The rise of organics has been one of the most noticeable trends to develop in the produce industry in decades. Once merely a specialty item favored by the uber health-conscious, organic food has widened its distribution channel, especially in retail formats, and has now become a staple in supermarkets around the world. The more accessible it becomes, the more its popularity rises. But with all great successes come challenges—and questions for the industry about how organic produce will continue its aggressive growth well into the future.
To predict where organic produce might be headed next, we must first look at how it achieved its mainstream status to begin with. Consumers are demanding transparency, especially about topics such as food safety, chemical preservatives, genetically modified ingredients and pesticides. Traditional consumer health concerns such as diabetes, blood pressure and heart problems are also
influencing food buying choices. Consumers now expect to know the story behind their food before they’ll buy it. Is it locally sourced or imported from an international market? Is it produced in an ethical manner or does it come from a factory farm? If a food item doesn’t have a positive backstory, even if it’s cheaper, many consumers consider looking elsewhere. And some important components of a positive backstory include “natural,” “organic,” and “locally sourced”, which can be major selling points despite the added costs. That shift helped transform organic produce from a niche underdog into a produce industry powerhouse, and it’s not slowing down.
In 2016, the global organic food market stood at $110.25 billion, according to management consulting firm TechSci Research. That number is expected to reach $262.85 billion by 2022. While Europe and North America make up the strongest demand for organic food, intense competition in those regions means companies must look elsewhere to gain a foothold. With the global organic food market being wide open for the taking, major players are shifting their focus to new opportunities. And some of those opportunities may lie in the densely populated Asia-Pacific market which boasts strong GDP growth rates, especially in India and China.
One company pursuing this opportunity is Amy’s Kitchen—a family-owned, privately held company that has been in the organics game for 30 years. Their convenience and frozen foods are already ubiquitous in Europe and North America, and they’ve now set their sights on India. It’s a pioneering move that has garnered attention from rivals and Indian consumers alike. American fast food chains have already found great success in India as preferences there have shifted to casual, on-the-go dining. Amy’s Kitchen is now poised to take it a step further with healthier options that don’t sacrifice convenience. The company has launched a select range of 14 products in the country starting with Delhi and the National Capital Region, and they plan to expand to Mumbai soon. If profitable, rival companies may soon follow suit to counteract uncertainties in the European and North American markets.
Of course, a new wave of expansion will have an enormous effect on production demands. Globally, organic food production stood at 280 million metric tons in 2016 and is now projected to reach 308 million metric tons by 2021. The entirety of the global organic food market includes meat, poultry, and dairy, fruits and vegetables, bread and bakery, beverages, and processed food. Organic fruits and vegetables dominated the other segments in 2016 due to their high production and wide consumption. As a result, governments around the world are now promoting and encouraging the use of organic products through new policies that maintain the quality of the crops used in organic farming.
While fueling the recent steady growth of the category, consumer perceptions present interesting challenges for organics’ future growth, as legitimacy remains an issue. As organics becomes more mainstream, consumers question their integrity and authenticity. According to the Hartman Group, “the purity of organic’s meaning and the standards around their production is under threat as the products become more ubiquitous, even appearing in what consumers consider ‘less healthy’ categories”. Consumers express concern about whether big brands and big companies can really “do organics” correctly. To continue growing, organics must win over new customers—especially those who remain skeptical about their reputation for higher quality. A government seal of approval helps, but many consumers require more proof before they’ll commit to a purchase.
Foods with organic and natural claims remain popular among households with children in the U.S. Organics strongly resonate with Hispanics, particularly millennials and especially those with children. In fact, parents in general are far more likely to embrace the positive reputation of organics. But households with children are on the decline. Meanwhile, the number of consumers that lack trust in the organic label remains steady. Older consumers are the most likely to be unconvinced of the organics’ value and are hesitant to spend more for them. And younger shoppers, while open to the benefits of organics, often can’t afford them.
So where will organics go from here? While challenges are on the horizon, the industry is well positioned to adapt as necessary. Their core base is loyal and untapped markets present even more opportunities for growth. And retailers and their supply chain partners are already making significant efforts to lower prices in order to make organic produce more accessible and affordable for consumers at all income levels. While skepticism about the benefits of organic produce remains among consumers, there’s an open-mindedness that can be capitalized on. Consumers are eager to find companies with whom they can develop a relationship. They support companies they believe see the world the same way they do, genuinely share their values and are committed to “real” food.
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