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How the Natural and Organic Food Industry Grew to Be a $81.6 Billion Phenomenon

How the Natural and Organic Food Industry Grew to Be a $81.6 Billion Phenomenon

The trend towards healthy eating and cooking has tremendously expanded in the last sixty years. Modern large-scale farming has been running the gamut from natural to GMO since the 1800s. Today’s shoppers are rebelling against the over-vaccinated, force-fed, synthetic options that formed the basis of industrial agriculture.

However, it wasn’t until Australia and Germany pushed a focus on biodynamic farming and organic agriculture that this movement truly took shape. Once governments entered the fray with supportive subsidies and organic farmers began a concerted marketing effort showing the value of this methodology, growth accelerated and continues to expand.

From the humble origins of this organic movement to today’s explosive industry expansion, see how the natural and organic food industry has grown over the last six decades into a $81.6 billion global phenomenon.

Organic Food Industry: The Roots

As farmers began to be challenged with production rates that required more food to be grown on each acre of land, they turned to chemical agriculture to boost crop yields. Little thought was given at the time to the long-term consequences of these decisions, and farmers continued to expand their use while being unaware of the environmental impact.

As early as the 1970s, shoppers began to have an increased awareness of the benefits of organic farming. This started with the outright ban on DDT pesticides, and the widespread negativity surrounding chemical use in food began to spread. However, a lack of standards and regulations made it difficult for farmers and sellers to bring clarity to exactly what “organic” or “natural” farming involved.

Communicating the key benefits of this type of agriculture was critical, as it was a more expensive method of production, resulting in a pricier final product. Interstate commerce during this period was challenging as organic standards differed from state to state. It wasn’t until the 1990s that Congress passed the Organic Foods Production Act (OFPA) that established baseline standards for organic food and fiber production.

Nearly 15 years passed before the USDA released written rules that, when followed, would allow farmers to certify their food as organic in a way that was recognized nationally. The USDA organic rules are relatively strict and cover everything from production to handling. Every farmer producing more than $5,000 per year must be certified by a USDA-accredited agency in order to claim the USDA Organic Seal.

Organic Food Industry: By the Numbers

Shoppers became more aware of organic food on a small scale by influential chefs who utilized small batches of personally-grown items to create wholesome, natural foods. Skepticism towards organizations such as Monsanto eventually led to outright boycotts in 2013 and beyond, resulting in organic food sales growth from $28.4 billion in 2012 to $35 billion in 2014. However, even these numbers are a tiny percentage of overall U.S. food sales — organic food represents only 4% of the total.

The organic food industry has experienced double-digit growth each year since the 1990s. Oddly enough, even though organic food sales make up 4% of the U.S. market, only approximately 1% of farmland is dedicated to this production method.

The big impact of organic farming can be seen in these industry statistics:

  • Over 82% of households buy some type of organic products
  • Over 75% of families trust the USDA Organic Seal
  • Organic farms are 35% more profitable than average farms
  • Nearly 14% of all fruit and vegetable sales are organic
  • Americans spend nearly $50 billion each year on organic options

Organic Food Industry: Today

Fruits and vegetables continue to be the biggest driver in organic food sales, representing a whopping 43% of the market. Dairy and prepared foods, beverages, and grains average around 10% each, with the remaining split between snack foods, meat/fish/poultry, and condiments with less than 5% market share each. Surprisingly, less than 7% of the sales occur via farmer’s markets — the majority of organic food sales are through what many consider traditional avenues such as chains and supermarkets. Organic foods continue to be available at a premium price, generally due to the increased cost of production and distribution.

Today’s organic shopper isn’t typically an aging Baby Boomer who lived through the 70s and wants to return to clean living roots. Instead, Millennial parents are increasingly taking up the organic trend, driving record growth each year. However, this younger generation only represents a certain percentage of growth. Studies show that nearly 80% of all households purchase at least some organic products. As shopper beliefs and attitudes continue to shift towards a healthier spectrum, it’s likely that organic food sales will continue to accelerate and gain ground against traditionally grown foods.

Shoppers are increasingly interested in transparency in their buying, with brands such as Unilever’s Sustainable Living growing 50% faster than other product lines. Fruit and vegetable sales still make up 40% of the overall organic market, but beauty lines are expanding exponentially. The move towards organic offerings doesn’t end at the plate — instead, shoppers are increasingly looking for holistic options that allow them to avoid synthetic colors, phthalates, and other industrial chemicals that can be introduced via the skin.

Understanding shopper buying habits is critical to ensuring that you are meeting their diverse needs. Having the right information about households who are more likely to buy higher priced organic options allows you to effectively target your offerings and continue to infiltrate this lucrative market. Look for continued expansion into the grocery market, with double digit growth the standard for the next few years as shoppers seek out cleaner, safer alternatives to their favorite items.