Nielsen: Organic products are getting cheaper and more accessible
- Eighty-eight percent of U.S. households purchased organic food and beverages in the last year, according to Nielsen. Organic product sales grew 9.8% and volume increased 11.4%.
- Organic foods are expanding beyond pricey natural and fresh markets. Supermarkets, mass merchandisers and discount grocery chains now represent a combined 25% of organic sales, making them more widely available to a diverse group of consumers.
- Price continues to be the largest deterrent to buying organic, but private-label brands could be the solution. On average, the price of a private-label organic item was 18% cheaper than the branded product.
Consumers’ fascination with organic products is rooted in their desire to eat healthier. But do they know what the term really means? There remains confusion between the terms "organic" and "natural" on food packaging. Products with organic certification go through a long process to ensure that they have been grown with no synthetic fertilizers or pesticides. Despite its popularity with consumers, "natural" has not been officially defined by the Food and Drug Administration, and the term has no consistent meaning. In 2015, FDA opened a comment period to determine a definition — or whether to allow the term at all — which ended in May 2016 with no action.
Organic can mean more to the consumer than a lack of pesticides. Its average higher price point compared to conventional products may also give them the feeling they’re getting a premium item.
The higher price of organic remains an obstacle for shoppers with less disposable income to spend at the grocery store. However, the increased prevalence of private-label organic goods could be a solution. On average, an organic private label item was 18% less expensive than its branded counterpart. Grocery chains looking to boost organic sales with the average shopper should take note and look into expanding their offerings.
Manufacturers would also be wise to explore ways they can offer organic CPGs at a more accessible price point. There is wider interest in buying organic, but it still has to fit into a shopper’s budget.
Despite the popularity of organic foods, they still only represent 5.3% of total retail food sales in the U.S. That percentage improves when looking at organic fruits and vegetables, which account for 15% of all the produce Americans eat.
Many consumers are willing to pay the higher cost for organic goods, but only significantly when it comes to produce and poultry. Roughly 44% of shoppers are willing to pay up to 20% more for fresh organic fruits and vegetables. Thirty-seven percent are inclined to fork over that much more for organic poultry. However, that number drastically drops when it comes to prepackaged goods like crackers and soy sauce.