consumers via a variety of channels. National natural and mass-market food chains are the leading channels (each accounts for about one third of sales).
- Regional natural food chains and independent health food stores are a smaller presence (about 10%).
Posting even more dramatic growth than organic food, organic non-food sales grew by 39.4%, to $1.6 billion, the report said. At the same time as sales of non-food organic products are growing faster than organic food, the scope of non-food products is changing as new product categories and products are introduced to the US market.
The largest categories of organic non-food products are supplements, fibers (linen and clothing) and personal care products, OTA reported.
Organic Labeling & Materials Supply
Half of organic producers surveyed say they currently display the “USDA Organic” seal on their products, a proportion that rises to 83% for companies with organic sales of $5 million or more. Among companies that don’t currently display the seal, 20% have decided to do so in the next three years.
As a result, relatively large firms (with organic sales more than $5M) are more likely than smaller firms to say that use of the USDA seal on labels has helped them generate sales of organic products. However, only about half of the larger firms hold this opinion.
Making Ends Meet
The report also found that during tough economic times, Americans are using various strategies in continuing to buy organic products. Because of more widespread availability, consumers often shop around, use coupons, select from a growing number of private-label brands and value-positioned products.
Additional findings about organic products:
- About half of companies report selling at least some products under a private label, or store brand. Among them, private label sales account for just more than 30% of total sales of organic products.
These companies are evenly split as to whether private label sales are growing faster than other organic
sales or not.
- Lack of a dependable supply of organic materials continues to be an important issue for the industry. More than two-fifths (41%)of producers say that undependable supplies of organic raw materials limit their ability to generate sales. Undependable supplies of organic grains are mentioned most often. Lack of organic sugar is an issue for 11% of companies that manufacture organic food.
- As in the 2007 report, just under half of companies report being involved in export sales. Companies with more than $5M? in annual revenue are twice as likely as firms with less than $500K in annual revenue to be involved in export sales, though many smaller firms want to enter the export arena.
- Companies rely heavily on international trade shows for export business development. At the same time, they cite regulations imposed by other countries as the principal barrier to export activity and growth.
About the research: The Organic Trade Association’s 2009 Organic Industry Survey was conducted and produced on behalf of the Organic Trade Association by marketresearch.com in partnership with the Lieberman Research Group. In total, 229 companies completed online surveys between? January and April 2009. The volume of 2007 and 2008 sales of organic products is computed using the 2006 sales data in OTA’s 2007 Manufacturer Study as a baseline. The estimates were compiled from primary sales data obtained from survey respondents, including manufacturers, distributors and retailers of organic products. Government data and financial reports from public companies also were used to develop the final estimates.