Organics are Growing, But Will Shoppers Stomach the Price?

Organics are Growing, But Will Shoppers Stomach the Price?

March 4, 2015

Organic food sales are poised to grow tremendously over the next 15 years. As a retail RD, what are some of the trends, stats, and facts you should know when communicating with your customers, and how can you expand their knowledge and quell concerns over conventional?

Morningstar's most recent Consumer Observer predicts "mid-to-high-single-digit growth in organic food sales over the next 25 years." They peg the number at six to seven percent as compared to 2.5-3.5 percent growth for the entire grocery channel. They also go on to say that by 2038 they expect organics to capture 14 percent of all grocery sales.

While many organic brands are celebrating, Facts, Figures & the Future (F3) suggests that it's premature to pop the cork on the champagne just yet.

F3 feels that these predictions seem to ignore the impact that the climate has on the organic food business. The drought in California and other global weather patterns are creating conditions for farmers and ranchers that have led to shortages and huge price increases.

The headlines continue to play out the organic milk shortage throughout the country, and organic beef, already in short supply, continues to see escalating prices. There is no doubt that as shoppers struggle economically, the higher prices of organic foods and beverages will be out of reach for many; who may well seek out less expensive alternatives with similar attributes.

Retail dietitians are perfectly poised to educate consumers on similar alternative products. For example, store brand milk. Most have eliminated rBST growth hormones; one of consumer’s top concerns and reasons to buy organic milk. Educating consumers on this simple fact may sway their purchases to the more wallet friendly conventional store brand.

Another example is locally grown produce.  Some small farmers choose not to be USDA-Certified Organic, but they still practice organic farming methods.  Get to know the small farmers who supply your retailer and their farming methods - and educate your shoppers accordingly.  Your shoppers may find that they have options that meet their needs besides USDA-certified organic produce.

There are many other products on our shelves that exhibit similar attributes to organics and meet shopper’s needs. It’s time we educate consumers about these similar less expensive alternatives. 

Perhaps it will be the price increases on organics that will in fact drive the percentage of sales to these heights as Morningstar predicts. We now have the opportunity and obligation to understand and explain to shoppers the reality of what is happening to our farmland and pastures; without doing this, we risk shoppers feeling that our industry - both retailers and brands - are increasing prices for their own benefit. 

Originally published in the Facts, Figures & the Future weekly e-newsletter.