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Sunday, October 20, 2019  Spokane, Washington  Est. May 19, 1883
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News >  Business

U.S. organic sales pass $50 billion mark for first time

UPDATED: Fri., May 17, 2019, 4:18 p.m.

Organic selections are displayed in the produce department of a  Target store in Minnetonka, Minn. (Tribune News Service)
Organic selections are displayed in the produce department of a Target store in Minnetonka, Minn. (Tribune News Service)
By Kristen Leigh Painter Star Tribune (Minneapolis)

U.S. organic sales continue to outpace the broader market, surpassing $50 billion for the first time last year, as pesticide-free, non-GMO products take a bigger slice of the total consumer dollars spent every year.

That rate is slowing from earlier this decade, a sign that the organic market is maturing and new types of health and wellness claims are fragmenting consumer spending.

The annual survey, published Friday by the Organic Trade Association, is primarily composed of organic food sales, but includes a rapidly-growing nonfood segment of personal care products, household goods and pet food.

“Organic is now considered mainstream. But the attitudes surrounding organic are anything but status quo,” Laura Batcha, chief executive of the Organic Trade Association (OTA), said in its announcement.

The vast majority of the more than 200 companies that responded to the survey, conducted by Nutrition Business Journal on behalf of OTA, make and sell food. In 2018, organic food sales reached $47.9 billion, or nearly 6% of the food sold in the U.S., the survey found.

Fruits and vegetables remain the largest driver, accounting for more than one-third of all U.S. organic food sales.

Organic’s second-largest sector, dairy, struggled in 2018 along with its nonorganic counterpart. Despite diet trends that shifted consumers away from dairy and eggs, organic sales in those categories eked out nearly 1% growth last year with $6.5 billion in sales.

Overall sales of organic products grew 6.3% last year with nonfood products seeing an even bigger boost of 10.6%. “Consumers want clean labels and to reduce the chemical load on their bodies,” the OTA release says.

But the double-digit gains that organic food sales saw a decade ago are gone. For the last three years, organic food sales have been in the mid- to high-single digits. Last year, organic food sales grew 5.9% compared to 2.3% for total U.S. food sales.

“The (U.S.) population isn’t growing as quickly as it once did and the fertility rate is declining,” said Michael Boland, director of The Food Industry Center within the University of Minnesota’s Department of Applied Economics. “The (organic market) maturing is happening, I think, because people have decided they don’t need to be 100% organic and people are only going to fill their baskets with so many fruits and vegetables.”

Perhaps more importantly, Boland said, is the changing view of health and wellness claims. Before the recession, organic was the clearest market helping consumers to make a better-for-you, better-for-the-planet purchases, he said.

Since then, packaged goods companies and food retailers have gotten smart about marketing other types of health and wellness claims – like plant-based ingredients, healthy fats, fewer ingredients, or improves gut health and digestion.

“The space has become more complicated,” Boland said. “You have a fragmentation going on.”

Champions of organic recognize the marketing challenges and are trying to make the USDA organic standards more stringent.

“Organic is in a unique and tough environment. The government is slowing the advancement of the organic standard, but the positive news is that industry is finding ways to innovate and get closer to the consumer without walking away from the organic program,” Batcha said in the release. “So, whether it’s grass-fed, regenerative, or Global Organic Textile Standard certified, they all have to be organic. The industry is committed to standards and giving consumers what they want.”

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