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Organic Food and Drink Retailing - US - November 2009

Organic food and drink sales experienced strong growth over the last decade, and in particular in the last five years as mainstream FDM started aggressively stocking organic name and private label brands. The recession has curtailed growth in the short term, and in this report Mintel discusses how consumer trends, the economy, and new product trends are influencing the market. In addition to presenting sales data by segment, supplier and brand, the report considers a range of topics, including:

  • The size of the organic food and drink market in FDMx and natural supermarkets, and Mintel’s forecast through 2012
  • How the economic recession and a shift towards frugality have hurt certain sectors of the organic food and drink market and how retailers and manufacturers alike have responded
  • The rise of organic private label brands as consumers trade down, but not out, of the organic marketplace
  • The latest new product trends that are going “beyond organic” with other feature sets appealing to the natural and organic consumer
  • To what extent confusion over “natural” and “organic” terms is impacting the market
  • Changes in shopping behavior versus last year among consumers that buy organic products
  • Competitive trends that are helping and harming the organic food and drink market
  • How retailers are more engaged than ever in their commitment for the organic foods market.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Organic definition
          • Data sources
            • Sales data
              • Consumer survey data
                • Advertising clips
                  • Abbreviations and terms
                    • Abbreviations
                      • Terms
                      • Executive Summary

                          • The $6.2 billion organic food and drink market will rebound from 2010-12
                            • Segment performance
                              • Retailer performance
                                • Leading companies
                                  • Innovations
                                    • Consumer attitudes and behavior
                                    • Insights and Opportunities

                                      • Partnerships with niche customer groups could ignite sales
                                        • Giving the customer what they need
                                          • Figure 1: ONE coupon booklets, 2009
                                        • Investing in the future of organic food and beverages
                                          • Figure 2: Whole Foods ‘Growing our local family’ ad, 2009
                                      • Inspire Insights

                                          • Trend 1: Sustainability's Evolutionary Tree
                                            • What's it about?
                                              • What we've seen
                                                • Specifics
                                                  • Implications
                                                    • Trend 2: Green Skepticism
                                                      • What's it about?
                                                        • What we've seen
                                                            • Figure 3: Starbucks’ fair trade campaign ad, 2009
                                                          • Implications
                                                          • Market Size and Forecast

                                                            • Key points
                                                              • Strong growth in 2007-08 slows considerably in 2009 but Mintel expects recovery
                                                                • Sales and forecast of organic food and drink
                                                                  • Figure 4: U.S. FDMx and natural supermarket sales of organic food and drink, at current prices, 2006-12
                                                                  • Figure 5: U.S. FDMx and natural supermarket sales of organic food and drink, at inflation-adjusted prices, 2006-12
                                                              • Competitive Context

                                                                • Key points
                                                                  • No nutritional superiority with organics could mar consumer perception
                                                                    • Retailers market better-for-you, though not organic products
                                                                      • Manufacturers also taking advantage of consumer confusion
                                                                        • Going local helps and hinders the organic food industry
                                                                        • Segment Performance

                                                                          • Nearly all segments will experience decline in 2009 but rebound is expected
                                                                            • Sales of organic food and drink in FDMx and natural supermarkets, by segment, 2006-09
                                                                              • Figure 6: FDMx and natural supermarket sales of organic food and drink, by segment, 2006-09
                                                                              • Figure 7: FDMx and natural supermarket sales of organic food and drink, by segment, 2007-2009
                                                                          • Segment Performance—Shelf-Stable Organic Food and Drink

                                                                            • Key points
                                                                              • Largest organic food segment overall will top $3 billion in 2012
                                                                                • Sales and forecast of shelf-stable organic food and drink
                                                                                  • Figure 8: FDMx and natural supermarket sales of shelf-stable organic food and drink, 2006-12
                                                                              • Segment Performance—Refrigerated Organic Food and Drink

                                                                                • Key points
                                                                                  • With 30% of organic food and drink sales, the refrigerated segment will hold its own through 2012
                                                                                    • Sales and forecast of refrigerated organic food and drink
                                                                                      • Figure 9: FDMx and natural supermarket sales and forecast of refrigerated organic food and drink, at current prices, 2006-12
                                                                                  • Segment Performance—Frozen Organic Food and Drink

                                                                                    • Key points
                                                                                      • Consumer trade-out with organic frozen foods stalls growth in 2009-10
                                                                                        • Sales and forecast of frozen organic food and drink
                                                                                          • Figure 10: FDMx and natural supermarket sales and forecast of frozen organic food and drink, at current prices, 2006-12
                                                                                      • Segment Performance—Packaged Organic Produce

                                                                                          • Key points
                                                                                            • Some retailers scaling back on organic produce merchandising
                                                                                              • Packaged organic produce—a bright spot in the organic food market
                                                                                                • Sales and forecast of packaged organic produce
                                                                                                  • Figure 11: FDMx and natural supermarket sales and forecast of packaged organic produce, at current prices, 2006-12
                                                                                              • Retail Channels

                                                                                                • Key points
                                                                                                  • Two thirds of consumers buy organic food at conventional supermarkets
                                                                                                    • Figure 12: Where do people buy, and where do people buy the majority of their organic food and beverages? September 2009
                                                                                                  • Sales of organic food and drink, by channel
                                                                                                    • Figure 13: FDMx and natural supermarket sales of organic food and drink, by channel, 2006-09
                                                                                                • Retail Channels—Supermarkets

                                                                                                  • Supermarkets seeking margin gains with bargain-hunting consumers
                                                                                                    • Conventional supermarket sales of organic food and drink
                                                                                                      • Figure 14: Conventional supermarket sales of organic food and drink, at current prices, 2006-09
                                                                                                  • Retail Channels—Natural Foods Supermarkets

                                                                                                    • Key points
                                                                                                      • Whole Foods moves to build consumer confidence in stores and out
                                                                                                        • Figure 15: Whole Foods, First national certified organic grocer and whole deal flyer, 2009
                                                                                                      • Natural supermarket sales of organic food and drink
                                                                                                        • Figure 16: Natural supermarket sales of organic food and drink, at current prices, 2006-09
                                                                                                    • Market Drivers

                                                                                                      • Various factors contribute to perfect storm
                                                                                                        • Healthy eating goes out the window
                                                                                                          • Frugality becomes hip
                                                                                                            • Lower food prices also deter organic purchases
                                                                                                            • Leading Companies

                                                                                                              • Key points
                                                                                                                • Organic retailer brands gobble up market share
                                                                                                                  • Manufacturer sales of organic food and drink—FDMx
                                                                                                                    • Figure 17: FDMx sales of organic food and drink, by manufacturer, 2008-09
                                                                                                                  • Brands in natural markets more immune to downturn
                                                                                                                    • Manufacturer sales of organic food and drink—natural supermarkets
                                                                                                                      • Figure 18: Natural supermarket sales of organic food and drink, by manufacturer, 2008-09
                                                                                                                  • Brand Share—Shelf-Stable Organic Food and Drink

                                                                                                                    • Key points
                                                                                                                      • Leader Hain Celestial falters while others hold on or gain share
                                                                                                                        • Manufacturer sales of organic shelf-stable food and drink—FDMx
                                                                                                                          • Figure 19: FDMx sales of organic shelf-stable food and drink, by manufacturer, 2008-09
                                                                                                                        • Some brands are reaping the benefit of being big fish in a small pond
                                                                                                                          • Manufacturer sales of organic shelf-stable food and drink—natural supermarkets
                                                                                                                            • Figure 20: Natural supermarket sales of organic shelf-stable food and drink, by manufacturer, 2008-09
                                                                                                                        • Brand Share—Refrigerated Organic Food and Drink

                                                                                                                          • Key points
                                                                                                                            • Organic dairy brands suffer in FDMx as consumers go for store brands
                                                                                                                              • Manufacturer sales of refrigerated organic food and drink—FDMx
                                                                                                                                • Figure 21: FDMx sales of refrigerated organic food and drink, by manufacturer, 2008-09
                                                                                                                              • Enigmatic and indie brands are leading the way
                                                                                                                                • Manufacturer sales of refrigerated organic food and drink—natural supermarkets
                                                                                                                                  • Figure 22: Natural supermarket sales of refrigerated organic food and drink, by manufacturer, 2008-09
                                                                                                                              • Brand Share—Frozen Organic Food and Drink

                                                                                                                                • Key points
                                                                                                                                  • Recessionary discretion hurts sales growth
                                                                                                                                    • Manufacturer sales of frozen organic food and drink—FDMx
                                                                                                                                      • Figure 23: FDMx sales of frozen organic food and drink by manufacturer, 2008-09
                                                                                                                                    • Frozen organic food brands performing well in natural markets
                                                                                                                                      • Manufacturer sales of frozen organic food and drink—natural supermarkets
                                                                                                                                        • Figure 24: Natural supermarket sales of frozen organic food and drink, by manufacturer, 2008-09
                                                                                                                                    • Brand Share—Packaged Organic Produce

                                                                                                                                        • Key points
                                                                                                                                          • Top brands hold their own, but private label hits its stride
                                                                                                                                            • Manufacturer sales of packaged organic food and drink—FDMx
                                                                                                                                              • Figure 25: FDMx sales of packaged organic produce, by manufacturer, 2008-09
                                                                                                                                            • Pesticide fears boost organic berry supplier
                                                                                                                                              • Manufacturer sales of packaged organic food and drink—natural supermarkets
                                                                                                                                                • Figure 26: Natural supermarket sales of packaged organic produce, by manufacturer, 2008-09
                                                                                                                                            • Brand Qualities

                                                                                                                                              • Private label offerings exemplify different consumer targets
                                                                                                                                                • Safeway O Organics
                                                                                                                                                  • Figure 27: Safeway O Organics examples, 2009
                                                                                                                                                • Supervalu Wild Harvest
                                                                                                                                                  • Figure 28: Wild Harvest organic examples, 2009
                                                                                                                                                • Whole Foods Market
                                                                                                                                                  • Figure 29: Whole Foods upscale organics, 2009
                                                                                                                                                  • Figure 30: Whole Foods Market organic private label product launches*, 2002-09**
                                                                                                                                              • Innovations and Innovators

                                                                                                                                                  • Key points
                                                                                                                                                    • Organic beverages
                                                                                                                                                      • Figure 31: Organic beverages new product launches, by beverage type, 1998-2009*
                                                                                                                                                      • Figure 32: Share of organic drink new product launches, by beverage type, 2009*
                                                                                                                                                    • Organic beverage innovations
                                                                                                                                                      • Beverage with a cause
                                                                                                                                                        • Green shoots
                                                                                                                                                          • Private label excitement
                                                                                                                                                            • Organic analogs
                                                                                                                                                              • Shelf-stable organic food
                                                                                                                                                                • Figure 33: Shelf-stable organic foods new product launches, by food type, 1998-2009*
                                                                                                                                                                • Figure 34: Share of shelf-stable organic food new product launches, by food type, 2009*
                                                                                                                                                              • Organic shelf-stable food innovations
                                                                                                                                                                • Private label drives
                                                                                                                                                                  • Innovations for younger consumers
                                                                                                                                                                    • Close targeting
                                                                                                                                                                      • Frozen and refrigerated organic food
                                                                                                                                                                        • Figure 35: Frozen and refrigerated organic foods new product launches, by food type, 1998-2009*
                                                                                                                                                                        • Figure 36: Share of frozen and refrigerated organic food new product launches, by food type, 2009*
                                                                                                                                                                      • Organic frozen and refrigerated food innovations—multi-level appeal
                                                                                                                                                                      • Advertising and Promotion

                                                                                                                                                                        • Overview
                                                                                                                                                                          • Cascadian Farm goes transparent
                                                                                                                                                                            • Figure 37: Cascadian Farm. “Gene Kahn holds a box of Raspberries,” TV ad, 2008
                                                                                                                                                                            • Figure 38: Cascadian Farm and Muir Glen “Organic food that matters,” TV ad, 2008
                                                                                                                                                                          • Brands and retailers alike stress support of local, family farms
                                                                                                                                                                            • Organic Valley targets consumers with local, family farm message
                                                                                                                                                                              • Figure 39: Organic Valley “Local, organic dairy,” TV ad, 2009
                                                                                                                                                                              • Figure 40: Organic Valley “Mother nature still the boss,” Press ad, 2009
                                                                                                                                                                            • Whole Foods Market graphically articulates support in print ads
                                                                                                                                                                              • Figure 41: Whole Foods, “Commitment to local,” Press ad, 2009
                                                                                                                                                                          • The Consumer and the Natural and Organic Foods Market

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Consumer perceptions in the natural/organic foods market
                                                                                                                                                                                  • Figure 42: Trust and understanding of the terms “natural” and “organic,” September 2009
                                                                                                                                                                                • Incidence of buying natural/organic products
                                                                                                                                                                                    • Figure 43: Incidence of buying organic food and drink, September 2009
                                                                                                                                                                                    • Figure 44: Change in incidence of buying organic food and drink, this year compared to last, September 2009
                                                                                                                                                                                  • Overview of attitudes to natural and organic
                                                                                                                                                                                    • Figure 45: Factors influencing decision to eat natural/organic food and drink, September 2009
                                                                                                                                                                                    • Figure 46: Impact of the recession on consumption of natural/organic food and drink, September 2009
                                                                                                                                                                                  • Popular brands of natural and organic foods/beverages
                                                                                                                                                                                      • Figure 47: Brands of organic and natural food and drink purchased in the past year, September 2009
                                                                                                                                                                                  • Faith in the Term “Organic”

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • A little knowledge can be dangerous
                                                                                                                                                                                        • Awareness of organic standards higher with women …
                                                                                                                                                                                          • Figure 48: Trust of the term “organic,” and views on organic/natural, by gender, September 2009
                                                                                                                                                                                        • Younger respondents (aged 18-34) …
                                                                                                                                                                                          • Figure 49: Trust of the term “organic,” and views on organic/natural, by age, September 2009
                                                                                                                                                                                        • Parents …
                                                                                                                                                                                          • Figure 50: Trust of the term “organic,” and views on organic/natural, by presence of children, September 2009
                                                                                                                                                                                        • And larger households
                                                                                                                                                                                          • Figure 51: Trust of the term “organic,” and views on organic/natural, by number of people in HH, September 2009
                                                                                                                                                                                      • Where Consumers Shop for Organic Food and Drink

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Families, younger, and upper-middle income households seek organic foods from various retailers
                                                                                                                                                                                              • Figure 52: Where people buy organic food and beverages, by age, September 2009
                                                                                                                                                                                              • Figure 53: Where people buy organic food and beverages, by household income, September 2009
                                                                                                                                                                                              • Figure 54: Where people buy organic food and beverages, by presence of children, September 2009
                                                                                                                                                                                          • Purchase of Organic Products by Sector

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • Organic shelf-stable foods
                                                                                                                                                                                                  • Figure 55: Other shelf stable organic food purchases in past year, by sub-category, September 2009
                                                                                                                                                                                                • Organic dairy
                                                                                                                                                                                                  • Figure 56: Organic other dairy purchases in past year, by sub-category, September 2009
                                                                                                                                                                                                • Organic meat/milk alternatives
                                                                                                                                                                                                  • Figure 57: Organic meat and milk alternative purchases in past year, by sub-category, September 2009
                                                                                                                                                                                                • Organic beverages
                                                                                                                                                                                                  • Figure 58: Organic drink purchases in past year, by sub-category, September 2009
                                                                                                                                                                                                • Organic meat and seafood
                                                                                                                                                                                                  • Figure 59: Organic meat and seafood purchases in past year, by sub-category, September 2009
                                                                                                                                                                                                • Organic frozen foods
                                                                                                                                                                                                  • Figure 60: Organic frozen food purchases in past year, by sub-category, September 2009
                                                                                                                                                                                              • The Demographics of Organic Food and Beverage Purchasing

                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                    • Organic foods
                                                                                                                                                                                                      • Figure 61: Purchase of organic foods in past year, main food categories by age, race/Hispanic origin and household income, September 2009
                                                                                                                                                                                                    • Organic milk and other beverages
                                                                                                                                                                                                      • Figure 62: Purchase of organic milk and other beverages in past year, by age, race/Hispanic origin and household income, September 2009
                                                                                                                                                                                                  • Impact of the Recession on Organic Buying Behavior

                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                      • Sales have leveled off with organic products with behavior shifts
                                                                                                                                                                                                        • Figure 63: Impact of recession on purchase of organic products, by age, September 2009
                                                                                                                                                                                                        • Figure 64: Impact of recession on purchase of organic products, by presence of children, September 2009
                                                                                                                                                                                                    • Attitudes to Purchase of Organic Products

                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                        • Natural products important, but label reading/understanding a limiting factor
                                                                                                                                                                                                          • Figure 65: Attitudes and opinions towards foods, by gender, age, race/Hispanic origin and household income, November 2008-June 2009
                                                                                                                                                                                                        • Perception of organic as healthier than all-natural
                                                                                                                                                                                                          • Figure 66: Perception of organic as healthier than all-natural, by gender, age, race/Hispanic origin and household income, September 2009
                                                                                                                                                                                                          • Figure 67: Perception of organic as healthier than all-natural, by region, presence of children and number of people in household, September 2009
                                                                                                                                                                                                      • Cluster Analysis

                                                                                                                                                                                                          • Low-ganics
                                                                                                                                                                                                            • Benefiters
                                                                                                                                                                                                              • Requirers
                                                                                                                                                                                                                • Cluster characteristics
                                                                                                                                                                                                                  • Figure 68: Organic food and retailing clusters, September 2009
                                                                                                                                                                                                                  • Figure 69: Organic foods bought, type of food, by organic food and retailing clusters, September 2009
                                                                                                                                                                                                                  • Figure 70: Reasons for eating organic and natural foods, by organic food and retailing clusters, September 2009
                                                                                                                                                                                                                  • Figure 71: Impact of recession on purchase of organic products, by organic food and retailing clusters, September 2009
                                                                                                                                                                                                                  • Figure 72: Aspects looked for when shopping for organic foods/beverages, by organic food and retailing clusters, September 2009
                                                                                                                                                                                                                • Cluster demographics
                                                                                                                                                                                                                  • Figure 73: Organic food and drink retailing clusters, by gender, September 2009
                                                                                                                                                                                                                  • Figure 74: Organic food and drink retailing clusters, by age group, September 2009
                                                                                                                                                                                                                  • Figure 75: Organic food and drink retailing clusters, by household income, September 2009
                                                                                                                                                                                                                  • Figure 76: Organic food and drink retailing clusters, by race, September 2009
                                                                                                                                                                                                                  • Figure 77: Organic food and drink retailing clusters, by Hispanic origin, September 2009
                                                                                                                                                                                                                • Cluster methodology
                                                                                                                                                                                                                • Custom Consumer Groups

                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                    • The picture of the natural/organic consumer household
                                                                                                                                                                                                                      • Affluent, educated, singles, couples, and families are primary groups of natural/organic products users
                                                                                                                                                                                                                          • Figure 78: Organic and natural foods attitudes and shopping, by household type, by key Mosaic groups, November 2008-June 2009
                                                                                                                                                                                                                        • Older, less affluent, rural consumers are primary groups of non-users of natural/organic products
                                                                                                                                                                                                                            • Figure 79: Organic and natural foods attitudes and shopping, by household type, by least interested Mosaic groups, November 2008-June 2009
                                                                                                                                                                                                                        • Appendix: Other Useful Tables

                                                                                                                                                                                                                          • Attitudes to the environment
                                                                                                                                                                                                                            • Figure 80: Changing concern over the environment, September 2009
                                                                                                                                                                                                                          • Where consumers buy organic food and drink
                                                                                                                                                                                                                            • Figure 81: Where people buy organic food and beverages, by number of people in household, September 2009
                                                                                                                                                                                                                          • Organic food and drink sectors purchased
                                                                                                                                                                                                                            • Figure 82: Purchase of organic foods in past year, main food categories, by region, presence of children and number of people in household, September 2009
                                                                                                                                                                                                                            • Figure 83: Purchase of organic milk and other beverages in past year, by region, presence of children and number of people in household, September 2009
                                                                                                                                                                                                                          • Impact of recession of organic product purchases
                                                                                                                                                                                                                            • Figure 84: Impact of recession on purchase of organic products, by number of people in household, September 2009
                                                                                                                                                                                                                          • Attitudes toward paying more for organic products
                                                                                                                                                                                                                            • Figure 85: Worth paying more for some organic products but not others, by gender, age, race/Hispanic origin and household income, September 2009
                                                                                                                                                                                                                            • Figure 86: Worth paying more for some organic products but not others, by region, presence of children and number of people in household, September 2009
                                                                                                                                                                                                                          • Attributes sought when shopping for organic products
                                                                                                                                                                                                                            • Figure 87: Attributes sought when shopping for organic food and drink, by gender, September 2009
                                                                                                                                                                                                                            • Figure 88: Attributes sought when shopping for organic food and drink, by age, September 2009
                                                                                                                                                                                                                            • Figure 89: Attributes sought when shopping for organic food and drink, by household income, September 2009
                                                                                                                                                                                                                        • Appendix: Trade Associations

                                                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                                                          • American Herbal Products Association
                                                                                                                                                                                                                          • Amy's Kitchen Inc.
                                                                                                                                                                                                                          • Applegate Farms
                                                                                                                                                                                                                          • Ben & Jerry's Homemade Inc.
                                                                                                                                                                                                                          • Boca Foods Company
                                                                                                                                                                                                                          • Bureau of Economic Analysis
                                                                                                                                                                                                                          • Dean Foods Company
                                                                                                                                                                                                                          • Food Marketing Institute
                                                                                                                                                                                                                          • General Mills Inc
                                                                                                                                                                                                                          • Greenfield Online
                                                                                                                                                                                                                          • Grocery Manufacturers of America
                                                                                                                                                                                                                          • Groupe Danone
                                                                                                                                                                                                                          • Jacobs Farm / Del Cabo, Inc.
                                                                                                                                                                                                                          • Kellogg Company
                                                                                                                                                                                                                          • National Nutritional Foods Association
                                                                                                                                                                                                                          • Natural Selection Foods
                                                                                                                                                                                                                          • Organic Alliance
                                                                                                                                                                                                                          • Organic Consumers Association
                                                                                                                                                                                                                          • Organic Trade Association
                                                                                                                                                                                                                          • Procter & Gamble USA
                                                                                                                                                                                                                          • Rudi's Organic Bakery, Inc.
                                                                                                                                                                                                                          • Small Planet Foods Inc. (Cascadian Farms)
                                                                                                                                                                                                                          • Stonyfield Farm
                                                                                                                                                                                                                          • Supervalu Inc
                                                                                                                                                                                                                          • Target Corporation
                                                                                                                                                                                                                          • Tesco Plc
                                                                                                                                                                                                                          • The Hain Celestial Group, Inc.
                                                                                                                                                                                                                          • The J. M. Smucker Company
                                                                                                                                                                                                                          • Trader Joe's Company Inc
                                                                                                                                                                                                                          • U.S. Department of Agriculture
                                                                                                                                                                                                                          • Walmart Stores (USA)
                                                                                                                                                                                                                          • Whole Foods Market Inc
                                                                                                                                                                                                                          • Winn-Dixie Stores

                                                                                                                                                                                                                          Organic Food and Drink Retailing - US - November 2009

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