Trend Watch: Organic Outlook

June 7, 2008
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Slow Growth Ahead?

The organic arena has enjoyed an extraordinary growth spurt during the past two decades. According to the Organic Trade Association (OTA), Greenfield, Mass., U.S. sales of organic food and beverages jumped from $1 billion in 1990 to an estimated $20 billion in 2007. Moreover, the association expects sales to reach almost $23.6 billion in 2008.

On the still-emerging non-food side, U.S. sales of such organic items as personal care products, apparel and more grew 26 percent in 2006 alone, OTA reports.

But recent surveys suggest the organic boom might be slowing. In fact, an April 23 article on contends U.S. consumers “are getting turned off by the organic hype for three reasons: price, skepticism and confusion.” The article cites several experts who provide data consistent with an increasingly disenchanted organic consumer base.

Indeed, food prices are up across the board, and the traditionally pricier organic sector presents an even more significant strain on already overstretched budgets. And with the current emphasis on all things green, many consumers are finding it difficult to sort out the truly organic from the hype and the hoopla.

And when it comes to consumer skepticism, even the most venerable of organic retailers - Whole Foods - is not immune. Some of the retailer’s faithful shoppers are questioning certain recent practices - spurred on by negative media reports.

“Whole Foods has faced well-deserved criticism for the effects it has on the environment, and its employees,” reports one article in the March 25 edition of Natural News.

Although Whole Foods has chalked up many recent positives - ranging from eliminating plastic bags to initiating programs that fund low-interest loans to local farmers - the doubts surely linger in some consumers’ minds.

To further compound matters, U.S. manufacturers face shortages of certain organic foods and ingredients. The result? Fewer products labeled as “100 percent organic” and more marked as “made with organic ingredients.”

Despite these challenges, it’s hardly a gloom and doom scenario for the organic products sector. In fact, retail buyers of private label products still can look forward to a strong opportunity for growth in the organic arena - provided they understand current consumer trends and develop the products and messages that meet them.

Trend Tracking

Speaking of consumer trends, Maryellen Molyneaux, president of the Harleysville, Pa.-based Natural Marketing Institute, and Lynn Dornblaser, director of custom solutions for the Chicago-based Mintel International Group Ltd., know a thing or two when it comes to the organic side. They shared key trends with attendees during a presentation at the 2008 All Things Organic show, held this past April in Chicago.

Noteworthy among the consumer trends the speakers identified as major organic industry impacts were “the culture of sustainability,” “the new immunity,” and “stop, I want off!” - three of eight key trends NMI unveiled first in early April.

Molyneaux stressed that today’s consumers are beginning to make choices based on sustainability aspects of products and companies, with 43 percent of consumers indicating that they’re doing something new this year to protect the environment. Tying in with the culture of sustainability is a growing concern about “greenwashing,” she added, with 78 percent of consumers saying it’s important for manufac-turers to be mindful in their product offerings and messages.

Manufacturers can appeal to consumers’ sustainability concerns not only by providing the right message with organic products, but also by addressing things such as fair trade and carbon footprinting in both organic and non-organic offerings.

Even a small effort can go a long way. For example, one variety of Ben & Jerry’s ice cream might emphasize just one fair trade ingredient, Dornblaser said - and that ingredient might be different in the United States from the fair trade ingredient touted in the same variety overseas.

As for the “new immunity,” Molyneaux said many U.S. consumers are beginning to blame a food system laden with additives, genetic modifications, antiobiotics, hormones, pesticides and herbicides for the rise in food allergies and weakened immune systems.

For many organic consumers, the single-largest organic purchase motivator is avoidance, she said, with environmental concerns coming in second. It should come as no surprise, therefore, that organic users also gravitate toward functional-type products that promise health benefits.

“Eighty-five percent of organic users have used a functional food product in the last year,” Molyneaux said.

You’ll also find a growing group of consumers who just want to be left alone. According to Molyneaux, the “stop, I want off” consumers don’t want to be bombarded with messages on their PDAs and loathe 24/7 connectivity.

For these consumers, the organic message - on the package and elsewhere - needs to be simple, Dornblaser said. Clean labels that tell a story in a simple way or point out the goodness of the product itself are a good tactic. And clear packaging provides a simple showcase for organic products’ healthful ingredients.

Each of these trends - as well as the five other NMI trends -includes a corresponding countertrend that further complicates matters, Molyneaux and Dornblaser pointed out. But product developers and marketers who make an effort to understand each of the trends and countertrends impacting the organic sector will be better situated for long-term growth.

To learn more about these and NMI’s other top 2008 consumer trends, visit PLB

Sidebar: One Product, Four Consumers

According to the National Marketing Institute, Harleysville, Pa., consumers fall into one of four different groups when it comes to organic purchases: Devoteds, Temperates, Dabblers and Reluctants. The Devoteds and Temperates comprise the most integrated and loyal organic consumers, and products must meet with their approval if they’re to be a success. Dabblers are more integrated than Temperates. Temperates have varying motivations - subject to change - when it comes to organic purchases.

Meanwhile, Dabblers and Reluctants are less convinced about organic’s virtues, with Dabblers described as cost-conscious explorers and Reluctants as non-believers. Growing organic sales among these two groups will take a concentrated effort.

It’s important for product developers and marketers to understand - and adjust for - the different motivators behind each of these groups’ purchase decisions, NMI says, to grow organic sales among them.

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