May 6 - US sales of organic food rose by almost 16% to US$22.9 billion in 2008, a report by the Organic Trade Association has said.
The association’s ‘Organic Industry Survey’ for 2009 found that organic food now accounts for 3.47% of all food products sold in the US. Sales of organic food account for 93% of total organic product sales, which reached US$24.6 billion last year.
Trends in Organic Food and Total Food Sales
While a small percentage of all food sales, organic sales are growing faster than the rate of growth for conventional food products, said the survey. The 15.8% increase in organic food sales since 2007 (vs. a 4.9% increase in total US food sales) propelled the organic share of total food sales to nearly 3.5% in 2008. The level of organic penetration has nearly doubled in the past five years, the OTA claimed.
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, representing just over 14% each. The strongest growth in 2008 is in the categories of breads and grains (35% over 2007) and beverages (40%).
Distribution of Organic Food and Beverage Sales by Channel
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%).
Private Label Products
About half of companies report selling at least some products under a private label (e.g., store brand).
Among those doing so, private label sales account for just over 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.
Exports
If the original model for organic foods was of small producers selling locally, the industry has certainly changed over the past decade. As in the 2007 report, just under half of companies report being involved in export sales.
Companies with more than $5 million in annual revenue are twice as likely as firms with less than $500,000 in annual revenue to be involved in export sales. However, 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.
OTA Executive Director Christine Bushway said that while the overall economy had been losing ground, sales of organic products reflected strong growth during 2008.
"Organic products represent value to consumers, who have shown continued resilience in seeking out these products," she said.
Ms Bushway added: "This marks another milestone for the organic food market."