Organic and Natural Foods: Retailing Trends

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Organic and Natural Foods Retailing Trends

• Dr. R. Wes Harrison
• Warner L. Bruner Professor
• Food Agribusiness Marketing
• wharrison_at_agctr.lsu.edu
• Louisiana State University
• Agricultural Center

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Overview of Presentation

• Quality Assurance/Certification Programs

• Organic Retail Markets Prices

• What do we know about the organic food buyer?

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Quality Assurance Certification Labels

• These programs provide assurances, or
  certification, of some extrinsic product
  attribute, such as, organic production
  practices, some aspects of food safety, origin
  of production, or animal welfare.

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Organic Crops and Pasture Up
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Organic and Natural Foods

• Quality Assurance/Certification Programs

• Organic Retail Markets Prices

• What do we know about the organic food buyer?

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The U.S. Organic Market

• Organic Trade Assoc. estimates growth
• of 20, and sales of 10.4 Billion in 2004

• Only about 2 of total food sales

• Largest Product Categories are Fresh Fruits and
  Veggies

Source Economic Research Service, USDA
7
Organic Sales by Product Category 2000
Source Economic Research Service, USDA
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Organic Prices in U.S. at 10-30 Premium - 1999
Source Economic Research Service, USDA
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Some Organic Categories Even Higher Premiums
E.G. Organic Broccoli
Source Economic Research Service, USDA, AMS
2004 Quarterly Price Premiums for Organic
Broccoli 1999 to 2004
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Organic Sales in Conventional Groceries is
Growing 1991 to 2000
Source Economic Research Service, USDA
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Why do consumers buy organic and natural products?

• Healthy, Nutritious, and Wholesome

• Biotechnology, Growth Hormones,
• Antibiotics, and Pesticides Use in Food
  Production

• Environmental and Socially Conscious
• Consumers

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How often do you buy organic or natural foods?
Source Consumer Surveys on GM and Functional
Foods, Harrison Munene, Harrison Han, Fall
2005, N1,005
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2004 - Mattson Survey

• 18 purchase very frequently to somewhat often

• 56 purchase rarely to never

Source MATTSON The Industrys Largest
Innovation Resource
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Do consumers buy organic for health reasons?
82 of consumers say they eat healthy
Only 15 of consumers who say they eat healthy,
also buy organic
Source Consumer Survey on Functional Foods,
Harrison Munene Fall 2005, N630
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What about Fruit and Veggie Eaters?
36 of consumers say they eat 5 plus servings of
Fruits Veggies per day
24 of consumers who eat 5 plus fruits veggies
per day, also buy organic
Source Consumer Survey on Functional Foods,
Harrison Munene Fall 2005, N630
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2004 - Mattson Survey

• 45 of consumer think organic products are
  healthier

Source MATTSON The Industrys Largest
Innovation Resource
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Do consumers who avoid GM foods buy organic?

• 28 of consumers agreed with the following
  statement
• I avoid buying GM foods

Source Consumer Survey on GM Foods, Harrison
Han, Fall 2005, N375
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60 of consumers who say they buy organic, also
avoid buying GM foods
12 of consumers say they buy organic
Source Consumer Survey on GM Foods, Harrison
Han, Fall 2005, N375
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What about customer demographics?
Source Consumer Survey on Functional Foods,
Harrison Munene Fall 2005, N630
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What about customer demographics?
Source Consumer Survey on Functional Foods,
Harrison Munene Fall 2005, N630
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What about customer demographics?
Source Consumer Survey on Functional Foods,
Harrison Munene Fall 2005, N630
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Concluding Comments

• High Growth Profitable Products

• About 14 Buy Organic Frequently

• But Over 50 are Seldom Buyers

• Most Buyers buy to avoid GM Foods

• Retailers Must Know their Customers and Local
  Competition

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Where are consumers getting there organic
products?
Source MATTSON The Industrys Largest
Innovation Resource
25
How often do you buy organic or natural?
Source Consumer Survey on GM Foods, Harrison
Han, Fall 2005, N375
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Sale of Processed Organics is also growing
Source Economic Research Service, USDA
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U.S. Organic Market - 6.6 Billion 20 Growth -
1999
Source Economic Research Service, USDA
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62 U.S. Organic Sales Sold in Specialty Stores -
1999
Source Economic Research Service, USDA
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What about customer demographics?
Source Consumer Survey on GM Foods, Harrison
Han, Fall 2005, N375