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OTA: Organic Sector Posts New Record In U.S. Sales

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The American organic sector stayed on its upward trajectory in 2016, gaining new market share and breaking records, as consumers across the U.S. ate and used more organic products than ever before, according to the Organic Trade Association‘s (OTA) 2017 Organic Industry Survey released today at OTA’s Annual Policy Conference.

Organic sales in the U.S. totaled around $47 billion in 2016, reflecting new sales of almost $3.7 billion from the previous year, according to the survey. The $43 billion in organic food sales marked the first time the American organic food market has broken though the $40 billion mark. Organic food now accounts for 5.3 percent of total food sales in this country–another first for organic.

Organic food sales increased by 8.4 percent, or $3.3 billion, from the previous year, significantly outpacing the 0.6 percent growth rate in the overall food market. Sales of organic non-food products were up 8.8 percent in 2016, surpassing the overall non-food growth rate of 0.8 percent.

The survey also showed that organic is creating jobs. More than 60 percent of all organic businesses with more than five employees reported an increase of full-time employment during 2016, and said they planned to continue boosting their full-time work staff in 2017.

“The organic industry continues to be a real bright spot in the food and ag economy both at the farm gate and checkout counter,” said OTA CEO and Executive Director Laura Batcha.

“The theme of our conference is ‘Organic. Big Results from Small Seeds’ because of the wide and positive impact of organic,” Batcha added. “Organic farmers are not just staying in business, they’re often expanding. Organic handling, manufacturing and processing facilities are being opened, enlarged and retooled. Organic farms, suppliers and handlers are creating jobs across the country, and the organic sector is growing and creating the kinds of healthy, environmentally friendly products that consumers are increasingly demanding.”

The popularity of produce and protein

The $15.6 billion organic fruits and vegetables sector held onto its position as the largest of the organic food categories, accounting for nearly 40 percent of all organic food sales. Posting an 8.4 percent growth rate–nearly triple the 3.3 percent growth pace of total fruit and vegetable sales–organic fruits and vegetables now make up close to 15 percent of the produce that Americans eat, according to the OTA research.

Produce traditionally has been the entry category for consumers new to organic, in large part because in the produce aisle the benefits of organic are probably the easiest to understand. But now, across all organic food categories, shoppers are placing high value on freshness and convenience, OTA says. In produce, grab-and-go salads and ready-to-eat veggies (fresh or frozen) were top sellers.

Consumers in recent years have sought clean products that are high in protein, the association noted, adding that sales of organic meat and poultry shot up by more than 17 percent in 2016 to $991 million, for the category’s biggest-ever yearly gain. Continued strong growth in that category should push sales across the $1 billion mark for the first time in 2017, OTA believes. Growing awareness of organic’s benefits vs. natural, grass-fed or hormone-free meats and poultry is also spurring consumer interest in organic meat and poultry aisles, OTA says.

A whole lot of dipping–and seasoning–going on

The organic condiment category isn’t one of the headline organic food categories, but some interesting trends are happening there, according to the study. Organic dips saw growth in 2016 of 41 percent, reaching $57 million in sales. Sales of organic spices grew by 35 percent to $193 million.

Beyond food…sales of organic items outside food section keep climbing

Confirming a trend that’s now fairly established, the OTA survey showed that today’s consumers aren’t just eating more organic, they’re also using more organic products in their wardrobes, their bedrooms and bathrooms and throughout their homes.

Sales of non-food organic products increased by nearly 9 percent to $3.9 billion. Organic fiber, supplements and personal care products accounted for the bulk of those sales. Adequate supplies of organic textiles are a continuing challenge in the organic fiber market. However, U.S. organic cotton farmers produced a record 17,000-plus bales in 2016, which should help alleviate some supply concerns.

OTA says a growing desire for transparency, clean ingredients and plant-based products is spurring sales of organic supplements and personal care products.

Challenges to maintain momentum

“Organic products of all sorts are now found in the majority of kitchens and households across our country,” says Batcha. “But the organic sector is facing challenges to continue its growth. We need more organic farmers in this country to meet our growing organic demand, and the organic sector needs to have the necessary tools to grow and compete on a level playing field. That means federal, state and local programs that help support organic research, and provide the organic farmer with a fully equipped tool kit to be successful.”

OTA’s 2017 Organic Industry Survey was conducted and produced on behalf of OTA by Nutrition Business Journal (NBJ). The survey was conducted from Feb.  2-March 31, 2017. More than 200 companies responded to the survey.

About the author

Lorrie Griffith

An observer of the grocery industry since 1988. Away from her editor job, she's a wife and mother of two grown sons and thinks cooking is (usually) relaxing.

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