Trends in Organic Sales and Products

 

The 2019 organic survey results were recently announced from the USDA National Agricultural Statistics Service (NASS) and the Organic Trade Association’s (OTA) industry survey. Steady growth rates continued as national sales of all organic products increased 31% (or $2.4 billion) since 2016, allowing total U.S. organic sales to surpass $55 billion for the first time. The ability to meet these increasing demands for organic products are also reflected in the number and size of certified organic farms nationally, which increased 17% in number (16,585 farms), and 9% in acreage (5.5 million certified acres) since the 2016 NASS census. Twenty-nine percent of surveyed farms plan to increase their level of organic production further.

 

Although California continues to lead the U.S. in certified organic product sales, Pennsylvania’s sales are third in the nation, where it remains in the top five states along with Washington, Oregon, and Texas. Sales are up across all organic food sectors including livestock and poultry products, vegetables, fruits, tree nuts, and berries, livestock and poultry, and field crops. Similar to past product trends, organic fruit, and vegetables lead food product sales in number but meat, poultry, and fish (9.9%), snack foods (7.3%), and breads and grains (5.9%) had the highest growth rates between 2016 and 2019.

 

So, what is sustaining continued growth in a 30-year-old industry? One main consistency is that younger consumers continue to drive demand. Millennials (ages 22-38) and Gen-Z (ages 15-21) consumers in particular, are driving market sales. They trust the organic label and associate it with being free from pesticides, chemicals, additives, and hormones and often assign “cleaner” and “healthier” attributes to organic products, as well. As a result, organic certification provides a foundation for other important factors for consumers. These include expectations that products will be convenient, healthy, and raised in an ethically responsible manner.

 

Consumers consider healthy products to be free from additives, fresh, and minimally processed. However, the definition of health is further influenced by popular diets, such as Keto and Paleo, that promote low sugar, high protein, healthy fats, and diverse plant-based offerings that are influencing buyer’s choices.

 

Convenience is also extremely important to consumers and is influencing sales of prepared items, as well as where people get their food. Organic products are now widely available in the mainstream marketplace and overall mass-market retail accounts for 56% of organic food sales. Stores that do food service well can expect to capitalize on take-out options. But perhaps a more interesting trend is an increase in internet sales for organic products, which was only partially influenced by COVID-19 social distancing guidelines. Online and grocery delivery services account for an estimated 4.5% of all organic food sales and those that help customers shop based on their personal needs are expected to become even more popular.

 

For customers, however, being organic is no longer enough as they are demanding more. In particular, they are interested in supply chain transparency (from farm to table), human and animal welfare concerns, and environmental responsibility, especially as it relates to climate change. Consumers are looking for ‘Fair-Trade’ or ‘B-Corp’ or other additional certifications to be paired with the organic label to add an extra level of validation that companies are doing the right thing for people and planet.

 

Finally, non-food organic products are becoming more popular as consumers comprehensively consider their concerns. Organic non-food product sales ($5 billion) were significant with a 9.2% growth rate in this sector alone. Key areas of interest are for organic pet food, fiber and textile products, personal care products, and nutritional supplements. Domestically, excitement is building for organic fiber, especially hemp, as efforts are being made to develop a steady supply of products and processing facilities. Options for supplying raw ingredients for pet food also shows promise for farmers, whereas beauty products and supplements have more complex ingredient profiles to consider.

 

Increasing market trends and consumer interests do not however, reflect associated challenges with organic markets. The primary barrier continues to be price. Consumers consistently choose organic if small price differences exist between it and a similar product, yet, if the price difference is too high, they will likely opt for non-organic options. Likewise, farm gate pricing ultimately encourages or dissuades farmers to produce organic crops. Downturns in conventional prices often drive farmers to switch to organic production, but organic pricing must be strong enough to balance production risks. Furthermore, complex, multifaceted supply chains for crops like fiber or grain increase the difficulty for farmers to fulfill product shortages. Risks to organic farmers are being acknowledged, especially as consumer expectations increase, and as more large companies like Clif Bar or General Mills invest in organic growers, they are being encouraged to share some of the associated costs and actually supply products that are good for consumers, producers, and the planet.