Enough Bloom for Organics?

Jeff Wells May 9th, 2008

If a couple recent news stories are to be believed, economic woes are driving shoppers to abandon organic and natural products in droves. One, which appeared in this week’s issue of Newsweek, declares “the bloom is going off organics”, citing data from The Hartman Group and a recent study by WSL Strategic Retail that show a declining interest amongst consumers. Also quoted are three shoppers who agree that, well, the price just isn’t right.

The story cites numerous cost examples to back this up: $7 for a gallon of organic milk, $4.50 for a loaf of organic bread, $50 for a liter of extra-virgin olive oil, and so on. Compare all this, notes the reporter, to $2.99 for a gallon of conventional milk at a Kroger store, and you get an idea of the price spread that’s crimping organic sales.

All of this is very easy to digest for readers. But the issue is more complex. For one, prices have gone up across the board, not just for organic. Conventional milk averages around $3.70 per gallon across the country right now (I don’t know where he got the $2.99 figure, but it’s definitely an anomaly). So consumers are in the habit of paying more in every aisle. Also, studies show that people are eating out less and eating at home more. Sure, most of these individuals are leaving Applebee’s and reaching for the Stove Top stuffing, but there are many who can still afford to pay the premium on certain wellness products, including organic.

One dividing point in all of this is loyalty. Shoppers who truly believe in the healthy, ethical qualities of organic and natural offerings will not abandon them in tighter times. The Newsweek story acknowledges this, highlighting that only a fifth of organic consumers hold this level of commitment. This is true, but according to the Natural Marketing Institute, that percentage is growing.

Will sales of natural and organic products ebb eventually? Sure — and we may be seeing a bit of that right now. The wellness industry is an ever-evolving one, and for one industry to sustain double-digit growth year after year is difficult. But I think it’s a stretch to imply that the category is losing its luster — or, er, going off bloom.

ShareThis

Email This Post

3 Comments to “Enough Bloom for Organics?”

Patrick Rea Says:

May 14th, 2008 at 10:21 pm

Jeff,

Very interesting topic for the organic industry. The question, “Is the organic industry recession proof?” was the most asked question by attendees to the Nutrition Business Journal Organic Markets Overview Webseminar last month: http://nbj.stores.yahoo.net/organicfoods.html

Time will only tell, but according to SPINS data in Q1 of 2008, sales growth was mostly similar to levels in Q1 2007. My feeling is that increased prices and decreased sales volume are acting to keep growth pretty steady so far this year. Of course, we cover this in detail…the drivers and dynamics of the business of the organic industry growth in our latest issue of Nutrition Business Journal - available via nutritionbusinessjournal.com

-Patrick Rea
Publisher & Editorial Director
Nutrition Business Journal
Juan Andres Ferrari Says:

May 15th, 2008 at 9:25 am

I had expressed in a comment few weeks ago about this precise point. How much more money people would want to spend in organic while they can get same product for 25% or less the price. It has to be a balance between the cost of growing and producing organic, the price the grower sells it and the price the consumer pays. Who wants to put the “tie to the cat”?.
The organic grower has to make a living, he deserves to make money and the supermarket too, how we find a balance???
That is the next question.
Jeff Wells Says:

May 15th, 2008 at 11:09 am

Thanks to both of you for posting. There is a growing body of stories and studies out there, and they all seem to fall on one side of this debate or the other. An increasing number, like the one from Newsweek, are proclaiming that premium-priced natural and organics will — pardon the pun — perish, more or less, in this sour economy. Other sources, like the data from SPINS along with a recent study by marketing firm Mambo Sprouts, claim that sales will hold steady and even increase.

I don’t think there’s a clean answer to the organics question right now. True, a lot of mainstream shoppers are trading down from high-priced goods like gourmet and organic. News stories, especially, have focused on the numbers surrounding this. But healthful food inspires immeasurable passion in people. And it’s growing. Indeed, at the same time that we (in the publishing community) talk about the economy’s impact on organics, we also report on studies that show preliminary benefits of eating organic produce, the carbon footprint of conventionally produced meat, and how organic farming can be just as productive as conventional (to name a few).

I’ll say it again: It all comes down to loyalty. Once the economists and the food industry are able to measure that, then we’ll have the answer.