Organic may only be a small segment of the food industry, but its growth over the last year and projected growth over the next few years shows that organic food is here to stay. Investments in organic food are likely to allow this niche market to continue to grow. Increased competition may decrease costs and thus increase accessibility of organic food.
David Pierson, May 15, 2014, 11:53 a.m. –Nationwide sales of organic products continued to experience healthy growth last year, jumping 11.5% to $35.1 billion, according to the Organic Trade Assn.
The Washington-based group representing organic businesses said growth rates are expected to at least keep pace the next two years.
“The U.S. organic market is experiencing strong expansion, with organic food and farming continuing to gain in popularity,” Laura Batcha, executive director and chief executive of the trade association, said Thursday. “Consumers are making the correlation between what we eat and our health, and that knowledge is spurring heightened consumer interest in organic products.”
Organic foods are generally pesticide-free products grown with natural fertilizers. There are a handful exceptions for fruit growers and egg producers that are being debated within the industry. Processed foods must contain 95% organic ingredients to be labeled organic.
In the clearest sign that organic foods have become big business, Walmart announced last month that it was cutting prices for its organic foods. The move aimed at garnering more market share of the niche category at its stores was a direct challenge to industry stalwarts such as Whole Foods.
Organic food represents just over 4% of the nation’s $760-billion food industry. Food sales as a whole are growing much slower than organics at around 3% annually, according to the Organic Trade Assn.
The group said food made up the majority of the $35.1 billion in organic sales last year, but also included nonfood organic products such as flowers, fiber, household products and pet food.
Fruit and vegetables led the sector with $11.6 billion in sales, up 15%. The group also said the organic condiments category posted the strongest growth — expanding 17% to reach sales of $830 million.
Organic snack foods grew 15% to $1.7 billion and organic bread and grain rose 12% to $3.8 billion.