Consumers loyally stuck with organic food despite inflation in 2023, and sales rose by a steady 3.5 percent, nearly the same as the grocery industry overall, said a report released by the Organic Trade Association on Tuesday. As recently as 2020, organic sales soared by 12.7 percent, but the pace slowed abruptly after the pandemic.
“Although the era of easy expansion might be behind us, we still have plenty of opportunity to grow,” said Tom Chapman, who shares OTA chief executive duties with Matt Dillon. At another point, Chapman said organic “was now a maturing sector” in the food market.
“In the face of inflation and considering organic is already seen as a premium category, the current growth is a step in the right direction and indicates that consumers continue to choose organic amidst economic challenges and price increases,” he said.
Sales of organic food totaled $63.8 billion last year, compared to $61.7 billion in 2022. Sales of non-food organic products were $5.9 billion, so total sales of certified organic products reached $69.7 billion in 2023, the highest tally ever. The organic sales report was produced by Nutrition Business Journal.
Organic food sales were up mainly because of higher prices in 2023, although the OTA said unit sales increased for 40 percent of the food products that were tracked for the annual report. Prices for conventionally grown foods also increased in 2023. The trade group said the price gap between organic and conventional food was narrowing, “which should help fuel growth for organic products in 2024.”
Produce is the largest sales category, accounting for 29 percent of organic food sales, and serving as “the primary entry point for consumers into the organic market,” said the report. Fifteen percent of produce sold in the grocery store is organic, with avocados, berries, apples, and carrots among the top sellers.
The so-called grocery category, which includes bakery goods, dry cereal, and baby formula and food, was the second-largest category at 22 percent, followed by beverages at 13 percent, and dairy and eggs at 12 percent. Organic dairy alternative products were growing rapidly in sales.
Organic’s share of the grocery market was 4.4 percent in 2023, roughly the same as in the previous four years. Research indicates “a consistent and growing interest in organic from Millennials and Gen Z” because of an interest in sustainable food production, said the report.
“Continuing to meet the needs of these younger, up and coming generations will be critical in continuing to elevate organic in the marketplace,” said Dillon, the OTA co-CEO.
However, the OTA said there was a risk of consumer confusion with the proliferation of labels, such as “regenerative,” to describe food produced with attention to soil health and biodiversity. “No other eco-certification is government regulated,” said the OTA in calling attention to the USDA Organic seal.
The OTA report can be read here.