Market Baskets See Organic Sales Growth

Discussion
Aug 17, 2010

By George Anderson

While much of the reporting in recent years has shown consumers
trading down in grocery stores — premium to value-price, national brands to
private label,  etc. — the new Food Shopping Trends Tracker survey
conducted by Harris Interactive for Whole Foods Market shows demand for higher-priced
natural and/or organic products on the upswing.

The number of adults purchasing
natural and/or organic items increased from 73 percent in 2009 to 75 percent
this year. Perhaps, even more significantly, the number of adults who say natural
and/or organics make up more than a quarter of their food purchases jumped
from 20 percent in 2009 to 27 percent today.

More than four out of five Baby
Boomers report being more concerned about what foods they eat today. Among
Boomers, 54 percent say they are buying more organic and/or natural foods this
year than in the past.

"While the economic downturn has brought renewed attention to getting
more value for less money, it is encouraging to see that shoppers don’t
want to cut corners on healthy, high quality food," said Michael Besancon,
senior global vice president of purchasing, distribution & marketing for
Whole Foods, in a press release.

Discussion Questions: What is your takeaway from the big increase in the numbers
of consumers who report that natural and/or organics make up at least 25 percent
of their food purchases? Are mainstream grocers or specialty chains such as Whole
Foods in the best position today to benefit from any upturn in natural and/or
organic food and beverage sales?

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17 Comments on "Market Baskets See Organic Sales Growth"


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Dan Berthiaume
Guest
Dan Berthiaume
10 years 9 months ago

This is another example of how America is polarizing. It can be safely said that Americans are simultaneously becoming more health- and nutrition-conscious while also becoming more obese and eating more junk food, depending on what demographic of the population you look at. Taking all considerations about public health aside, either market has large potential – there are more junk food-eaters but organic eaters tend to be wealthier and better educated.

David Biernbaum
Guest
10 years 9 months ago

It has become “mainstream” to be almost-natural, somewhat organic, and light “green.” Consumers are hearing a lot of talk and watching a lot of TV that influences them to jump on to the bandwagon, as long as this bandwagon is not over priced, nor terribly inconvenient, and doesn’t look or taste bad. That said, I think that companies like Trader Joe’s and Whole Foods have had an impact.

Anne Howe
Guest
10 years 9 months ago

I think the specialty stores stand to gain more of the organic food market basket than mainstream grocers, and the reason may surprise you. I believe it’s the shopping environment and experience that inspire a larger basket.

When in a mainstream grocery store last week, I sought out Michigan organic potatoes. I found them, but was so unimpressed with the way they were merchandised, that I ultimately elected not to buy them. The next day, I headed to a specialty market across the street, where sections of fresh Michigan grown organic foods were vibrantly displayed with attractive signage.

I was visually stimulated, emotionally motivated and happily shopped my way around those displays, buying much more than I actually had planned. Experience and environment matter because they invoke triggers. Mainstream grocers don’t seem to play to those triggers as often as they should.

Liz Crawford
Guest
10 years 9 months ago

It would be interesting to look at the Nielsen or IRI scan data by this demographic, to compare their comments with their actual behavior.

I am skeptical about this claim. I’m sure that Baby Boomers believe that they are purchasing more natural and organic products. This could be the result of new line extensions on “regular” brands that have new organic or natural claims. This way the shopper feels that she is getting the benefits of all natural foods, while maintaining her lifestyle. While some of these food package claims are genuine, others not so much.

David Livingston
Guest
10 years 9 months ago

I think the experts such as Whole Foods are in a better position to benefit because they are simply better at it. Reasons I can think for the the upturn in natural foods are first, the economy has recovered. People who are still trying to figure out how to come out of their economic mess were probably not the educated consumer that is targeted by the natural/organic providers.

Another reason is that consumers are seeing results of their purchases. I’ve personally seen my cholesterol drop and arthritic pain decrease due to what I believe from consuming certain products. So now I’m not thinking twice about buying those products regardless of price.

Joan Treistman
Guest
10 years 9 months ago
Breyer’s ice cream has been all natural forever. Does that count in this study? I’m not disputing the results but suggesting there is a need for a deeper dive into the numbers. What exactly are consumers buying when they commit to all natural/organic products? There are lessons in them thar hills. 363 days a year, consumers are satisfied with buying Private Label cranberry sauce. For Thanksgiving and Christmas it has to be Ocean Spray. The same process that leads shoppers to buy these brands is probably at work for organic and natural products. Simply said, the shopper decides what is appropriate for the particular use. And that’s why this article leaves me hanging. If I know what natural and organic products and brands consumers are buying I have a better understanding of the opportunities for the various retailers who distribute organic and natural products. For example, I may want all natural for my pet food. I may want organic produce, but care less about dairy products. Farfetched? But still not a certainty. Note many shoppers… Read more »
Dr. Stephen Needel
Guest
10 years 9 months ago

I agree with Liz–I too would be wary of believing these self-reported numbers. That said, there is no necessary conflict between consumers spending less and, if it were true, buying more natural/organic. The shopper’s goal is to improve on value per dollar, not necessarily reducing dollars. Buying better products, even though more expensive, may make you a winner in your value equation.

John Karolefski
Guest
10 years 9 months ago

I haven’t done a formal study, but my first-hand and anecdotal research of fellow Baby Boomers has them eating organic or whole wheat pasta instead of traditional, organic spaghetti sauce instead of regular, all-natural/reduced-fat ice cream instead of full-fat varieties, and so on. The food bill is higher, but the guilt level is lower. The reported health benefits are a bonus.

Gene Hoffman
Guest
Gene Hoffman
10 years 9 months ago

Increasingly more people with money want to eat healthy foods and thereby live longer. They will pay more for that perceived primal privilege and the psychological uplift it brings to their psyche. It’s appears to have become the current principle in life.

A retailer who specializes in natural foods, such as Whole Foods or Lakewinds, can more easily capture the imaginative hearts and minds of this potent shopping audience since they aren’t trying to be all things to all people. In fact, they don’t really want “all people” as customers, just the health nuts blessed with “affordability.”

Mainstream grocers don’t have this luxury built into their business models even though many try to capture some of the beloved profits in natural foods by including them in their assortments. But the mystic lies in “totality” and that’s where the natural foods grocers have the edge.

Anne Bieler
Guest
Anne Bieler
10 years 9 months ago

Makes sense that natural and organic foods will continue to see growth–people want more nutritious foods, and many feel that products from mainstream stores don’t seem as “healthy.”

Part of the “New Normal,” post recession shopper behavior is moving away toward home, family, community and health. Their value proposition includes buying what they believe is an investment in healthier lifestyles, centered around eating at home. As many shoppers stopped to read the labels, learn more about nutrition, and became more interested in healthier options; food choices are including more natural/organic products.

Yes, the Boomers are at the head of the line here, but many people are more active, getting more exercise and are concerned about what their children eat, too. Here, shoppers are more careful about choice, want to know where products are grown or manufactured, and want the right assortment for their needs.

Charles P. Walsh
Guest
Charles P. Walsh
10 years 9 months ago

Like Liz Crawford, I too am skeptical of the claim made by those surveyed. We have many examples of disparity between what people claim/aspire to and what they actually do.

I might also suggest that there has been a significant increase in the amount of product that is, or is being represented as, organic or natural. Keep in mind that the FDA isn’t necessarily enforcing regulations around “Green Claims” and knowing that perception rules over actual knowledge for consumers as it relates to what is truly organic and natural. This being the case, it is entirely possible that consumers really believe that they are consuming more natural/organic product than they really are.

What’s worse, some of what they are purchasing falls into the “junk food” snack categories. Take a look at the cereal and snack aisles and you may be surprised to see the number of products touting their organic/natural ingredients.

The reality is that healthy food and healthy diets require more than simply purchasing the same old products with new wrappers and labels. We aren’t there yet.

Ed Rosenbaum
Guest
10 years 9 months ago

Organic food sales will continue to grow as we become more health and weight conscious. Even with the costs being higher we, as concerned consumers, will continue to buy the best quality foods for our family.

Yet, as I say this, I am compelled to think about the differences between our lunch eating habits and our dinner eating habits. Our dinner eating habits are continuing to change as the parents, mostly moms, watch what we are serving. The lunch eaters, mostly away from home, do not always concern themselves with the quality of their meal vs. the speed of getting it and getting back to work.

Herb Sorensen, Ph.D.
Guest
10 years 9 months ago

So Whole Foods found “shoppers” reporting in an internet survey that 2% more of them this year are into natural and organic foods? Give me a break! This is what I call “pretend market research.” It just creates factual noise in the industry, but possibly is of some PR value for the sponsors.

Lee Peterson
Guest
10 years 9 months ago
If nothing else, Whole Foods’ excellent sales lately tells you that despite a very sticky recession, “better for you” food continues to sell. This puts healthy eating up the belle curve towards mass in my mind. True, there is polarization in terms of the consumers buying healthier food, some of it based on affordability, but none the less, more and more shoppers of all brackets are turning to better food options across the board (in restaurants as well). Mass acceptance is right around the corner. A story to illustrate how pervasive healthy food is becoming; I was in a Whole Foods for lunch recently, which just happened to be fairly close to The Ohio State University in Columbus Ohio. The salad bar, not the deli or meal section, was under attack by 3 or 4 very large people. As I got closer and got my chow, I noticed that they were all fairly famous Ohio State football players–collecting mounds of lettuce and veggies!!! Gone were the giant slabs of beef these guys are famous for… Read more »
Michael L. Howatt
Guest
Michael L. Howatt
10 years 9 months ago

Didn’t we learn anything from the ’60s and ’70s? “Health” foods weren’t really all that healthy and way overpriced. Now we have “organic” foods. Can anyone tell the difference? Is there any proof of the benefits as we all get fatter anyway? History has a way of repeating itself, but does it have to be the dumb mistakes?

Brian Agar
Guest
Brian Agar
10 years 9 months ago
I’ve been a broker in the Natural Products Industry for 25 years, specializing in only the very best natural products, sold throughout the Midwest Region of the US. We’ve never had a down year, in sales, overall. People are starting to wake up to the fact that money saved on buying cheaper processed foods ends up getting spent on medicine, and then some, to try to belatedly fix decades of poor diet eating habits. This really isn’t rocket science! An ounce of prevention is worth a pound of cure! This also applies to buying, not just voting, where our mouth is. Concern for environmental problems that results with greener choices to stem the tide of bad news, and make a better world and future, are just a “natural” progression. The “real” cost of bad choices and buying behavior is poor health and a polluted environment, both of which drive up the “real” cost tremendously when we attempt to fix the results of these prior bad choices. Maybe we are learning from history! Lessons learned the… Read more »
James Tenser
Guest
10 years 9 months ago

It’s heartening to hear news that sales of unrefined, natural, organic, low-fat, reduced-sugar and chemical-free foods are on the upswing–even if the data seem suspect. If there is a real consumption trend afoot, we may speculate that its principle drivers are the wider distribution of such products and the reformulation of others.

In other words, if you believe behavioral studies that indicate shoppers make most of their final take-away decisions at the shelf, then the convenient availability of healthier choices at the point of decision may be the primary driver of sales growth. Production and availability of natural and organic foods is on the increase, and the number of retail locations carrying them is also rising.

So…is this “light green,” healthier-food purchase trend demand-driven or supply-driven?

Because my bias is to look for structural explanations first, I’m leaning more toward the supply side. That’s something for the fast-food merchants to think about too.

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