The financial crisis has hit the organic sector, with growth slowing in the past few months as Americans cut back on discretionary spending.
The market has enjoyed double digit growth of up to 20 percent a year for several years, but research released in the wake of the country’s economic meltdown shows a significant drop. While it was still on the up, the natural and organic sector only managed 4 percent growth in the four weeks to October 4.
“Organics continue to grow and outpace many categories,” the Nielsen Company reported. “However, recent weeks are showing slower growths, possibly a start of an organics growth plateau.”
Experts believe core consumers who regard organic produce as a necessity not a fad will stick by the industry, but those who were merely dipping their tastebuds into the sector may opt out or, at the least, not buy as many organic items as before.
Laurie Demeritt, the president of the Hartman Group, a research company for the health and wellness industry, told The New York Times that those products marketed to children would hold ground because of parental concern for the wellbeing of their offspring, but those targeted at adults may struggle.
The economy has “crystallized the tradeoffs that consumers are willing to make,” she told the newspaper. “Fair trade is nice, but fair trade may fall off the shopping list where organic milk may not.”
The pain is certainly being felt at organic chain store Whole Foods Market, where stocks have plummeted more than 70 percent. Dairy producer Organic Valley has also seen sales slow in the past few months.
Other organic suppliers said they believed that although consumers may turn their backs on bigger luxuries, such as cars and holidays, and eat out less they will treat themselves to better quality produce to cook at home.
It’s not something reflected in recent results for the king of the fast food industry. McDonald’s reported an 11 percent rise in profits, up to $1.19 billion, compared with $1.07 billion the previous year, as penny-pinching sent more people in search of cheap meal deals.
According to a report in the International Herald Tribune, store sales increased 7.1 percent globally during the quarter, with an investment strategist saying the company was benefiting from “consumers not spending as much money on discretionary food purchases”.
