Whole Foods Market, a showcase for the natural and organic industries, is struggling through the toughest stretch in its history. And the organic industry is starting to show signs that a decadelong sales boom may be ending.
The New York Times
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As shoppers cut back on expenses, chains like Whole Foods suffer.
Once upon a time, sales of organic and natural products were growing in double digits most years. Enthusiastic grocers and venture capitalists prowled the halls of trade shows looking for the next big thing. Grass-fed beef? Organic baby food? Gluten-free energy bars?
But now, shaky consumer spending is dampening the mood. It turns out that when times are tough, consumers may be less interested in what type of feed a cow ate before it was chopped up for dinner or whether carrots were grown without chemical fertilizers, particularly if those products cost twice as much as the conventional stuff.
Whole Foods Market, a showcase for the natural and organic industries, is struggling through the toughest stretch in its history. And the organic industry is starting to show signs that a decadelong sales boom may be ending.
The sales volume of organic products, which had been growing at 20 percent a year in recent years, slowed to a much lower growth rate in the past few months, according to Nielsen, a market-research firm. For the four weeks that ended Oct. 4, the volume of organic products sold rose just 4 percent compared with the same period a year earlier.
"Organics continue to grow and outpace many categories," Nielsen concluded in an October report. "However, recent weeks are showing slower growths, possibly a start of an organics growth plateau."
If the slowdown continues, it could have broad implications beyond the organic industry, whose success spawned a growing number of products with values-based marketing claims, from fair-trade coffee to hormone-free beef to humanely raised chickens. Nearly all command a premium price.
Still a priority for some
While a group of core customers considers organic or locally produced products a top priority, the growth of recent years was driven by a far larger group of less-committed customers. The weak economy is prompting many of them to choose which marketing claim, if any, is important to them.
Among organic products, those marketed to children will probably continue to thrive because they appeal to parents' concerns about health, said Laurie Demeritt, president and chief operating officer of the Hartman Group, a market-research firm for the health and wellness industry. But products that do not have as much perceived benefit, such as processed foods for adults, may struggle.
The economy has "crystallized the trade-offs that consumers are willing to make," she said. "Fair trade is nice, but fair trade may fall off the shopping list where organic milk may not."
Thomas Blischok, president of consulting and innovation for Information Resources, a market-research firm, said shoppers are not moving entirely away from organic products at the grocery. But they are becoming more selective, buying four or five products instead of seven or eight, he said.
Blischok surveyed 1,000 consumers in the first half of the year and found that nearly two-thirds said they were cutting back on nonessential groceries and nearly half said they were buying fewer organic products because they were too expensive. ...more
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