SPECIAL REPORT: Organic Products Move Far Beyond the Niche

19 Feb 2016 --- Sales show that more and more people are opting for the organic option when grocery shopping. In this report NutritionInsight explores the research on these products, the consumers, and the global market producers.

Organic food and beverages have many advantages, and their popularity is growing fast. Back in 1997, less than 1 percent of the US food and beverage market was organic, and now it’s 5 percent, confirms John Reganold, professor of soil science and agroecology at Washington State University and co-author of the “Organic Agriculture in the 21st Century” review study, featured in the February issue of Nature Plants journal.

Innova Market Insights reported over 20,000 new organic products (excluding pet foods & supplements) with an organic positioning in 2014, a doubling from the numbers tracked in 2011. Product launch activity was led by the US (21%), Germany (14%), France (8%) and the UK (5%). Juice & juice drinks (7%), baby meals (7%) and tea (6%) were the leading categories that featured an organic claim. Interestingly, it was brands that dominated NPD activity, accounting for 85% of new products tracked in 2014 with an organic positioning, compared to 15% for private label.

The rise of organic food has come amid an increasing concern about wellbeing and healthier eating. However, there is still the debate of just how healthy — and how natural — organic foods really are. The US Department of Agriculture (USDA) urges consumers "to keep in mind that the term 'organic' does not necessarily mean 'healthier’," adding that the term “organic” largely refers to how farmers grow and process food.

Reganold analyzed 40 years of available data and focused on how organic farming impacts several types of sustainability: productivity, impact on the environment, economic viability and social wellbeing. He notes that 12 out of 15 studies reviewed found evidence that organic is more nutritious than conventional by having more vitamin C, antioxidants and omega-3 fatty acids.

As reported by FoodIngredientsFirst recently, an international collaborative meta-analyses study lead by Newcastle University’s Organic Food Quality project found an astonishing 50 percent more omega 3 in organic compared to non-organic milk and meat due to the high clover diet of cows. In response to this, Soil Association Director Helen Browning told NutritionInsight: “This exciting new research confirms what many people have always thought was true – what you feed farm animals and how you treat them affects the quality of the food – whether it’s milk, cheese or a cut of meat.”

Other studies indicate that children who eat organic foods have lower levels of pesticide metabolites in their bodies than those who eat conventional.

However, The Mayo Clinic highlights a recent study that examined the last 50 years of data, in which researchers found that organic and conventional food was "not significantly different in their nutrient content."
Research in this area is ongoing.

Organic Producers
This lack of clarity hasn't stopped consumers from purchasing organic items, or those making it. Worldwide, there are more than 27,800 organic producers.

In 2015, the number of organic producers in the US rose more than 5 percent in a year. There are now almost 20,000 certified organic operations, which is a new record according to Department of Agriculture (USDA) officials. This is up 250 percent from 2002, when certified organic producers were first tracked.

“As demand for organic products continues to soar, more and more producers are entering the organic market,” said Agriculture Secretary Tom Vilsack in a statement. The USDA recently put forward US$66.5 million in funding to support specialty crops and organic food production, as well as provide more options for organic consumers. Vilsack added: “Growing demand for organic goods can be especially helpful to smaller family operations. The more diverse type of operations and the more growing market sectors we have in American agriculture, the better off our country’s rural economy will be.”

One success story is Organic Valley, who’s family of businesses reached a record breaking US$1 billion in annual sales for 2015. Lewis Goldstein, Vice President of Brand Marketing told NutritionInsight: “Organic Valley is committed to innovation in organic dairy beverages. For example, we just launched Good To Go milk in chocolate and white, the first organic single–serves in adult portions in the marketplace. Two years ago, we created organic milk protein shakes, Organic Fuel and Organic Balance, which have quickly become the bestselling organic protein shakes in the nation. And in March, we are launching the only organic flavored half & half available to US consumers. Our organic French Vanilla and Hazelnut half & half will meet consumer demand for premium coffee flavorings, using America’s bestselling half & half.”

Goldstein concluded with plans for the future: “We are also making 100 percent grass-fed milk to meet the growing trend of consumers who want the premium nutrition and flavor of milk from cows that are never fed grain, only lush green grasses, clovers and dried forages.”

Market Economics
The most infamous fact about organic food is that it’s expensive – costing about 47 percent more, according to a recent analysis from Consumer Reports. As organic foods are more labor-intensive to produce and can perish faster than conventional foods, they are priced at a premium and purchased primarily by high-income consumers.

A 2015 meta-analysis about the economics of organic farming, published in the journal PNAS (Proceedings of the National Academy of Sciences), determined that organic farming is more profitable than conventional, earning farmers between 22 and 35 percent more money. They concluded that the organic price premium (which was around 30 percent in the study) only had to be about five percent for organic profits to break even with conventional.

Sales Growing Rapidly
Sales from organic farms in the US grew at a rapid pace, up 72 percent since 2008, according to the USDA. Organic food sales exceeded US$35 billion in 2014, up more than 11 percent from the prior year, according to the Organic Trade Association (OTA). Over half of US families are buying more organic products than a year ago, the association added, and the country as a whole is shipping more than US$500 million in organic products abroad.

In 2013, the four biggest single retail markets were the United States (US$27.55 billion), Germany (US$8.62 billion), France (US$4.99 billion), and China (US$2.72 billion). The US market share (4 percent) was comparable with that of Germany. In 2014, growth continued in the big markets.

Consumers in the European Union spent 22.2 billion euros (US$1.13 billion) on organic foods. This is shown by the latest data provided by the Organic Data Network, the Research Institute of Organic Agriculture (FiBL), and the Agricultural Market Information Company (AMI). Some countries, such as Switzerland, Sweden, and Norway, showed double–digit growth rates.

After successive years of decline due to tough economic times, four out of five British households bought organic produce in 2014, with younger shoppers spending the most, an industry report on behalf of Soil Association found. Produce World Group, the UK’s largest grower and supplier of organic vegetables, confirmed that consumer demand for fresh organic vegetables in Christmas 2014 was higher than any other year.

Sales of organic food and drink rose by 2.8 percent, fueled by strong growth among independent retailers and healthy online sales. The organic market in the UK is worth £1.86 billion (US$2.11 billion) – an increase of 4 percent– according to the Soil Association “2015 Organic Market Report.” This is noteworthy considering food prices fell by 1.9 percent, and consumer food spending decreased by 1.1 percent.

Danish consumers are the most pro-organic in the world, according to Organic Denmark – an association of companies, organic farmers and consumers. Nearly eight percent of all food sold in Denmark is organic, the highest percentage in Europe. Danish organic export has risen by more than 200 percent since 2007. The country’s national organic brand has been in business for 25 years, making it one of the oldest organic brands in the world.

Last year the Danish government pledged a total of 400 million kroner (US$60 million) to its 67–point action plan, Økologiplan Danmark, which ambitiously aims to double organic farming by 2020; as well as increase organic items on the menu in canteens, hospitals and daycare institutions. Goals include requiring organic farming on public lands, as well as subsidizing farmers transition to organic, and simplifying the country’s organic regulations.

Certification and Regulation
In the United States, only 1 percent of US farmland is certified organic.

To improve this figure, ongoing USDA’s National Organic Program (NOP) developments include educational initiatives, as well as an “Organic Integrity Database”. This database, rolled out in September 2015, will keep track of all entities holding a USDA organic certification. The program is also working to make a joint organic certification, as there are now 80 accredited organic certifiers nationwide.

Organic food production within the EU is strictly regulated, and the word “organic” is defined in law. In the UK, organic control bodies (CBs) license individual organic operators. They are approved by Defra, the department for environment, food and rural affairs. The Organic Food Federation, established in 1986, is now one of the UK’s leading CBs, operating in all areas of organics. Their standards are based on the Council Regulation 834/2007 which is the official definitive legal standard within the EU.

The Soil Association is the trade body which licenses organic products, as well as representing organic farmers, in the UK. In April 2014, Soil Association Certification announced a unique partnership with China’s organic CB, Organic Food Development Centre (OFDC). This partnership makes it cheaper and simpler for the UK’s organic businesses to export to China.

Evidence proves that shoppers around the world believe organic foodstuffs are beneficial and worth the expense. They are continuing to demand and buy more – which is good news for producers and evolving organic food industries.

By Kerina Tull

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