Mintel: Organic market will slow with economy

by Staff
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CHICAGO — Market growth rates for organic food and drink will decline as the economy struggles, according to new research from Mintel International.

"Rising food and gas prices, the credit crunch and economic uncertainty have deeply affected people’s shopping habits," said Marcia Mogelonsky, senior analyst at Mintel. "Across the board, Americans are spending less and ‘organic versus traditional’ is a decision many people are thinking about carefully."

Mintel said the market for organic foods and beverages will reach $7.2 billion in 2008, which is an increase of more than 14% from $3 billion in 2003. However, year-over-year, Mintel has seen sales growth slowing.

Rising food prices and private label brands are major cost-related challenges for organic manufacturers. The price of all food at home increased more than 7% in the past year, Mintel said.

Mintel also found people are saving money by going for private label organics. According to the Mintel Global New Products Database, there were 540 new private label products in organic foods in 2007, a significant increase from 35 in 2003.

In addition, 60% of survey respondents said the difference between brand name and private label organics doesn’t matter, and they buy whatever is available.

"Economic struggles will undoubtedly change the way organic food and drink is sold," Ms. Mogelonsky said. "But we don’t expect people to completely stop buying organics. We anticipate more subtle changes such as the formerly all-organic shopper who returns to traditional cookie brands while sticking with organic produce. These small changes will slow market growth."

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