Natural Products Insider

MAR-APR 2018

INSIDER is the leading information source for marketers, manufacturers and formulators of dietary supplements, healthy foods and cosmeceuticals. Since 1997, INSIDER has been serving the needs of the global nutrition industry.

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42 INSIDER March/April 2018 In 2016, U.S. organic food sales represented 5.3 percent of total retail food sales—the highest penetration ever, according to the Organic Trade Association (OTA). The organization's 2016 Organic Industry Survey also revealed 13.6 percent of all fruits and vegetables and 8 percent of all dairy products purchased by U.S. consumers were organic. "The fi rst sales estimates for organic products go back only to 1990, when U.S. sales of organic food and beverages were approximately US$1 billion a year," said Laura Batcha, OTA's executive director and CEO. "Sales have grown substantially since that time, reaching approximately $47 billion for total organic product sales in 2016, with food and beverage sales totaling $43 billion." New Hope Network's NEXT Trend Database supports the rising popularity of organic. At Expo West 2017, 44 percent of all products carrying a certifi cation held an organic one. Looking back at all products exhibited at Natural Products Expos from 2013 to 2017, New Hope's NEXT Data & Insights team noted the organic certifi cation is the 2nd most common behind kosher. Approximately 22,700 products exhibited through those years were certifi ed organic. Agropur Ingredients' Custom Solutions team has been working with organic products for more than a decade. Emily Ross, technical beverage sales, reported the company has seen organic grow in every area, from supplements to frozen pizza to ice cream, with the impact of the increased demand particularly evident in recent years. "Five years ago, companies only requested organic if that was the story their company was focused on, where their entire marketing plan and product mix were focused on the niche of organic," Ross shared. "Today however, in addition to these loyal organic brands, we've been interacting with a good deal of mainstream companies who are adding organic SKUs on top of their conventional offerings." Some categories are feeling the growing pains more than others. Despite a measure of growth in organic acreage the past few years, U.S. organic grain supply falls short of demand and must also compete against global commodity markets, noted Elizabeth Reaves, senior program director, agriculture and environment, Sustainable Food Lab. Food production also plays a role. "Because organically produced livestock must be fed only organic feed (organic grain and certifi ed organic forage such as grass and hay), it is important to have enough feedstock supplies to keep up with the demand for feeding the animals," Batcha stated. "Grains are also crucial in the overall supply chain not only for animals but for food for consumers. Many of the products in the center of the store include ingredients based on grains, pulses and cereals." David Sheluga, consumer insights director at Ardent Mills, quantifi ed the growth. "U.S. sales of organic grain-based food approached $1 billion in 2016, according to Nielsen Scantrack Retail Sales for the 52 weeks ending November 2016," he reported. "U.S. retail sales are growing at an average annual rate of more than 11 percent per year since 2012." Another busy category is beverages. Laura Dembitzer, marketing director at Imbibe, confi rmed juice and juice-based beverages currently have the largest organic offering in the drink world. However, "Health-conscious consumers who are looking for high-quality products seek out organic certifi cation, therefore the better-for-you beverages like kombucha, plant waters and probiotic beverages are also going to more commonly have organic certifi cation since organic is an important Food & Beverage: Organic Supply Chain In 2016, U.S. organic product sales reached US$47 billion. Organic averaged double-digit growth during the last five years. The Organic Trade Association (OTA) sought to represent many organic stakeholders via its 2018 Farm Bill platform. Many conventional companies are adding organic SKUs, increasing marketplace competition for early-adopter organic brands. The Organic Food and Beverage Supply Chain: Stretching to Meet Demand by Karen Butler INSIDER's Take Drinks Snacks, Cookies & Candy Diet & Nutrition Cereal & Breakfast Foods Grains, Pasta & Side Dishes Cosmetics Frozen Food Condiments, Oils & Salad Dressings Dairy Sauces, Spices & Seasonings Top 10 Categories Making Organic Claims at Expo West 2017 19 % 16 % 12 % 7 % 5 % 5 % 4 % 4 % 4 % 4 % Source: New Hope NEXT Data & Insights

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