Economy Brings Decline in Organic Food Sales

To consumers, organic food is often considered healthier, better-tasting and more environmentally friendly than conventionally raised food.

To consumers, organic food is often considered healthier, better-tasting and more environmentally friendly than conventionally raised food. In recent years, sales of organic products have been booming; however, the current economic crisis has halted the growth of organic food sales.

According to market research from Euromonitor International, the global market for organic food and beverages was worth $22.75 billion in 2007, more than doubling sales in the last five years. The U.S. accounted for about 45% of that total. However, with economies in crisis, the trend is slowing in the U.S., Britain, France and Europe’s most important market for organic food, Germany.

"Typical growth rates of 20% to 30% for organic food sales in the U.S. eased in the second half of 2008 as middle- and upper-income families felt the strain of layoffs and declining investment portfolios," said Tom Pirovano, director of industry insights at market research firm, The Nielsen Co.

Sales in December were up 5.6%, against a 25.6% rise a year earlier. Even though growth is slowing, Mr. Pirovano noted that most people who purchased organic foods were very committed.

"I’m not convinced that we are going to see big declines in organics any time soon," he said.

Ronnie Cummins, U.S. national director of the Organic Consumers Association, said occasional buyers of organic produce were cutting back, but regular buyers were lightening up on processed food in favor of organic whole fruits, vegetables and meats.

Wholefoods’ Mr. Besancon argued consumers were treating organic purchases differently from those of other premium products.

"When you buy organic you believe it is inherently better for you and the planet," he said. "Who can afford to get sick? So people are becoming more introspective about what they eat. There is growth in the category. It is just less than it was."

In France, the sector continued to grow last year and the head of Agence Bio, the main organic food group gathering officials and producers, said she was confident it would continue to do so, albeit more slowly, in 2009.

"For the moment, sales are keeping up, consumers are still interested and demand is rising," said Elisabeth Mercier.

Although official data will not be available until next month, she said her comments were based on wide and recent contacts with producers, specialist shops and supermarkets.

"In Europe, I do not believe there will be a drop in consumption this year, although growth rates may be less spectacular," Ms. Mercier said.

In Britain, growth in sales of organic products has slowed dramatically, to an annual rate of about 2% from 16%, according to 2008 Nielsen data.

"What I would expect is for this year to see a small single-digit decline for organics," said Jonathan Banks, UK-based business insight director with Nielsen.

Patrick Holden, director of Britain’s leading organic certification body the Soil Association, said he was getting mixed reports, with some consumers switching from organic to cheaper free-range products.

However, demand for many products is still holding up well. Some are benefiting from a growing demand for locally produced food.

"Organic food with a local story is bucking the recession," he said. "This recession has destabilized things a little, but not catastrophically."

Mr. Holden said about 20% of organic food sales were vulnerable, being bought by "light green" purchasers who had been influenced by the actions of other consumers. These he contrasted with the "deep greens" who make up 80% of demand and are committed to the benefits for health and the environment.