Organic Foods - US

Published by: Mintel International Group Ltd.

Published: Oct. 1, 2008

Table of Contents

Scope and Themes

What you need to know

Definition

Data sources

Sales data

Consumer survey data

Abbreviations and terms

Abbreviations

Terms

Executive Summary

Organic food grows 142% during 2003-08, growth predicted to slow

Natural, local, and private label pose challenges to organics

Organic prepared and packaged food lead produce for top spot

FDM channels account for 60% of sales

Organic food market is driven by younger and higher-income shoppers

Dean Foods leads all other manufacturers in organic food and beverages

Organic ingredients appearing in a wide range of products

The organic food consumer

Supermarkets top shopping venues, but alternative options on the rise

Fresh fruit and vegetables top organic purchases

Importance of organic guarantee, relative unimportance of brand

Reasons for organic consumption

Thoughts about organics

Market Size and Forecast

Key points

A number of factors impede growth of organic food market

The rising price of food

Figure 1: Food price changes, by food category, July 2007-July 2008

Stretching the dollar

Market sales and forecast

Figure 2: Total U.S. sales and forecast of organic food at current prices, 2003-13

Figure 3: Total U.S. sales and forecast of organic food at inflation adjusted prices, 2003-13

Competitive Context

Key points

Two external competitors

Natural food

Locally grown food

Figure 4: Number of operating farmers markets, 1994-2008

And one internal challenger: private label organics

Figure 5: New product launches, organic private label products, 2003-08

Segment Performance

Key points

Fruits and vegetables, prepared food, share top billing

Segment sales and forecast

Figure 6: U.S. sales and forecast organic food at current prices, by segment, 2003-13

Figure 7: U.S. sales of organic food, by segment, 2006 and 2008

Segment Performance—Organic Prepared and Packaged Food

Key points

A wide range of convenient products

Organic prepared and packaged food sales and forecast

Figure 8: U.S. sales and forecast of organic prepared and packaged food, 2003-13

Segment Performance—Organic Fruits and Vegetables

Key points

Fresh organic produce faces some obstacles

Organic fruits and vegetables sales and forecast

Figure 9: U.S. sales and forecast of organic fruit and vegetables, 2003-13

Segment Performance—Organic Snacks

Key points

Energy bars and salty snacks move market

Organic snacks sales and forecast

Figure 10: U.S. sales and forecast of organic snacks, 2003-13

Segment Performance—Organic Grain Products

Key points

High cost of grain products slows the market

Responding to the needs of the gluten-free consumer

Organic grain products sales and forecast

Figure 11: U.S. sales and forecast of organic grain products, 2003-13

Segment Performance—Organic Dairy Products

Key points

A segment with many challenges

Organic dairy products sales and forecast

Figure 12: U.S. sales and forecast of organic dairy products, 2003-13

Segment Performance—Organic Meat

Key points

Organic meat challenged by a lack of pastureland, products

Organic meat sales and forecast

Figure 13: U.S. sales and forecast of organic meat, 2003-13

Segment Performance—Other Organic Food

Key points

A broad category

Other organic food sales and forecast

Figure 14: U.S. sales and forecast of other organic food, 2003-13

Retail Channels

Key points

Sales through FDM channels continue to be strong

Figure 15: U.S. sales of organic food, by retail channel, 2006 and 2008

Retail Channels—Food, Drug and Mass Merchandisers

Key points

FDM channels dominate organic food sales

Biggest competitors are natural products and private label lines

Figure 16: Television ad: Wild Harvest Organic and Natural Food, 2008

Sales of organic food at FDM channels

Figure 17: U.S. sales of organic food at FDM channels, 2003-08

Retail Channels—Natural Supermarkets

Key points

Natural supermarkets continue to grow, despite price challenges

Sales of organic food at natural channels

Figure 18: U.S. sales of organic food at natural supermarkets, 2003-08

Market Drivers

Key points

Persuading older consumers to “go organic”

Figure 19: Population by age, 2003-13

Higher income household means higher organic usage

Figure 20: Household income distribution, 2007

Leading Companies

Key points

Competition between mainstream and natural manufacturers

Sales of leading organic food companies

Figure 21: Organic food and beverage sales of leading companies, 2006 and 2008

Brand Share—Organic Prepared and Packaged Food

Key points

Amy’s Kitchen controls a third of sales

Brand sales of organic prepared and packaged food

Figure 22: Brand sales of organic prepared and packaged food, 2006 and 2008

Brand Share—Organic Fruits and Vegetables

Key points

Bagged salad and berries lead

Tomato scare has little impact on organics

Segment includes a range of products

Brand sales of organic fruits and vegetables

Figure 23: Brand sales of organic fruit and vegetables, 2006 and 2008

Brand Share—Organic Snacks

Key points

Clif and Newman’s Own Organics lead in the segment

Brand sales of organic snacks

Figure 24: Brand sales of organic snacks, 2006 and 2008

Brand Share—Organic Grain Products

Key points

Cereal manufacturers vie for top spot

Brand sales of organic grain products

Figure 25: Brand sales of organic grain products, 2006 and 2008

Brand Share—Organic Dairy Products

Key points

Stonyfield Farms controls half the market

Brand sales of organic dairy products

Figure 26: Brand sales of organic dairy products, 2006 and 2008

Brand Share—Other Organic Products

Key points

A broad collection of brands and few standouts

Brand sales of other organic food

Figure 27: Brand sales of other organic products, 2006 and 2008

Brand Qualities

Key points

Paul Newman (1925-2008) and his influence on the organic market

Figure 28: Launches of Newman’s Own organic products, by product segment, 1998-2008 (total)

Newman gave organics a new image

And Paul Newman’s own image did a lot to carry the brand…and the message

Lessons for other organic manufacturers

Innovation and Innovators

Key points

Organic ingredients in everything from baby food to candy

Vegetables

Snack/cereal/energy bars

Baby food

Number of organic food launches

Figure 29: New product/variant launches, organic food, by sector, 2003-08

Organic food claims

Figure 30: Top 10 claims, new product/variant launches of organic food, 2006-08

As the market matures, what claims will continue to grow?

Figure 31: Positioning new organic food products, 2006-08

Organic Food and Drink Buying

Key point

Usage of organic food and beverages

Figure 32: Purchase of organic food and beverage products in past year, by gender, age, household income, race/Hispanic origin and region, July 2008

Frequency of Purchase

Key point

Young respondents, those from higher-income HH, key to organic market

Figure 33: Frequency of purchase of organic food and drink, by age, July 2008

Figure 34: Frequency of purchase of organic food and drink, by household income, July 2008

Purchase frequency up, especially among younger consumers

Figure 35: Purchase of organic food compared to previous year, July 2008

Purchase Venues for Organic Products

Key points

Natural food stores losing ground, farmers markets see boost

Figure 36: Purchase venues for organic food and beverages in past year, 2006-08

Purchase locations driven by cost

Figure 37: Purchase venues for organic food and beverages in past year, by age, July 2008

Figure 38: Purchase venues for organic food and beverages in past year, by household income, July 2008

Types of Organic Food Purchased

Key points

Organic food purchases on par with past year

Figure 39: Types of organic food purchased in the past year, July 2007 and July 2008

Fresh fruits and vegetables top organic food purchases

Figure 40: Types of organic food purchased in the past year, by gender, July 2008

Figure 41: Types of organic food purchased in the past year, by age, July 2008

What Purchasers Look for in Organic Food

Key points

100% organic remains on top, lack of artificial ingredients or preservatives declines

Figure 42: Criteria for purchasing organic food, July 2007 and July 2008

Figure 43: Criteria for purchasing organic food, by age, July 2008

Name Brands vs. Private Label

Key points

Preference for name brands varies by gender, age

Figure 44: Branded and store-branded organic beverages purchased, by gender and age, July 2008

Reasons for Eating Organic Products

Key points

Personal health tops reasons, but many factors in play

Figure 45: Reasons for eating organic food and beverages, July 2008

Distinguishing between Natural and Organic

Less than half distinguish between natural and organic food

Figure 46: Distinguishing between natural and organic food/beverages, by gender, age, household income and race/Hispanic origin, July 2008

Opinions about Organic Food and Beverages

Key points

Trends in organic opinions

Figure 47: Opinions about organic food and drink, 2006-08

Older consumers most resistant to organic products

Figure 48: Opinions about organic food and drink, by age, July 2008

Reasons for Not Purchasing Organic Food and Beverages

Key points

Highest-income non-users demonstrate most resistance

Figure 49: Reasons for not purchasing organic food and beverages, by household income, July 2008

Appendix: Other Useful Consumer Tables

Reasons for eating/drinking organic food and beverages

Figure 67: Reasons for eating organic food and beverages, by age, July 2008

Figure 68: Reasons for eating organic food and beverages, by race/Hispanic origin, July 2008

Concern with genetic modification of food steady over time

Figure 69: Concern about genetic modification of food, by age, 2006-08

Figure 70: Concern about genetic modification of food, by gender, age, household income and race/Hispanic origin, July 2008

Appendix: Trade Associations

Abstract

The organic food market is valued at $5.2 billion in 2008, through sales from FDM and natural supermarket channels. This does not include sales of private label organic food, which have pushed the category even higher. In this report you will learn:

• How the market has grown over the past six years, and how Mintel projects sales will increase through 2013
• Which forces are driving the organic food market and the importance of providing products that appeal to the two major user groups: younger adults and higher-income consumers
• The opportunities that will grow the market in the future-as well as those that may cause its sales to slow: the effects of higher food prices and the importance of quality
• The key players in the marketplace, in six broadly defined segments
• What consumers feel is important when they choose organic food; how and where they shop for these products and how they feel about organic products in general

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