Market Update: Organic and Plant-Based Food Sales

Originally Appeared in Presence Marketing News, August 2019
By Steven Hoffman

Rabobank: Organic Food Sales Growth Slows; Market to Hit $60 Billion by 2022

Between 2010 and 2016, organic food retail sales grew by an average of 10% per year, however, that growth has slowed to 5.9% for the past two years, says Rabobank. The international bank, known for its focus on food, predicts that organic food sales will reach $60 billion by 2022. While fruits and vegetables remain the top organic food category, representing 36% of all organic food purchases in 2018, even that category is showing signs of slowed growth, noted Rabobank Senior Analyst Roland Fumasi in a report by Food Navigator USA. “Organic produce availability has now become mainstream which means that the organic produce market will continue to more closely resemble the traditionally grown produce market,” Fumasi told Food Navigator USA. “Just a few short years ago, both organic produce prices and organic produce volumes were rising, indicating that demand expansion was occurring more rapidly than supply growth. However, there are indications that continued growth in the organic movement has partially been driven by lower prices for some of the top-selling organic product items.” Fumasi predicts that in a few years, demand for organic produce will see an increase in sales as millennials grow their income and start their own families.

Plant-based Food Sales Growing 5X Faster than Overall Food Sales

Plant-based food sales are growing like a weed, according to new research from the Plant Based Foods Association and the Good Food Institute. According to the research published in July 2019, U.S. retail sales of plant-based foods have grown 11% in the past year, bringing the total plant-based market value to $4.5 billion. Since April 2017, total plant-based food sales increased 31% according to the study. Additionally, plant-based foods unit sales are up 8.5%, compared to total U.S. food sales, which are flat, showing the overall health and momentum of the plant-based foods category. The data covers the total U.S. grocery marketplace and was commissioned from SPINS, a wellness-focused data technology company and retail analytics provider, says the Plant Based Foods Association (PBFA). According to PBFA, sales of the plant-based meat category alone is worth more than $800 million, with sales growth of 10% in the past year. Refrigerated plant-based meat is driving category growth with a 37% sales increase. Sales of plant-based milks, which grew 6% over the past year, now comprise 13% of the entire milk category, while cow’s milk sales have declined 3% over the same period. In addition, in the past year, plant-based yogurt has grown 39%, while conventional yogurt declined 3%; plant-based cheese has grown 19%, while conventional cheese is flat; and plant-based ice cream and frozen novelty has grown 27%, while conventional ice cream and frozen novelty has grown just 1%, according to the PBFA study.

Good Food Insights: Natural Continues to Set the Pace

Here’s some good news for natural products marketers, writes New Hope Network’s Bob Benenson: Natural product sales are growing five times faster than conventional product sales nationally—in the Multi-Outlet (MULO) channel, a.k.a. traditional grocery chains. Here’s the even better news: Natural product growth in this channel, where the vast majority of Americans get their groceries, outstrips conventional growth in all seven regions of the U.S., as defined by SPINS, the leading data market research firm for the natural, organic and specialty products industry. Along with FamilyFarmed’s Good Food Accelerator, Naturally Chicago and Esca Bona, SPINS is a collaborator in the Good Food Insights series. Based on the annual State of Good Food Report, derived from SPINS’ analysis of MULO market data for the 52 weeks ending May 19, 2019, while natural products comprise 9% of total sales in the MULO channel, sales in this category grew 5% over the study period, compared to 1% growth for conventional products. “Conventional retailers are recognizing that the rise of natural is an ongoing historic and generational shift, not a fad. And as they address consumer demand by adding more natural products to their shelves, they are jump-starting further growth in the sector,” writes Benenson. According to SPINS, California has the largest MULO market share of natural products at 14%, followed by the Northeast, with 12% MULO market share for natural products. The South-Central states recorded the lowest MULO market share, with only 6% of sales attributed to natural products. According to Andrew Henkel, SVP of Brand Growth Solutions at SPINS, the forerunner regions have the biggest consumer bases that are apt to adopt a “good food and natural products lifestyle.” “Parts of the country that have significant urban, progressive consumer bases are indicators of where the rest of the country is going to go,” Henkel told New Hope Network.