By Denise Purcell

Food safety fears and health concerns boosted organic food sales to $5.3 billion in 2004, reports Mintel International. Organic products now comprise 1.9 percent of total U.S. food sales and are expected to continue gaining at an inflation-adjusted rate of 16.5 percent annually from 2004 through 2009.

Consumers’ continuing perception of these products as safe, nutritious and healthful alternatives is crucial to continued growth. As long as shoppers remain concerned about food integrity, the higher price point of organics is not expected to deter sales. A lift is also coming from supermarket chains that are growing organic selections with moderately priced private labels, making these foods more accessible to a wider range of consumers.

The most pressing impediment to growth may be a shortage of land, not consumers. As the organic market expands, fields suitable for farming these foods become more limited while outsourcing options raise more consumer doubts about the security of the food supply.

The Organic Market
Mintel’s research divides the organic industry into eight segments: fruits and vegetables; dairy products; beverages; grain-based foods; prepared and packaged foods; snacks, desserts and confectionery; meat and poultry; and other organic foods. Each segment has seen significant growth in the past two years, primarily due to a wider variety of organic products available through more channels.

Sales of organic foods and beverages through mainstream food, drug and mass merchant channels increased 88 percent between 2001 and 2004, with the majority taking place in supermarkets. During the same period, natural food store sales rose at a rate of 71 percent, fueled by the growth of Whole Foods and Wild Oats.

Supermarkets are expanding organics in center aisles and service cases through the store-within-a-store concept such as Wegmens’ Nature’s Marketplace or integrated within their product mix as at Albertson's. This development is helping satisfy consumers’ needs to purchase conventional and organic products in a one-stop format. Private-label organic lines—such as Wegmens’ Food You Feel Good About; Harris Teeter’s Naturals; Krogers’ Naturally Preferred; and Publix GreenWise—are booming.

In August 2004, Wild Oats Market announced that it would sell private-label products through the Peapod.com online shopping service in Chicago as well as test a branded store-within-a-store natural/organics department at selected Stop & Shop stores in the Northeast. Most private labels are priced midway between national organic items and conventional items, boosting consumer appeal. With more supermarket chains moving in this direction, store brands are expected to be a major player in organics.

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Editor’s Note: Specialty Food Magazine,/i> is pleased to be working with Mintel on Research Spotlight. Mintel is a leading supplier of competitive media, product and consumer data. A 30-year reputation for delivering dependable and original market information has allowed Mintel to maintain Business Superbrand status in the U.K. Mintel’s multifaceted product line includes: Mintel Reports, a renowned market intelligence report series, publishing more than 600 reports annually covering the U.S. and Europe; and Mintel’s GNPD, the Global New Products Database, which monitors worldwide product innovation in consumer packaged goods markets.

For more information, call 312.943.5250, or visit www.mintel.com. NASFT members may purchase Mintel’s Organic Foods report at a 10 percent discount.