July 12, 1995
U.S. Organic Sales Top $2 Billion
According to the sixth annual Organic Market Overview, the
U.S. organic industry grew more than 22% in 1994, reaching
sales of US$2.3 billion. The report, issued by the magazine
Natural Foods Merchandiser (NFM), examines changes and trends
in four sectors of the organic products market -- natural
food stores, mainstream supermarkets, exports and direct
farmer to consumer sales. The NFM report indicates that the
1994 surge in organic sales reflects changing consumer
demands and increasing competition between natural and
mainstream food stores, as well as expanding organic exports,
and higher sales directly from farmer to consumer.
The majority of organic earnings came from natural food
stores, where organic sales increased 21% from 1993 to US$1.5
billion in 1994. Organic produce accounted for US$332.7
million of total sales, up 32% from 1993, but other organic
products experienced even greater growth. For example,
controversy surrounding recombinant bovine growth hormone
(rBGH) in milk production sparked unprecedented demand for
organic dairy products, sales of which increased 125%, up
from US$11 million in 1993 to almost US$24 million in 1994.
As natural food stores proliferate and gain an edge on the
market share of organics, mainstream supermarkets have moved
swiftly to get a larger share of the organic market. Owners
and managers of mainstream supermarkets are becoming
increasingly aware that sales of organic foodstuffs can be
profitable. As Robert Scaman, president of the organic food
distribution business Goodness Greeness, says "We saw huge
growth in the amount of organic products going to
conventional food outlets. It's the first time organic
products have really been accepted by these people. And some
of the stores are taking organics very seriously indeed."
Many mainstream supermarkets now provide large selections of
organic foods that are more affordable and available year
round. These stores experienced exceptional growth in organic
sales in 1994, up 23% to US$172 million. According to the NFM
report, these figures reflect an improved distribution
network, better supply, consumer demand, greater mainstream
acceptance of organics, and more assertive marketing
strategies by conventional stores which face competition from
natural food stores.
The export of organic products to foreign countries also
contributed to the recent growth in the organics industry;
export figures for 1994 increased 80% from 1993 to US$203
million. While some growth can be attributed to European
markets, Japan accounted for the largest segment. Since many
Japanese consumers are eager to have organic options in
everything from produce to condiments, the lack of organic
production within Japan has necessitated importing organic
foods from the U.S. and other countries. The strength of the
yen over the U.S. dollar in recent years has meant organic
foods are often very reasonably priced for the average
Japanese shopper.
Direct sales from farmers to consumers, buttressed by the
expansion of organic farms, grew 10% from 1993 to 1994,
reaching US$392.7 million. The amount of land devoted to
organic farming has increased tenfold since 1980, and
according to the Organic Farming Research Foundation (OFRF),
12,000 of the 1.9 million farmers in the U.S. are now farming
organically. With a federal organic act expected to be passed
in 1996, the OFRF estimates organics will surge from 1% of
the total agricultural economy to 5% by the year 2000.
A recently conducted survey by Rodale Press, publishers of
"Prevention" magazine, indicates that many American consumers
are moving towards healthier lifestyles. Of those questioned,
33% reported changing their eating habits in the last year,
which included eating organically grown produce. Ninety
percent of those asked said they would buy organic if the
cost was the same as conventionally produced food. The survey
suggests that the role of consumers within the trajectory of
organics will continue to be an influential factor in the
years to come.
Source: Natural Food Merchandiser, June 1995; Ecology and
Farming, May 1995.
Contact: Organic Farming Research Foundation, P.O. Box 440,
Santa Cruz, CA 95061; phone 408-426-6606; fax 408-426-6670.
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