Community | March 20, 2010 | 26 comments

Organic foods finding a niche, but that's all

source: http://www.reuters.com/article/idUSTRE62H4HW20100318?type=FoodandAgriculture10

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xiola
The wave of organic packaged foods may have crested at mainstream retailers.

Organic foods and beverages are pulling back from startling growth levels in recent years and settling into a small niche space at mainstream retailers, food industry executives and analysts said this week.

The recession put a halt to the double-digit sales growth organic foods saw earlier last decade. But even when the economy improves, organics are not likely to rebound to such lofty heights as consumers and retailers now have other priorities for spending and shelf space.

"It's hard if you are a big company to do things that move the needle in that space," said Greg Pearlman, managing director and head of the U.S. food and consumer group for BMO Capital Markets (BMO.TO). While Pearlman expects 2010 to be an active year for deals in the food industry, he did not see a big play for manufacturers in the organic space.

Health and wellness is still expected to be a big trend in the food industry, analysts and executives said at the Reuters Food and Agriculture Summit in Chicago. But that interest will be spread across items like those with lower sodium, reduced calories and even a focus on removing allergens from food.

"Retailers are looking for the best assets for the limited amounts of space" they have, said Ken Harris, CEO of consulting firm Kantar Retail US, part of Britain's WPP (WPP.L).

Some organics and their less-regulated cousins, natural foods, may be losing out in that battle for shelf space.

Organic sales are still growing, but the pace has slowed sharply.

During the 52 weeks ending February 20, supermarket sales of packaged foods and nonalcoholic beverages with "organic" claims rose 1.9 percent to $4.4 billion, according to Nielsen data. That compares with an 11.7 percent increase the prior year, and increases of 24.5 percent in the period ending in 2008 and 29.1 percent in the period ending in 2007.

Organic food was a hot topic in the grocery industry in the middle of the last decade, with even Wal-Mart Stores Inc (WMT.N) saying in 2006 that it would double its organic offerings. Mainstream manufacturers jumped on the bandwagon, coming out with organic versions of products like pasta sauce and ketchup.

To qualify as "organic" in the United States, food must be farmed without the use of pesticides, antibiotics or genetically altered organisms, while "natural" foods refer to those that are minimally processed.

ORGANIC BY ANOTHER NAME

Mainstream consumers are finding benefits similar to those they seek in foods that fall short of U.S. government standards for the "organic" label.

"We're seeing a lot of conventional companies fighting back with 'organic light,'" said Michael Swanson, analyst at Wells Fargo.

He noted milk that is free of artificial hormones is one product that consumers will buy that is less expensive than organic milk, but which still gives a benefit sought by consumers.

"They don't need to go up to true organic to get most of the perceived benefit in their food dollar," Swanson said.

For some mainstream food producers, the economics of organic foods, naturally raised chickens and other such products have not made sense.

Read More: http://www.reuters.com/article/idUSTRE62H4HW20100318?type=FoodandAgriculture10
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26 comments // Organic foods finding a niche, but that's all

  • bioguy313
    • 0
      bioguy313  

    • Congratulations to all for having common sense. Yes buying expense organic food is a social statement. Yes farmers having average produce do charge more because they use the word organic. Also very correct when those understanding that growing healthy food with soil microbes and ocean based nurtients does cost less and should retail for less too.
      Many are still hooked on the click word organic not knowing or understanding the difference between healthy high brix produce and low unhealthy organic produce. Trust your instincts and common sense. If a farmer did not put nutrients into the soil seems logical the food from that soil would be low in nutritional value.
      If you want to eat healthy..... KNOW YOUR LOCAL FARMER. Get to be friends. Ask questions. Must get brix readings on all items grown. cross reference with listing found on internet. Happy gardening one and all.

    • 1 year ago
  • 2helenahandbasket
    • -1
      2helenahandbasket  

    • Organic food is a big joke. It costs twice as much as "regular" food and supposedly has none of the added "bad" stuff. WHY should it cost MORE to grow organic fod when the growers don't have to purchase the "bad" stuff?

    • 1 year ago
  • xiola
    • 0
      xiola  
    • 2helenahandbasket:

      I'm certainly no expert, but I would guess that, for one thing, the crop yield wouldn't be nearly as high. Plus, you can buy organic pest control, but it costs more... Just guesses.

    • 1 year ago
  • electricworry
    • 0
      electricworry  
    • 2helenahandbasket:

      To some degree because the bad stuff is cheaper. But the biggest reason is that the regular food is heavily subsidized through tax dollars.

      And it's not always more expensive. It depends where you buy it. I supplement my garden production with a half share in a CSA. $265 gets me 30 weeks of food, a grocery bag full of fresh, organic produce every week. $9 for a grocery bag is cheaper than i could fill a grocery bag with regular produce at the grocery store...and best yet, that money goes directly to the farmer.

    • 1 year ago
  • Elligirl
    • 0
      Elligirl  

    • I find "organic" is more of a pricey status symbol than anything else. It's like calling a product "green." i buy local fruit and veg whenever I can, but yes, I know that bananas and avocados and kiwis aren't local to Vancouver.

      However, if they come out with a 'non-GMO' label, then I will definitely always buy that over the alternative!

    • 1 year ago
  • bailey78
  • mindcruzer
    • +2
      mindcruzer  

    • I honestly don't even care anymore. If people want to treat their bodies like shit and get cancer when they're older, let them. I'm finished trying to convince people that what they eat is bad for them. No one ever listens and if they do they have quite a few fact-less arguments to come back at me with. I can't argue with someone who isn't reasonable, so I don't try anymore.

    • 1 year ago
  • xiola
    • +2
      xiola  
    • mindcruzer:

      It's true and I don't understand how people can dispute the fact that what you put into your body affects it. I mean, they probably buy the best gas for their car, then drive thru McDonald's. People just really want to believe that the FDA is protecting us; if it's on the supermarket shelf it must be safe. Like I said, if everyone would just watch Food, Inc., it would be a great start.

    • 1 year ago
  • xiola
  • kitteneater
  • xiola
  • julesrs007
    • +2
      julesrs007  

    • Many people simply do NOT HAVE ACCESS TO ORGANIC FOODS.

      Depending on where you live, a store that offers even a small variety of organic goods can be difficult to find.

      So, if you DO NOT have a local "farmers market" to go to and the only choice of grocers is WALMART or Publix (that does not have an adjoined "GREENWISE") what other choice do you have?

      By the way, there IS PLENTY of shelf space, the problem is that GREED takes place of moral integrity. Corporate greed would rather stock items that make the most profit... they do not care about human health, the environment or our planet.

    • 1 year ago
  • xiola
    • +1
      xiola  
    • Image
    • julesrs007:

      I know what you mean. We have had some success ordering organic produce and grass-fed milk and cheese online. My husband is gluten-free (an added challenge), so we find things for him online too. If you order enough, and it's flat-rate shipping, it works out pretty well. He's able to get a lot of his gluten-free ingredients here: http://www.benefityourlifestore.com/

      But, really, if you can, your best, cheapest bet is to start a small garden. Seeds and soil aren't terribly expensive, and it's gratifying to grow what you eat. Plus, fresh produce just tastes so much better. I never really had a green bean till I had a green bean from my garden. :) We grow a lot with very little space...

    • 1 year ago
  • csmonut
    • +2
      csmonut  

    • As a side note here about organic v. regular milk. Organic milk is heated to 220 degrees for 30 minutes, regular milk is heated to 170 degrees for 20 minutes.
      that is why organic milk will keep much longer than regular milk.
      For people who do not drink a lot of milk, organic is perfect because it has a much longer shelf life than even the expiration date.
      In fact...if you did not open the carton of organic milk, it could last up to 6 months.
      And...this may sound icky to some...I bought a half gallon of organic milk last year...expiration date of Dec. 12, 09. We seldom use milk, and we just finished it up the first of March 2010. And yes...it was still good;))
      The organic veggies also last longer in the fridge. It is because they have to be in the stores much faster than their other cousins, who have had longer shipping times, etc.

    • 1 year ago
  • xiola
    • +1
      xiola  
    • csmonut:

      Good info! I wondered why it lasts so much longer. Really, I want grass-fed milk. I figure the corn they're feeding the cattle is probably genetically-modified. Could be wrong about that...

    • 1 year ago
  • xiola
    • 0
      xiola  

    • Well, I know the people in my life are becoming more aware of the need to buy organic and avoid GMOs. I and many of my friends are beginning our own Spring gardens. We go to Farmer's Markets, too, and seek out the organic produce. Local is definitely the way to go.

    • 1 year ago
  • Michael_Lemons
    • 0
      Michael_Lemons  

    • It appears that this is a setback for the organic food industry. Do you think that this could also be an opportunity for smaller food retailers to enter the market? If the problem is that there is not enough shelf space, then that means there is room for more retailers. Assuming the continuation of the health and wellness trend, maybe there is a chance for small local grocers to make a comeback and compete against larger grocery stores! Any opinions?

    • 1 year ago
  • Sublime_Emperor
  • xiola
  • Sublime_Emperor
    • 0
      Sublime_Emperor  
    • xiola:

      i'm not saying that is always the case but i'm sure it happens. In the store the other day bananas were 44 cents a pound, but the organic bananas were 88 cents a pound the only difference was the organics were in plastic bag. I would rather grow my own fruits and veggies, or buy them at the farmers market, but for somethings I can't. That is where the word organic comes in.

    • 1 year ago
  • xiola
    • 0
      xiola  
    • Sublime_Emperor:

      I wonder about it, too. I has that little sticker on it, so it must be organic. They wouldn't lie to us, would they? Ha. I am willing to pay more for organic, but I sure hope it actually IS organic...

    • 1 year ago
  • electricworry
    • 0
      electricworry  
    • xiola:

      It all depends on how you define "organic" and what's important to you. But it is entirely possible to sell "organic" produce while slathering your farm with RoundUp. It's also possible to use non organic chemicals under the OMRI system depending on specific situations.

      And frankly, i'm not convinced that big organic is significantly better than big chemical agriculture (i work in horticulture so feel free to take this with a grain of salt, but i'm not looking at it from a shopper's perspective). The issue is that plants can only take up nutrients in elemental form. For true organic one needs good soil health with the biota to break down long, organic molecule chains into constituent elements. It is, however, possible to buy "organic" fertilizers that will work in less than perfect soil. These fertilizers generally come from livestock operations or fisheries. The work of soil biota is accomplished in a fertilizer factory so that the fertilizer can be taken up by plants easily and consistently.

      Is the produce organic if the fertilizer is heavily processes waste from a battery chicken operation?

      As a consumer - assuming your choosing based on health rather than environmental concerns - your best bet is to buy directly from a farmer, even if that farmer is not certified organic. Or grow your own, of course.

      In too many ways the term "organic" has been hijacked as a marketing gimmick. I'd rather have produce from a farmer who carefully applies chemical fertilizer when needed to healthy soil than supermarket organic slathered with CAFO livestock waste. But that's just me.

    • 1 year ago
  • xiola
  • Lucretia_Gross
  • csmonut
    • +1
      csmonut  
    • xiola:

      Friends of ours invited us over for dinner..and showed us this movie afterwards. It even made a believer of my jaded boyfriend..he believes me now:))

    • 1 year ago
  • xiola
    • 0
      xiola  
    • csmonut:

      Glad you didn't have to watch it before dinner. :) Yuck. Yeah, my best friend watched it the other night. The next morning she called me and asked if I'd help her plan a garden. She's a changed woman. :)

    • 1 year ago
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