Organic food sales in the U.S. have come a long way in 20 years, growing from $3.4 billion in 1997 to $45.2 billion in 2017. Last year’s sales were up 6.4 percent year over year, well above the 1.1 percent growth in the overall food market and claiming 5.5 percent of the nearly $822.2 billion in total sales.
“Consumers love organic, and now we’re able to choose organic in practically every aisle of the store,” Laura Batcha, CEO and executive director of the Organic Trade Association, said in a press release accompanying the latest data on organic sales.
The 2018 Organic Industry Survey was conducted in January by Nutrition Business Journal on behalf of OTA, with 250 companies participating.
The growth rate was below the 9 percent increase seen in 2016 and the double-digit increases from 2012 to 2015, but some slowdown was expected as the organic market matures. New channel and product expansions are becoming more incremental rather than revolutionary, according to OTA.
“The organic market will see a steadier pace of growth as it matures, but it will continue to surpass the growth rate of the broader food market,” Batcha said.
Produce remained the top organic category in 2017 with $16.5 billion in sales on 5.3 percent growth. Fresh produce accounted for 90 percent of those sales, but organic dried beans, dried fruits and dried vegetables increased 9 percent.
Organic beverages rose 10.9 percent to $5.9 billion, making it the third-largest organic category. The driver was fresh juices with $1.2 billion in sales, an increase of 25 percent. Non-dairy organic beverage alternatives such as almond, soy, coconut and rice drinks also gained popularity.
But it was a challenging year in the dairy and egg category. While still the second-largest selling organic category, sales grew just 0.9 percent to $6.5 billion.
Many producers have entered the organic dairy market over the last several years, creating a new wave of supply. But that supply hit the market as demand for organic milk began to shift to more plant-based beverages — creating a situation of too much of a good thing, OTA said.
Despite the slump in milk sales, sales of organic ice cream were up more than 9 percent in 2017, and organic cheese sales grew by almost 8 percent.
In the egg market, pasture-raised eggs presented stiff competition for organic eggs in 2017.
OTA blames the fallout in poultry and dairy on USDA, saying the requirements regarding outdoor access for organic poultry and livestock are unclear and inconsistently applied.
OTA worked to advance organic livestock and poultry rules to clarify required practices, but USDA withdrew the proposal in 2017.
“USDA’s squelching of this regulation widely supported by the organic sector caused millions of consumers to question the meaning and relevance of the USDA organic seal as it relates to dairy and egg products. This confusion and uncertainty dampened consumer demand for both organic eggs and organic dairy,” OTA said.
Non-food organic sales saw a 7.4 percent increase to $4.2 billion, with sales of organic fiber leading the pack at $1.6 billion.