Triumph for organic industry as sales skyrocket

Currently valued at $231.52bn and projected to grow at a CAGR of 13.9% through to the end of the decade, according to Grand View Research, the global organic food and beverages market is growing fast. What’s more, the industry has achieved success at a time when consumers are struggling with the cost-of-living crisis.

“The organic market has delivered its 12th year of positive growth, despite the global political and economic turmoil and the cost-of-living crisis,” says a spokesperson for Organic Research Centre.

And organic producers are noticing the development.

“From our own perspective there is no question that interest in organics has grown in recent times,” says Charles Redfern, founder of organic food brand, Organico Realfoods.

So, what’s fuelling this growth and what’s next for the organic label?

Organic foods include vegetables, eggs and meat (Getty Images)Why are organic sales rising?Sales of organic foods and beverages are continuing to show strong growth, and it appears the industry has one major food and beverage trend to thank for its success – health and wellness.

“Organic foods have traditionally been associated with better-for-you perceptions,” says Ananda Roy, consumer goods industry advisor at Circana.

Furthermore, organic foods are closely linked to perceptions of ethical farming practices, attracting consumers for whom that is a priority.

“Organic foods are associated with higher standards for animal welfare and the environment,” says Circana’s Roy.

However, this benefit to organic foods will likely be diminished going forward as EU regulations demand better animal welfare.

“Retailers are now able to offer food with high standards on animal welfare, mandated by strict EU regulations, without needing to be organic,” says Circana’s Roy.

In fact, organic stands at the very heart of the EU’s Green New Deal and Farm to Fork strategy, with a stated target that 25% of EU’s agricultural land be organic by 2030.

However, the EU is struggling to enforce regulations to cut pesticide use, which continues to set organic foods and beverages apart. This is having a particularly strong impact on non-organic foods and beverages, as pesticides have received heavy criticism over the past 12 months, with links to increased cancer risk, thyroid disease, liver damage and fertility issues.

“There’s certainly a growing understanding of the poor health pitfalls associated with non-organic offerings,” says Organico Realfoods’ Redfern.

Sales of organic foods and beverages, including milk, are on the up (Getty Images/iStockphoto)What’s next for the organic industry?The rise of organic foods and beverages looks set to continue, with strong market growth predicted. However, the industry does face significant challenges, particularly in its efforts to achieve price parity with non-organic foods.

“The cost of managing the entire organic food production chain adds cost and complexity, which makes closing the gap to ordinary foods and beverage, with high standards of quality and welfare standards mandated by the EU, extremely difficult,” says Circana’s Roy. “Coupled with this are ingredient shortages, poor harvests due to unseasonable weather in Spain and Italy, and rising transport costs, making any short-term parity unlikely.”

“Organic by its very nature will never be cheap, because best-in-class ethical sourcing with specific origin ingredients and craft production principles isn’t something that can be done cut-price,” agrees Organico Realfoods’ Redfern.

So how can organic producers continue to compete with non-organic producers, when they continue to retail at a higher price?

“Organic food producers must be encouraged to sell the transformation, not the process,” says Circana’s Roy. “The process of bringing organic foods and beverages to shop aisles is understood, but their benefits have become somewhat vague.”

And that process is often closely linked with quality and care. Though organic producers are keen to highlight that organic can also be just as convenient and easily accessible as non-organic foods.

“Organic is increasingly being associated with small batch, curated ranges, the very antithesis of mass-market conveyor belt offerings,” says Organico Realfoods’ Redfern. “Convenience comes in many guises and could just as easily be associated with our extra slow dried pasta, hand-twisted breadsticks or Puglia farmed passata as a mass-produced ready meal.”

Despite cost challenges, the outlook for the organic industry remains bright.

“Sales of organic food and beverages are projected to rise as a result of the change in purchasing behaviour of consumers,” says a spokesperson for Grand View Research. “In addition, the rising popularity of non-GMO products among consumers is driving market growth.”

Also read → Is the organic label still important to consumers?What are organic foods and beverages?Organic foods and beverages are foods and beverages, which have been produced by methods complying with the standards of organic farming. These standards vary across the globe. However, within the European Union (EU), organic farms must work to sustain the health of the soils, ecosystems, animals and people.

Farmers are only able to use a very limited number of naturally-derived pesticides, and only under restricted circumstances. Instead of relying on pesticides, organic farmers aim to create a natural balance between plants and animals to prevent pests.

Rather than focussing on cost, organic producers are encouraged to draw consumer attention to the quality of their products (Getty Images)