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Worldwide Demand for Organic Food Slowing Down


Greenplanet.net
February 9, 2009


Organic food is considered healthier, better-tasting and more environmentally
friendly than traditional food and in recent years its sales have been booming.
However the current economic crisis has made this growth slowing down.
The global market for organic food and beverages was worth $22.75 billion in
2007, after more than doubling in five years, according to market research firm
Euromonitor International. The US accounted for about 45% of that total.
With economies in crisis, the trend is slowing in the US, Britain, France and
Europe's most important market for organic food, Germany.

Typical growth rates of 20% to 30% for organic food sales in the US eased in the
second half of 2008 as middle- and upper-income families felt the strain of
layoffs and declining investment portfolios, said Tom Pirovano, director of
industry insights at market research firm The Nielsen Co.

Sales in December were up 5.6%, year on year, against a 25.6% rise a year earlier.

Even though growth is slowing, Mr. Pirovano noted that most people who purchased
organic foods were very committed. "Iím not convinced that we are going to see
big declines in organics any time soon," he said.

Ronnie Cummins, US national director of the Organic Consumers Association, said
occasional buyers of organic produce were cutting back, but regular buyers were
lightening up on processed food in favor of organic whole fruits, vegetables and meats.

Wholefoods' Mr. Besancon argued consumers were treating organic purchases
differently from those of other premium products. "When you buy organic you
believe it is inherently better for you and the planet," he said. "Who can
afford to get sick? So people are becoming more introspective about what they
eat. There is growth in the category. It is just less than it was."

If the relative cost of health care is one significant factor keeping
well-educated Americans with organic produce, in Germany producers argue organic
foods are being helped out of a niche into the mainstream.

Growth in Germany's organic food sales in 2008 to Ä5.8 billion did slow to about
10%, the German organic food industry association BOLW estimates. This compared
with 14% growth booked in 2007.

Alexander Gerber, the associationís chief executive, argued that Germanyís giant
discount food supermarket chains were increasingly introducing organic food,
which was underpinning the market.

In France, the sector continued to grow last year and the head of Agence Bio,
the main organic food group gathering officials and producers, said she was
confident it would continue to do so, albeit more slowly, in 2009. "For the
moment, sales are keeping up, consumers are still interested and demand is
rising," said Elisabeth Mercier. Although official data will not be available
until next month, she said her comments were based on wide and recent contacts
with producers, specialist shops and supermarkets. "In Europe, apart maybe from
the UK where the market seems more fragile, I do not believe there will be a
drop in consumption this year although growth rates may be less spectacular,"
Ms. Mercier said.

In Britain, growth in sales of organic products has slowed dramatically, to an
annual rate of about 2% from 16%, according to Nielsen data for the year to
early November 2008. "What I would expect is for this year to see a small
single-digit decline for organics," said Jonathan Banks, UK-based business
insight director with Nielsen.

Patrick Holden, director of Britainís leading organic certification body the
Soil Association, said he was getting mixed reports, with some consumers
switching from organic to cheaper free-range products.

Demand for many products is, however, holding up well.

Some are benefiting from growing demand for locally produced food.

"Organic food with a local story is bucking the recession," he said. "This
recession has destabilized things a little, but not catastrophically."

Mr. Holden said about 20% of organic food sales were vulnerable, being bought by
"light green" purchasers who had been influenced by the actions of other
consumers. These he contrasted with the "deep greens" who make up 80% of demand
and are committed to the benefits for health and the environment.

"Storm and tempest wonít affect their buying habits," he said. "I think that
rump of committed consumers [is] with us to stay."

 

 

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