Study: Organic market not recession-proof

CHICAGO According to Mintel, the market for organic foods and beverages should reach $7.2 billion in 2008, an increase of over 140% from the $3.0 billion recorded during 2003. But year-over-year, Mintel has seen sales growth slowing. With many Americans now struggling financially, Mintel projects that sales of organic foods and beverages will not rally anytime soon.

“Rising food and gas prices, the credit crunch and economic uncertainty have deeply affected people’s shopping habits,” comments Marcia Mogelonsky, senior analyst at Mintel. “Across the board, Americans are spending less and ‘organic versus traditional’ is a decision many people are thinking about carefully.”

People are also saving money by reaching for private label organics, which have exploded in recent years. Mintel’s Global New Product Database (GNPD) tracked over 540 new private label organic foods in 2007, a massive increase from the 35 new products seen in 2003. Furthermore, when Mintel asked survey respondents about the difference between name brand and private label organics, three in five (60%) said it didn’t matter, that they reached for “whatever is available” when shopping. Private label posts an increasingly large threat to branded organic lines.

“Economic struggles will undoubtedly change the way organic food and drink is sold. But we don’t expect people to completely stop buying organics,” states Mogelonsky. “We anticipate more subtle changes, such as the formerly all-organic shopper who returns to traditional cookie brands while sticking with organic produce. These small changes will slow market growth.”