The organic category has enjoyed stratospheric growth over the past two decades, shooting from $1 billion in sales in 1990 to more than $20 billion today, according to the Organic Trade Association. Judging from recent studies, however, the industry is starting to fall back to earth.
According to a report from whole health marketing firm The Hartman Group, consumer use of organics between 2006 and this year dropped 4 percentage points, from 73% to 69%. That's certainly not a drastic decline, but it is a stumble for an industry that for years has moved steadily forward. It also appears to be a taste of what's to come, according to analysts.
The economy is partly to blame. High food and gas prices have forced many consumers to consolidate their shopping trips and trade down from premium-priced items. Whole Foods Market, the Austin, Texas-based retailer considered by many to be the vanguard of mainstream organic, saw its third-quarter net income drop by 30%, causing its stock price to tumble 18%.
Yet there are larger factors at work. One expert notes that, after six years of government-sanctioned growth, the organic market is reaching its first stage of maturity.
“It's not necessarily that organic isn't important anymore, it's that it's not quite as differentiated as it used to be,” said Laurie Demeritt, president of The Hartman Group, based in Bellevue, Wash. “There's organic all over now.”
More affordable midrange options exist now, too. According to marketing agency BBMG, nearly half of all shoppers had a strongly favorable response to eco-claims like locally grown and cruelty-free, while only 26% voiced approval of the USDA's Organic label.
“We're seeing that consumers are looking for that additional level of detail,” said Demeritt. “They ‘sort of’ get organic, and now they're saying they want even more detail about what's going on with this product.”