Organic Food: Coronavirus and the Future

March 2021

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.

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This report comes in PPT.

Key Findings

Organic food sales grew in 2020 despite the economic crisis

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 and food safety are important drivers of growth for organic products

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.

Consumers seek organic food for helping the environment, but also the local community

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.

Affordability still a challenge, although weakened by market maturity and changes in consumer priorities

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.

Higher future growth expected in developing markets

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.

Key findings
Organic packaged food sales grew in 2020 despite the economic crisis
Health, sustainability and new priorities drive organic food sales
COVID-19 has made preventative health a priority for many consumers
Organic products are sought for reassurance on food safety
Focus on food safety favours baby food , the door opener for organic
Organic labels make indulgent products more permissible
Organic food grows based on environmental and local economy concerns
Animal welfare reinforces organic food growth
Affordability is still a challenge for organic , especially for some categories
Companies use organic claims as a means for premiumisation
However , as markets mature organic food price gap tends to decline
Expansion of private label makes organic food markets more competitive
Organic has also benefited from changes in consumer priorities
The US leads in terms of size , but China is expected to grow fast in future
European markets receive regulatory push and Yili scales up organic dairy
Organic is top of mind in countries with an emerging organic trend
E- commerce is the channel to look out for in organic packaged food
Key takeaways: opportunities and challenges for organic food

Packaged Food

In packaged food we consider two aspects of food sales: 1) Retail sales. 2) Foodservice. Retail sales is defined as sales through establishments primarily engaged in the sale of fresh, packaged and prepared foods for home preparation and consumption. This excludes hotels, restaurant, cafés, duty free sales and institutional sales (canteens, prisons/jails, hospitals, army, etc). Our retail definition EXCLUDES the purchase of food products from foodservice outlets for consumption off-premises, eg impulse confectionery bought from counters of cafés/bars. This falls under foodservice sales. For foodservice, we capture all sales to foodservice outlets, regardless of whether the products are eventually consumed on-premise or off-premise. Foodservice sales is defined as sales to consumer foodservice outlets that serve the general public in a non-captive environment. Outlets include cafés/bars, FSR (full-service restaurants), fast food, 100% home delivery/takeaway, self-service cafeterias and street stalls/kiosks. Sales to semicaptive foodservice outlets are also included. This describes outlets located in leisure, travel and retail environments. 1) Retail refers to units located in retail outlets such as department stores, shopping malls, shopping centres, super/hypermarkets etc. 2) Leisure refers to units located in leisure establishments such as museums, health clubs, cinemas, theatres, theme parks and sports stadiums. 3) Travel refers to units located in based in airports, rail stations, coach stations, motorway service stations offering gas facilities etc. Beyond the scope of the foodservice research are captive foodservice units that serve captive populations around institutions such as hospitals, schools, and prisons. This is also known as institutional sales.

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