"Organic" Shows Surprising Resiliance in Recession

The Organic Trade Association would have us believe the Great Recession hasn't stopped the growth of organic foods.

What else would you expect them to say?

At least they're trying to back up their assertions with data. On Monday they release the details from their 2009 Organic Industry Survey which purports to show U.S. sales of organic products (including non-food items) reached $24.6bn, a 17.1% rise over 2007 sales levels. Not surprisingly, the segment's overall growth rate was the slowest it's been since 2004 (14.6%). In contrast, organic food sales expanded at a 20.9% clip in 2006 and 18.5% in 2007.

One resource for the elasticity of organic demand is the spread of organic products across the grocery channel. Now consumers can often rely on store brands and couponing to keep eating green without shelling out too much green. The OTA, prejudiced though they may be, are not alone in supporting the notion that organic eating has taken hold in the U.S. A soon-to-be released J.D. Power and Associates survey (Private Label Industry Report) shows consumer perceptions about private label in general and store-brand organics in particular as trending in a positive direction. Safeway is even attempting to sell its O Organics line to other retailers (though not direct competitors). Aggressive marketing has also helped push the notion that store brand organic products are no longer "no name" cheap substitutes, but instead are high-value items that stand on their own.

OTA's study was conducted by Lieberman Research Group, and it studied things like organic fibers, personal care products and pet foods, too. Organic food sales grew 15.8% ($22.9bn), while organic non-foods increased 39.4% ($1.648bn). While organics are clearly here to stay, they account for less than 4% of total U.S. foods sold.

A similar result was found by Cone Inc., a Boston-based company reporting 34% of U.S. consumers say they are now more likely to buy environmentally responsible products. Of those interviewed, 44% say their "green" shopping habits have not changed as a result of the economy (only 8% say they are less likely to buy environmentally-responsible products).

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