Americans are buying more organic food and household products than ever, according to a new survey.
The research — released Wednesday by the Organic Trade Association, the nation’s leading organic industry group — offers a glimpse into how the market is developing and where there is the greatest demand for organic products.
Sales of organic food and goods crested at $47 billion in 2016, an increase of more than 8 percent over the previous year.
And while there are a growing number of organic personal care and household products on the market, food still accounts for the vast majority of all organic sales, with $43 billion last year. Organic food now boasts more than 5 percent of the nation’s total food sales.
Consumers choose organic food for a variety of reasons, but health and environment often top the list.
“Polling shows the No. 1 reason people go organic is to avoid pesticides, chemicals and all of those things that are not allowed in organics,” said Katherine Paul, associate director of Minnesota-based Organic Consumers Association. “So I think you are looking at a better-educated population that is connecting the dots between what they eat and their health.”
Fresh fruits and vegetables are most consumers’ gateway purchase into organic. It is easier to understand the potential benefits of buying raw produce that was grown using organic methods than it is to grasp how organic standards translate into a processed or packaged food, or especially household products.
Meat and poultry is another segment showing strong consumer demand for organic. Sales of organic meat and poultry grew more than 17 percent to $991 million last year, marking the category’s biggest yearly gain.
All segments included, organic food sales grew 8.4 percent last year compared with the overall food market’s nearly flat growth rate of 0.6 percent. This year-over-year growth has been consistent for more than a decade. In fact, the segment has more than doubled since 2007, when organic sales were just below $20 billion.
Golden Valley-based General Mills, one of the largest packaged food companies in the United States, has watched organic sales numbers trend upward in recent years while its core food segments, such as cereal, cake mixes and refrigerated dough, have experienced just the opposite.
In an effort to see future growth, the company has made significant investments in the natural and organic food segment, with large acquisitions such as its $820 million purchase of Annie’s, an organic-focused packaged food company. Smaller acquisitions include the $20 million purchase of Texas-based Epic Provisions, a maker of meat snacks.
Highlighting the disparity between organic and conventional food sales, General Mills’ overall sales declined 6 percent in 2016 while Annie’s grew 11 percent, which helped buoy the company’s overall numbers.
Still, organic food faces significant challenges to its long-term growth — namely, the amount of land and number of farmers dedicated to producing it.
Laura Batcha, CEO of the Organic Trade Association, said the industry needs more organic farmers for it to be able to meet the growing demand for organic food.
“We’re making a lot of progress in many areas, like fruits and vegetables, dairy, other protein products, but we need more domestic supply in organic feed grains to feed our growing organic dairy herds and organic poultry and meat animals,” Batcha said in an e-mail. “There is unmet demand for organic in this country, and this provides a great opportunity for America’s farmers.”