Why has organic food become more popular

Organic food going mainstream

After an 8.4% sales increase from the previous year and Amazon's purchase of Whole Foods for $13.7 billion, it looks like organic food is growing into a normal part of American life.

Organic food sales are setting records as more mainstream Americans fill their shopping carts with everything from eggs to gummy fruit snacks.

Having shed its hippy-dippy image, organic food is among the faster-growing categories in supermarkets even though it adds to food bills and studies vary when it comes to perceived health benefits.

Organic food producers, which now includes giants such as General Mills, are capturing more consumers such as business coach Patty Lennon of Brookfield, Conn.

"It’s produced in a healthier way, without pesticides, without any bad things that contaminate the growth of the food and the growth of my kids," the 45-year-old mother of two said. "As my kids grow up, I want to know I’ve done everything I could to put the right things in their bodies."

Sure, organic costs more. Lennon estimates the $450 she spends on groceries weekly would drop to $275 or $300 if she bought the usual non-organic products. "I have the luxury of being able to afford it," she said..

There are millions of other shoppers like her.

Sales of organic food hit a record $43 billion last year, up 8.4% from the previous year, according to the Organic Trade Association, based in Washington, D.C.. Compare that to the 0.6% growth rate in the overall food category. But they still have a long way to go: Overall, organic food now represents 5.3% of total retail food sales in the U.S.

Interest in organic products is booming not only due to a more conscientious consumer, but also thanks to rising incomes in a strong economy and improved farming practices that make organic yields more robust. The demand for organic extends from supermarket aisles to the multitude of farmers markets that have sprung up.

Organic's rising importance was underscored by Amazon's offer last month to buy Whole Foods Market, the upscale grocery chain known for its expansive produce selection, for $13.7 billion.

"There's an increasing awareness of organic products," said Rupesh Parikh, investment bank Oppenheimer's senior analyst for food, grocery and consumer products, who predicts continued double-digit annual growth. "Consumers are really looking more into what they’re eating."

The most popular organic items are fruits and vegetables, which account for close to 40% of all organic food sales, the Organic Trade Association found. Organic produce sales grew at more than twice the rate of total fruit and vegetable sales. Almost 15% of veggies and fruit consumed in the U.S. is now organic.

With consumers' desire for more nutritious, less chemically-laden food comes a willingness to pay more. Some 44% of shoppers would pay an additional 20% or more for organic fresh vegetables, and 37% are willing to hand over that much more cash for organic poultry, found a study by the Hartman Group, a food and beverage research firm in Bellevue, Wash.

No wonder large food companies are diversifying their portfolios to include organic products.

"Finally, the conventional food and beverage industry has woken up and said, 'Why, this isn’t niche anymore . It’s eating into my share,' " Hartman Group senior vice president Shelley Balanko said.

Campbell Soup has the Plum Organics baby food line and Bolthouse Farms salad dressings and juices. Coca-Cola has organic Honest Tea. Hormel's lineup includes organic meats label Applegate Farms.

General Mills' organic-only portfolio has grown more than 350% over the past five years. Natural and organic sales were $1 billion this year, growing at a double-digit clip since 2000 when the Minneapolis-based cereal maker first ventured into organic with the purchase of Small Planet Foods, which produces a variety of organic foods, from ketchup to granola bars. In 2014, General Mills acquired Annie's, which features fruit snacks, cereal, cookies and more.

"As the food values consumers are looking for have shifted, we always try to be responsive," said Carla Vernon, General Mills' vice president of the natural and organics portfolio.

The growing popularity of organic food has opened the door to price cutters.

The Sprouts Farmers Market chain, for instance, has become an organic alternative to Whole Foods. And m ainstream supermarket giants, such as Cincinnati-based Kroger, which operates a variety of chains around the nation, are dedicating more floor and shelf space to organic products.

With that customer migration from traditional groceries to organic goods will come lower prices for shoppers. Organic's profit margins are generally higher than on conventional groceries.

"When a product is available at more retailers, it puts pressure on gross margins and profitability," Parikh said. "There’s more available, so supply chain has an impact as well."

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Reasons for the Increase in the Demand of Organic Food Worldwide

During the COVID 19 pandemic the demand for organic food went up as consumers perceived them as being healthier and good for immunity. However, otherwise too, demand for organic food is increasing at a continuous pace. According to an Expert Market Research report the Indian organic food market stood at a value of USD 849.5 million in 2020. For the forecast period of 2021 – 2026, the trend in the organic food market is expected to grow at a CAGR of about 20.5% to reach about USD 2601 million by 2026 (4).

Trends in growth of organic food market

In India, there has been a paradigm shift post the 2020 pandemic as consumers began to buy more organic foods as a preventive health measure. This change in perception is likely to drive the growth of the organic food market in future as well. In fact, all over the globe, there has been a growth in the organic food and beverage market particularly fruit and vegetables.

In fact, the biggest share in the organic food market comes from fruit and vegetables, followed by bread, cereals, milk and meat. Organically grown fresh fruit takes the leading position in international trade too. While the production and sale of organic food comes mainly from developed countries, even developing countries have begun to produce and export organic foods and products. India is a leader in the export of organic tea, basmati rice and cotton. Another area where India can see a demand in the export market is through organic vegetables.

Organic fruit and vegetables

The demand for organic fruit and vegetables is likely to continue right till the forecast year 2026. The rich nutrition value in organic fruit and vegetables is the main reason why they are in demand in the domestic as well as global market. Fruit and vegetables contain rich amounts of vitamins, minerals, fibre, carbohydrates and calcium. Also, studies have shown that when testing was carried out, then organically grown fruit and vegetables proved to taste better. Other studies show that organic foods may have more antioxidants compared to conventionally grown varieties which makes them more beneficial for health, including prevention of cancer.

Several other reasons for demand

In the last decade there has been an increase in awareness among people about other positive effects of organic foods like the following:

Fitness, health and wellbeing: One of the main motives for the consumption of organic food is of course that they do not contain harmful chemicals and pollutants, as some chemicals could lead to cancer and other serious medical problems. Consumers have also begun to realise that their energy and fitness levels also increase when they consume organic food. People with allergies to certain foods, chemicals, or preservatives often find their symptoms decrease or go away when they consume only organic foods.

Harmful effects of pesticides: To increase crop production several man-made pesticides are used which are leading to the depletion of water tables and soil contamination. Organic farming is eco-friendly and more sustainable since there is no soil and water contamination from use of synthetic chemicals. Farming without the use of pesticides also provides a healthier life for small animals and humans who live close to or work on the farms.

Use of antibiotics: Use of antibiotics on livestock is causing a poor immune response in humans. Animals that are organically raised do not receive antibiotics, growth hormones and are not fed any animal by-products. The animals are also given more space to move about outdoors, which ensures better health for the animal.

Unsafe food and food safety: Worldwide organic food has gained popularity because they are produced in an agricultural system that provides food that is free from toxic pesticides, synthetic fertilizers and genetically modified organisms (GMOs). So organic products are seen as being of high quality and are considered safer for both health and the environment. Moreover, the certification processes that organic food have to undergo, makes it clear that the food has been grown and processed according to the standards required for certification.

Environmental protection: Organic farmers follow strict cultivation standards which has a positive impact on soil, water and air. Natural farming methods also conserve biodiversity and maintain the natural balance of the ecosystem. Organic agriculture helps the fight against global warming as organically produced food is distributed locally and so less energy is used for transportation which automatically reduces carbon dioxide emission.

Other advantages of organic foods

We can clearly see that as awareness about the benefits of organic food grows, the demand for them is growing proportionally. Besides this, other reasons for the demand of organic food are that they

have high nutritional value
have high biological quality even when stored for longer periods of time
are more suitable for processing and distribution due to their longer shelf life.
need less energy to be processed
have higher organoleptic properties like colour, fragrance and taste
contain no residues of pesticides, heavy metals or hormones.

Consumer spending on health

In recent years, Indian consumers have started paying more attention to their health, the nutrient content and quality of the food they eat. Due to these concerns, they have gradually begun shifting towards organic food, even though organic foods are priced higher than conventional foods. This awareness among consumers is further giving a boost to the organic market as consumers are willing to pay for them if it is going to benefit their health and wellness. Also, in places where consumers are aware about the safety and quality of organic products, the market is growth is increasing, since consumers are willing to pay higher prices.

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