After two tumultuous years of the Corona pandemic with double-digit growth rates in the organic food market, purchasing behaviour has changed. Multiple crises - climate, war and inflation are causing consumers to turn to special offers and low-priced private labels. Nevertheless, many consumers remain loyal to organic food and natural products, and sales are growing, albeit at a low level. They have good reasons for choosing organic products: their own health, protection of the environment and climate, and animal welfare.
OTA Organic Industry Survey 2022
Market consolidation after tremendous growth
In pre-pandemic 2019, growth was moderate at 5% but organic food and natural goods sales climbed above $60 billion for the first time. In the first covid year, the run on organic was great and caused sales to rise by 12.5%. In 2021/22, however, sales consolidated and fell short of market participants' expectations, growing by only 2.2%. According to the Organic Trade Association's 2022 industry report, organic sales in the US market are $63.3 billion. This corresponds to a doubling in the past ten years. With a share of 57.5 billion dollars, organic food recorded an increase of only 1.2% (market share 6.3%) while the non-food category grew by 6.9% to 5.8 billion dollars.
Graphics by Inside Organic / Newhope
Obstacles to growth and market drivers
Inflation, problems with the supply of raw materials and interrupted supply chains as well as high energy costs, rising interest rates and general uncertainty have affected the US organic market as well as many other markets worldwide. According to market experts, this is likely to continue for a while. Fortunately, surveys show that consumers continue to buy organic products and the good reasons for doing so have even increased, as has the number of organic buyers. Nancy Coulter-Parker of NewHope, who presented developments in the US market at Biofach, listed important trends that are having a positive impact on organic sales:
- A new view of health and well-being triggered by Covid.
- the desire for "clean" products
- Increased awareness of climate change and sustainability
- all plant-based
- animal welfare
- Keto-ish. Low-to-no sugar. Goten-free, Regenerative, Customized diets
- World Cuisine
“Like every other industry, organic has been through many twists and turns over the last few years, but the industry’s resilience and creativity has kept us going strong. In 2020, organic significantly increased its market foothold as Americans took a closer look at the products in their home and gravitated toward healthier choices. When pandemic purchasing habits and supply shortages began to ease in 2021, we saw the strongest performance from categories that were able to remain flexible, despite the shifting landscape. That ability to adapt and stay responsive to consumer and producer needs is a key part of organic’s continued growth and success.”
Tom Chapman, OTA CEO and Executive Director
Graphics by Inside Organic / Newhope
Insights: Consumers have good reasons to buy organic
An "Inside Organic" Consumer Survey by NewHope in August 2022 revealed interesting results. Just over 50% of respondents said they wanted to know more about organic food. A third said they wanted to consume as much organic as possible and were willing to pay more for it. In addition to the well-known arguments such as organic food is grown and produced without chemicals, does not contain pesticides, hormones and antibiotics, and is healthier and better for the environment, there are now more plus points with regard to climate protection, humus formation, animal welfare and transparency in the supply chain.
A surprising detail of the survey was the fact that Asian and Spanish consumers buy significantly more organic products than others. Asian households obviously place a high value on organic food and almost twice as much as the white and black populations.
Unfortunately, an explanation for this phenomenon was not provided in the presentation.
Author: Karin Heinze, BiO Reporter International
Presentation by Inside Organic/ NewHope