Organic consumer base remains steady

January 18, 2011

For the third straight year, the percentage of U.S. consumers purchasing organic products has held steady in the 38–39% range, reports TABS Group Inc., a marketing research and consulting company. While there has been no growth in the buyer count of organic products since last year, there was a considerable shift in outlet patterns towards mass market and away from natural foods.

This was the first year that organic chicken and red meat were included in the survey, and the reported purchase rates were 13.4% and 6.4%, respectively. The inclusion of these two categories had only a modest impact on organic penetration, pushing the incidence from 38.6% to 39.8%.

“When we see a consistent penetration over three years combined with the fact that adding more categories does not increase that penetration, we conclude that there is a well-entrenched consumer base for organics. There is little hope of increasing that base any time soon,” said Jetta. “Any growth in organics from one outlet must, therefore, necessarily come at the expense of another channel.”

Fresh fruit continues to be the highest penetration category for organics with 27% of consumers. This is followed by fresh vegetables (26%), eggs (17%), milk (16%), chicken (13%), red meat (6%), frozen vegetables (6%), frozen fruit (4%), and ice cream (4%). While organic products showed growth in traditional grocers, likely due to major increases in organic SKU counts, Jetta still expressed skepticism that the category warranted major shelf space and investment by these outlets. “I am concerned that grocers will be unduly encouraged by these numbers. It takes 20 times more outlets (1,900%) to establish an 80% sales advantage, so I still don't see where the economics make sense for a major investment in the category for supermarkets.”

"By contrast, if I were a natural foods store owner, I would expect that mainstream grocers will continue to expand organic offerings and support, and I would be quite concerned at this competitive threat,” said Jetta. “Natural foods retailers—particularly the small independents—need to consider whether they are taking these consumers for granted. Organic foods consumers are the lifeblood of the natural foods channel.”

Press release