Organic food has grown in 2020 despite its premium price points, amid the worst global economic crisis in decades. The briefing explores the reasons for this expansion, including the focus on health and food safety, the importance of sustainability and animal welfare, the change in consumer priorities in terms of expenditure, and the competitiveness brought by the maturity of the market and the development of private label. The briefing ends with a look into the future of the category.
Although typically organic products have higher prices than non-organic and the world GDP decline was the biggest in decades, organic food sales grew in 2020. The growth rate of organic packaged food was the highest among all health and wellness categories.
Health became a primary concern amidst the COVID-19 pandemic. Organic foods are viewed as a less harmful alternative to conventional products because they are GMO-free and they have lower pesticide and antibiotic exposure. On the other hand, organic certifications serve as a seal of quality, transparency and confidence. This trend is even more important for parents of young children.
Many consumers seek organic food for environmental concerns and animal welfare reasons. However, sustainability currently involves not only the impact on the environment, but also on the community. Hence, local producers of organic food have benefited.
Premium price points of organic food depend on the category and the maturity of the market. Increasing competition and entrance of private label in categories reduce the difference with non-organic products. On the other hand, savings by consumers in terms of travel, foodservice, entertainment and apparel have relieved the budgets of consumers, who may assign part of those resources to organic food.
Countries with mature markets, such as the US, France, Germany and the UK, show attractive market sizes, but do not promise high growth rates. Stronger expansion is expected in developing countries such as China and Turkey, pushed by factors such as food safety and a growing middle class.
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