Study: Organic sector stays on upward climb, posts new records in U.S. sales
Organic sales in the United States totaled around $47 billion in 2016, reflecting new sales of almost $3.7 billion from the previous year.
The robust American organic sector stayed on its upward trajectory in 2016, gaining new market share and shattering records, as consumers across the United States ate and used more organic products than ever before, according to the 2017 Organic Industry Survey, conducted by the Organic Trade Association, Washington, D.C.
Organic sales in the United States totaled around $47 billion in 2016, reflecting new sales of almost $3.7 billion from the previous year. 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% of total food sales in this country, another significant first for organic.
Organic food sales increased by 8.4%, or $3.3 billion, from the previous year, blowing past the stagnant 0.6% growth rate in the overall food market. Sales of organic non-food products were up 8.8% in 2016, also surpassing the overall non-food growth rate of 0.8%.
The survey also showed that organic is creating jobs. More than 60% of all organic businesses with more than 5 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 check-out counter," says Laura Batcha, executive director and CEO. "Organic farmers are not just staying in business, they're often expanding. Organic handling, manufacturing and processing facilities are being opened, enlarged and re-tooled. 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 almost 40% of all organic food sales. Posting an 8.4% growth rate, almost triple the 3.3% growth pace of total fruit and vegetable sales, organic fruits and vegetables now make up almost 15% of the produce that Americans eat.
Produce has traditionally been the entry category for consumers new to organic, in large part because the benefits of organic are probably the easiest to understand. Across all organic food categories, shoppers are placing high value on freshness and convenience. In produce, grab-and-go salads and ready-to-eat veggies (fresh or frozen) were top sellers.
In recent years, consumers have sought clean products abundant in protein, and sales of organic protein-rich meat and poultry shot up by more than 17% 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. Growing awareness of organics more encompassing benefits over natural, grass-fed or hormone-free meats and poultry is also spurring consumer interest in organic meat and poultry aisles.
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 nonetheless. Organic dips, for one, posted stellar growth in 2016 of a whopping 41% with $57 million in sales. And, sales of organic spices swelled by a 35% to $193 million.
Challenges to maintaining the organic 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 through March 31. More than 200 companies responded to the survey. Executive summaries of the survey are available upon request.