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Organic food sales will slip 1.1% to $5.07bn according to a forecast from Chicago-based research firm Mintel.No, that's not an "Arpril Fool's Day" joke.
Fuel prices especially have cut into profits on organic soybeans, whose price has jumped to $28/bushel; conventional soybeans sell for $12 per bushel according to the U.S.D.A. Dean Foods calls the “natural” designation “a large, growing industry.” Critics say the totally-unregulated (and meaningless) “natural” category (including empty buzz words like “eco-friendly,” “fair trade” and “sustainable”) have gutted the organic category.
Unlike the strict rules for organic certification (and their attendant cost), the “all natural” rubric has no requirement for testing, evaluation or regulation. A recent survey of consumers found that an overwhelming majority believed “natural” is better than “organic.” WhiteWave (a Dean brand), for example, claims it works with Conservation International to ensure its soybeans are grown without genetic engineering, and are sourced in a “sustainable, socially responsible and ethical manner.” The Food & Drug Administration has expressed its reservations to the industry about using the ambiguous term “natural,” but no regulations have discouraged companies from using the term despite its ambiguity.
Meanwhile, Private Label organic products have grown from 13.6% of the total organic products sold in 2007 to 22.7% in 2008. Part of the growth can be seen in Safeway’s effort to peddle its organic products to other retailers, and SUPERVALU has extended its Wild Harvest organic brand to from 150 to over 300 items. Overall, private-label organic food sales increased 34% to $1.1bn; in comparison, only three years earlier (2005), organic private-label sales were only $166MM. The meteoric growth of organic foods has slowed during the recession, with shoppers trading down to conventional products in the face of 100%+ price differences. In years passed, the organic category saw 20% annual increases, while the previous 52 weeks have seen this taper off to 4.6% ($18.3bn).
Stores are retaining organic customers with private label products that have slashed prices from boutique and big brands alike. Deflation, however, is a real worry with organics, however, with a ½ gallon of reduced fat 2% organic milk retailing for $3.78(vs. $2.96 for a gallon of conventional milk). As a result, organic farmers are scaling back expansion plans. And Whole Foods Market Inc., has reported consecutive quarters of declining same-store sales. Its $8bn in annual sales makes up over 1/3 of the organic industry.
This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).
Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.
Fuel prices especially have cut into profits on organic soybeans, whose price has jumped to $28/bushel; conventional soybeans sell for $12 per bushel according to the U.S.D.A. Dean Foods calls the “natural” designation “a large, growing industry.” Critics say the totally-unregulated (and meaningless) “natural” category (including empty buzz words like “eco-friendly,” “fair trade” and “sustainable”) have gutted the organic category.
Unlike the strict rules for organic certification (and their attendant cost), the “all natural” rubric has no requirement for testing, evaluation or regulation. A recent survey of consumers found that an overwhelming majority believed “natural” is better than “organic.” WhiteWave (a Dean brand), for example, claims it works with Conservation International to ensure its soybeans are grown without genetic engineering, and are sourced in a “sustainable, socially responsible and ethical manner.” The Food & Drug Administration has expressed its reservations to the industry about using the ambiguous term “natural,” but no regulations have discouraged companies from using the term despite its ambiguity.
Meanwhile, Private Label organic products have grown from 13.6% of the total organic products sold in 2007 to 22.7% in 2008. Part of the growth can be seen in Safeway’s effort to peddle its organic products to other retailers, and SUPERVALU has extended its Wild Harvest organic brand to from 150 to over 300 items. Overall, private-label organic food sales increased 34% to $1.1bn; in comparison, only three years earlier (2005), organic private-label sales were only $166MM. The meteoric growth of organic foods has slowed during the recession, with shoppers trading down to conventional products in the face of 100%+ price differences. In years passed, the organic category saw 20% annual increases, while the previous 52 weeks have seen this taper off to 4.6% ($18.3bn).
Stores are retaining organic customers with private label products that have slashed prices from boutique and big brands alike. Deflation, however, is a real worry with organics, however, with a ½ gallon of reduced fat 2% organic milk retailing for $3.78(vs. $2.96 for a gallon of conventional milk). As a result, organic farmers are scaling back expansion plans. And Whole Foods Market Inc., has reported consecutive quarters of declining same-store sales. Its $8bn in annual sales makes up over 1/3 of the organic industry.
This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).
Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.
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