US organic food & beverage sales rose 10.6% to $39.8bn in 2015, says OTA

















 By Elaine Watson, 


19­May­2016 









Sales of organic food and drink surged 10.6% to $39.8bn in 2015, significantly ahead of the 3% growth in the overall food market, with some segments up more than 30% year­on­year, according to the Organic Trade Association (OTA). 




Total organic product sales (which includes non­food items) rose 11% to $43.3 billion, said the OTA. 




The biggest category within organic food is fruits and veggies (sales +10.6% to $14.4bn), with almost 13% of the produce sold in the US now organic; followed by dairy (sales +10% to $6bn). 




Sales of organic fresh juices and drinks surged 33.5% in 2015, making it the fastest­growing organic subcategory, closely followed by eggs (+32%), and organic condiments (+18.5%). Sales of organic snack foods, meanwhile, rose almost 14% to $2.3bn. 




Demand outstrips supply However, domestic production still lags consumption, said OTA, CEO and executive director Laura Batcha: “Dairy and grains were two areas where growth could have been even more robust in 2015 if greater supply had been available. “There is an industry­wide understanding of the need to build a secure supply chain that can support demand. This goes hand­in­hand with securing more organic acreage, developing programs to help farmers transition to organic, and encouraging new farmers to farm organically.”



We all need to care about organic farmers having a livelihood Asked about the price differential between conventional and organic food at a session on the future of organics at last month’s Food Tank Summit , Batcha said: “I’m not sure you’ll ever see price parity until the food policy system around organic changes. There is a reason why cheap food is cheap, but that said, we’re seeing increased accessibility to organic food. “But we all need to care about organic farmers having a livelihood. There is a premium at which if you go below it might not make sense for farmers to participate [in organic farming]. Data suggests it’s around 10% [the cut­off point at which there is not sufficient incentive for farmers to be in the organic space].” 



However, much depends on the crop, said Charles Benbrook, research consultant at Benbrook Consulting Services: 


“In the tree fruit industry, there are some growers that are 100% organic because organic systems are the most profitable, but they aren’t selling their full crop as organic because it would flood the market and erode price premiums. “But I think that in fresh fruits and vegetables, in 20 years, at least 50% will be grown organically.”






 Natural vs organic 




As for the difference between ‘natural’ (which is not defined by law) and ‘organic’ (which is underpinned by clear standards), confusion still reigns, says  the OTA, which has urged the FDA to prohibit the use of the term ‘natural’ except where it is already defined in regulation (eg. ‘natural flavors’). 




Meanwhile, some industry stakeholders – notably Annie’s president John Foraker ­ have predicted that more companies in the ‘natural’ foods sector will transition to organic, in part because it is underpinned by clear standards, and in part because it will help them stay ahead of the curve as more mainstream food brands get into the ‘natural’ space by cleaning up labels and ditching 'artificial' ingredients. 





According to Foraker , who caught up with FoodNavigator­USA at the Expo West show in March:


“I think that the natural products industry will move to organic. That’s where it’s going and it’s what consumers want. Today 4­5% of the market is organic, and I think it will ultimately get to 20%.” 



But getting there will involve teaming up with large retailers and CPG manufacturers, said Foraker, who noted that Annie’s parent company General Mills has recently committed to more than doubling the organic acreage from which it sources ingredients from 120,000 acres today to 250,000 acres by 2019. 



The OTA represents more than 8,500 organic businesses across the US. Its members include growers, shippers, processors, certifiers, farmers' associations, distributors, importers, exporters, consultants, retailers and others. 




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