Rising retail sales for organics fuels optimism - The Packer

Rising retail sales for organics fuels optimism

01/06/2012 11:24:00 AM
Jim Offner


Sales of organic fruits and vegetables continue to increase despite an ongoing global economic downturn, according to marketing agents.
“Our survey last year showed favorable growth, and we projected sales to be up,” said Barbara Haumann, spokeswoman for the Brattleboro, Vt.-based Organic Trade Association, which conducts annual surveys on organics sales. 
“You start to see member companies who are active in organic reporting sales that have been great. That’s not to say everyone is doing great, but overall, it appears organics did very well in 2010 and 2011,” she said.
Families buying more organic
The OTA reported in its 2011 survey that 41% of families say they are “buying more organic” than they were a year earlier. The association also reported 78% of U.S. families are buying organic foods, up from 73% in 2009 and 2010.
Although consumers said they had backed away from some organic purchases during tougher economic times, the OTA reported produce and dairy remained the primary categories within which U.S. families were most consistently buying organic. 
Nineteen percent said they “always buy” organic produce, which was level with 2009 and 2010.
Economic factors have taken a toll on organic sales, but the damage has been limited, said Simcha Weinstein, marketing director with Bridgeport, N.J.-based Albert’s Organics.
“Even during the economic downturn of the past three to 3 1/2 years, the organic industry has managed to show growth — not necessarily strong growth — but considering the economic climate, it’s growth that any industry would be pleased to see,” Weinstein said. 
“Prior to 2009, the organic industry averaged double-digit growth between 2000 and 2008. That pace certainly subsided, but again, growth has still been there, and the growth of the organic industry has been stronger than the overall growth of the food industry in general during the past three years.” 
Marketers tweak sales strategies
Other organic sales and marketing agents said they had seen the category continue to grow.
“It’s been a good year,” said Scott Mabs, sales and marketing director with Porterville, Calif.-based Homegrown Organics Farms. “We saw a decent amount of growth. We’re continuing to look to new items. We just launched our first season of organic clementines. That was exciting. And our mandarin program is growing significantly here. That’s been really good.”
That trend likely will continue, Mabs said.
“Organics in general, I think, overall there’s still very good interest and demand,” he said. “It continues to gain each year as retailers change their strategies and look at how they’re going to continue to offer organics to their consumers. It’s a good time to be involved in it, as they’re changing on a yearly basis with different retailers.”
A down U.S. economy that has featured monthly unemployment rates near 9% has not affected sales, Mabs noted.
“We have not noticed a significant impact,” he said. “We have a certain amount of fruit we need to move, and we’ve moved it. It’s not like we have an endless supply of product we can go out and sell until the market is completely saturated.”
The economy has affected organic sales in restaurants, however, said Gwen Gulliksen, sales and marketing director for Harvest Sensations, Los Angeles.
“In retail, we’ve seen lots of sales increases,” Gulliksen said. “There are mothers out there that want to buy the right product on their family. In foodservice, they’re more interested in the local-sustainable route, not necessarily organic.”
Narrower margins, struggles
Economic realities have narrowed the price differential between conventional and organic product, but the difference is still there, Gulliksen said.
“It’s always going to be more expensive,” she said. “Now, it’s a only little more expensive, but it’s still more expensive.”
Organic’s sales success hasn’t been universal, said Mike Bowe, Cincinnati-based vice president of Dave’s Specialty Imports Inc., of Coral Springs, Fla.
“It’s been a tough time for the organic grower, for sure,” he said. “The premium has narrowed some. The organic growers have been used to a bigger spread.”
Weinstein said the industry anticipates further growth.
“According to this latest report from the OTA, the organic industry supports 14,540 organic farms and ranches across the country,” he said.
 “A total of 4.1 million acres of land are currently in organic management, and there are organic farms in all 50 states. Since 78% of organic farms report planning to maintain or increase organic production levels over the next five years, the organic sector will continue to play a contributing role in revitalizing America’s rural economy through diversity in agriculture.”

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