US: Consumer insight vital as demand for organic slows - study
Manufacturers and retailers of organic food in the US must improve their understanding of consumer demand for organic products as sales in some categories start to plateau, a study has claimed.
In its Organic 2008: The Many Faces of Organic report, market research firm The Hartman Group said companies needed to work on their knowledge of the most "relevant" organic foods for consumers despite the growth of organics out-stripping the conventional food sector.
According to figures from the Organic Trade Association, cited by The Hartman Group, US organic food sales have grown by 17-21% a year since 1997. Total US food sales have risen by 2-4% over the same period.
However, The Hartman Group said there is evidence that that level of growth is not being enjoyed in all food categories. "As we move through 2008, beneath all the hyperbole about the dramatic growth of the organic market, rumblings of slowdowns in certain organic categories - or at least a suspected plateauing of overall organic sales - have begun to surface," the report said.
Rising awareness of and growing demand for artisan, fair trade and free range products is hitting sales of organic products, the report claimed. Consumers are also becoming unsure as to what the notion of "organic" means to them, it added.
"Another partial explanation to flattening growth comes from our qualitative interviews conducted for this study, which suggest that consumer interest is waning as 'organic' comes to mean so many things to consumers that it represents no one thing for everyone," the report explained.
"In general, while organics are still an important cue to millions of consumers for products that contribute to healthy lifestyles (especially for households with children), conventional culture is now including organic as one of several symbolic distinctions of equal importance subsumed under the moniker of 'quality'. Related to cultural concepts of high-quality foods, the concept of 'fresh products', while linked intrinsically in the minds of consumers by a solid line to organics, is also shown here in this report to have moved to the forefront of importance for conventional consumers."
Organic food in some categories - including dairy, fruit and veg and meat - is still "resonating" with consumers, The Hartman Group said. The report also claimed that "core" organic consumers are buying organic foods more frequently.
However, the report insisted that organic food makers and retailers should not rest on their laurels. "While prior to 2008 it was sufficient to assume that analogues of 'conventional' food and beverage products would sell if they were organic, the future for organics dictates a different picture," the report said. "Manufacturers and retailers will have to develop specific understandings of those organic categories that consumers find relevant and those that they find uninteresting and even frivolous."
It added: "Marketers focusing on organics will also have to understand that new organic product successes are still waiting to be developed, but these opportunities require an understanding of which types of consumers such products resonate with."
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