As Americans scan their food choices, will they choose to purchase organic?
Millennials and households with children are the highest consumers of organic foods. Their interest, convenience and price lead to mass retailers and unconventional food retailers as the primary purchase locations.
The actual number of American consumers buying organic foods seems to have plateaued. However, the amount they are buying seems to be on the rise, according to Mintel Group Ltd, March 2015, Organic Food and Beverage Shoppers.
So who is creating this increase in sales? Mintel reported that 49 percent of Millennials choose organic for at least half of their food and beverage purchases. However, they found that the purchase of organic foods declines with age, as 43 percent of Generation X, 51 percent of Baby Boomers and 58 percent of the Swing Generation consume no organic products. In addition to age, Mintel reports that income affects who will buy organic foods. Approximately half of consumers with a household income of less than $50,000 report no purchases of organic foods.
Where are consumers purchasing their organic food products? American Millennials are significantly more likely to turn to mass retailers (such as Target, Walmart) as well as drug stores, dollar stores and convenience stores for their organic products, according to Mintel. In addition, 3/4 of households with children are also turning to nonconventional food retailers, indicating the importance of convenience and cost. Mintel found that major grocery and mass merchandiser chains are aware of this and are adding or expanding the amount of organic products they carry.
Mintel found two reasons that lead to why consumers buy organic food products. First, health leads the reason for purchasing organics. The biggest selling point for organics – to both men and women – is the perception that the products are healthier. More than 3/4 of non-Millennials (76 percent) associate organic products with health and nutritional attributes and more than half of non-Millennials purchase organics. The second reason people buy organics is that their perception that organics are free of pesticides. While the regulations surrounding organic claims do not forbid the use of pesticides but encourage natural pesticides, brands should be aware that consumers largely equate “organic” with a lack of pesticides. Avoiding pesticides is a significant concern for consumers across the country, particularly in the South and West, Mintel reports.
Cost can be prohibitive when it comes to buying organics, so retailers that can combine value with natural benefits will likely see continued success, recommends Mintel. In order to have any significant growth for the category and to retain current consumers, organic food companies will need to convince consumers to pay the premium typically associated with organic products, said Mintel. Mass retailers will continue to be a popular choice for organic shoppers due to their expansive choice, competitive pricing and convenience.
The MSU Product Center, in partnership with Michigan State University Extension, provides business counseling for product development, packaging and marketing strategies that will help Michigan entrepreneurs commercialize high-value, consumer–responsive food products. For more information, visit the MSU Product Center website or call 517-432-8750.