Organic food's public profile surged in the early 2000s as consumers began to see the connection between diet, health and the environment. As shoppers today turn to clean labels and demand transparency in the foods they eat and the beverages they drink, organic is ideally positioned to address these concerns while providing growth in an industry that desperately needs it.
Growth of organic isn't expected to slow down anytime soon. A recent TechSci Research report estimated the global organic food market is projected to increase at a compound annual growth rate of more than 14% between 2016 and 2021.
"We're seeing innovations in baby and children's foods, and there's a lot of evidence that better-for-you snacking is continuing to be on trend," Laura Batcha, executive director with the Organic Trade Association, told Food Dive. "There's still a lot of opportunities in the United States for expansion as well as export of organic, particularly fresh product globally. You look in the retail space and retailers are continuing to accelerate their investment in organic options in their stores."
WHAT IS ORGANIC?
Some consumers confuse the word organic with natural on food packaging. Organic certification describes how an item was produced and requires that it lack antibiotics, artificial colors, genetically modified ingredients or synthetic pesticides. Despite efforts by the U.S. Food and Drug Administration to define it, the term natural has no official definition.
are attracted to food raised and grown without synthetic pesticides. Regardless of what drives people to organic food, many people are trying it and often becoming regular consumers. Some Americans are even growing their own, taking part in community supported agriculture and joining special produce buying clubs.
While shoppers will often pay more for foods labeled organic, it's not clear whether they understand what the term means. Some consumers confuse the word organic with natural on food packaging. Organic certification describes how an item was produced and requires that it lack antibiotics, artificial colors, genetically modified ingredients or synthetic pesticides. Despite efforts by the U.S. Food and Drug Administration to define it, the term natural has no official definition.
Confusion over these terms — plus all the labels and seals crowding food packaging today — makes it harder for shoppers to identify and purchase what they're looking for. As a result, some groups are proposing new organic certifications designed to increase confidence among consumers that what they're buying meets certain requirements.
Batcha said that OTA is watching how the organic seal is used in the marketplace, working to reduce fraud, and making sure there are ongoing improvements to comply with the standards that are in place.
"We have some things we're doing with government and with certification agencies to push the envelope on all fronts," she said. "I think that is always our top priority because the value of the seal that everybody shares on their products is tied to the quality of the oversight program and the integrity of the oversight program."
BENEFITS OF ORGANIC
The push toward more organic farming methods — fewer chemicals, better soil management and more biodynamic methods — isn't new. It actually began back in the 1940s, so organic is more of a return to how things used to be, although with better equipment, more streamlined supply chains, and the benefit of today's modern marketing and retailing.
Taste and flavor have been major contributors to today's organic trend. As consumers experimented, typically with organic fruits and vegetables at first, some claimed they had better taste and flavors that conventional produce seemed to lack. Nutrients are another factor assisting in organic's popularity, even though there is ongoing debate over whether it has a higher nutritional profile than conventionally grown food. Other shoppers are attracted to food raised and grown without synthetic pesticides.
ACCESS TO ORGANIC
The industry has struggled at times to produce an adequate supply — livestock producers, hungry for organic feeds, are importing them from overseas because they can't find enough domestically. It's also had to work to convince consumers that the often higher prices are justified.
Part of the increased cost for organic comes because it has to be grown, harvested, processed and transported separately from traditional foods. It also takes time for traditional acreage to be converted over to organic, a transition period when producers do not get to reap the higher prices tied to organic but still have to follow the protocols that come with growing the crop.
"When I talk to people looking at it, it's three years to transition to organic, so they ask if they should try it, or stay in conventional," Chad Hart, associate professor of economics at Iowa State University, told Food Dive. "That's been a challenge that the organic industry has had to overcome."
As retailers and manufacturers expand their organic brand offerings, ingredient prices climb as competition increases, providing financial incentives for producers to take the necessary steps to convert their land. Still, it's not always easy to find organic ingredients, and sourcing can require businesses to plan several years ahead.
There's also the question of having enough people to work the land since the average age of a farm operator is 58, according to the U.S. Department of Agriculture.
Denise Morrison, Campbell Soup's CEO, told Food Dive it can sometimes be a challenge sourcing fresh and organic items as it bolsters its health and wellness portfolio. She noted initial difficulties the company faced when it introduced a new version of its Goldfish crackers with organic wheat.
"We had to work all the way back to the supply chain for sufficient quantities of organic wheat," Morrison said. "Now, it’s not a problem, because when there is a demand" supply follows.
In response to market demand for organic food, the number of farms is increasing. U.S. organic grain acreage rose 30% in 2017 from the prior year, according to a Mercaris report. However, farms classified as organic account for just 0.7% of total farming operations in the U.S., even though the amount of land being converted to organic practices has rapidly risen in recent years.
Grocery stores, food manufacturers and other groups that depend on organic are closely working with farmers to make sure they have
enough supply available in the future. In some cases, they pay for the cost for producers to convert their land to organic and assist them in finding consultants to help them make the transition.
General Mills recently partnered with a South Dakota farm to convert 34,000 acres from conventional to certified organic by 2020. The CPG giant said it plans to use the wheat grown there in its Annie's Homegrown line of pasta, snacks and other products.
Iowa State's Hart said what General Mills is doing is a "feel-good" move and a way to test the market.
"What you're seeing General Mills do is dipping their toe in and seeing how consumers respond," he told Food Dive. "If consumers are willing to respond with their dollars, then General Mills is going to be willing to do more. Producers are looking at whether they can develop a strong market with organics."
NEW ORGANIC PRODUCTS
More organic products are coming to the market all the time, including Unilever's Growing Roots line of organic snacks. In January, 7-Eleven introduced a line of organic, cold-pressed juices under its 7-Select Go!Smart private brand. And those are just two recent examples.
Besides product introductions, acquisitions are another way for Big Food to grab a larger share of the organic space. General Mills purchased Annie's in 2014. Campbell Soup also has bulked up its presence in recent years, purchasing children's food and snack company Plum Organics in 2013 and Pacific Foods of Oregon last summer. Just last month, Nestle announced it bought a majority interest in Terrafertil, a South American organic and natural plant-based food manufacturer.
Similar investments also are occurring on the ground. Certifications of farming operations are increasing, and more are in the process of making the transition from conventional to organic, according to Sustainable Brands. One indication of growth is the number of applications the Organic Materials Review Institute receives to check which products — fertilizers, pest controls, livestock health care and more — are appropriate for organic operations.
"More and more people understand and request the OMRI seal, but our growth also reflects the growth of the organic industry overall," Peggy Miars, executive director for OMRI, told Food Dive in an email. "More people are looking for organic options in their food and fiber, and more people are using organic methods in their farms and home gardens."
There's no question the demand for organic foods and beverages will continue and that manufacturers are finding creative ways to expand their offerings. The organic sector is changing, with new definitions, certifications, products, policies and even new consumers constantly being added to the fold.
"I think we're continuing to see strong growth there, which is understandable in terms of the demographic wave," Batcha said. "I think also new frontiers for organic are because of accessibility, and availability of products, and awareness of what organic is, and the percolation of better-for-your choices across the consciousness of consumers across the board."
