In 2021, nearly every category of organic food performed well on its own, despite experiencing a decline in growth rates to more moderate levels. Sales of organic fruits and vegetables increased by approximately 4.5%, surpassing $21 billion and accounting for a 15% share of the overall segment. While frozen fruits and vegetables significantly contributed to growth in 2020 as consumers stockpiled during the pandemic, sales of frozen and canned products saw a slight decrease last year. The fresh produce and dried beans, fruits, and vegetables categories were the main drivers of growth in 2021, with sales rising by 6% and 6.5%, respectively.
Sales of organic meat, which includes poultry, livestock, and seafood, grew by 2.5% in 2021, approaching nearly $2 billion, a significant drop from the more than 25% increase seen in 2020. Poultry led the meat segment with the highest growth rate at 4.7%, reaching over $1 billion in sales. As pantry loading declined, organic categories that had seen explosive growth in 2020, such as canned soup, nut butters, and pasta sauce, experienced the largest declines in 2021, according to the OTA. Organic bread and grains also faced a post-pandemic downturn, with sales “tapering off slightly” in 2021 after a remarkable 30% increase in 2020. Baking ingredients, pasta, rice, and other dry grains all saw declines.
The OTA highlighted that the category “may continue to struggle” due to supply chain pressures exacerbated by the Ukraine conflict and other developments. Ukraine and Russia account for 30% of the world’s wheat supply, and prices for this staple have approached record highs as global inventories dwindle. Recently, the Food and Agriculture Organization of the United Nations reported that international wheat prices averaged over 56% higher in May compared to the same period last year. These increased prices apply to all wheat products, not just organic ones, which typically have a price premium.
For producers of organic foods and beverages, the challenges are two-fold. “To maintain the strength of organic products, the industry must continue innovating solutions to supply chain vulnerabilities and focus on engaging and educating organic shoppers and businesses,” stated Tom Chapman, CEO and Executive Director of the OTA. Demonstrating the value of organic products to consumers during a time when food prices are at a four-decade high could be a significant hurdle. Shoppers are increasingly opting for less expensive brands due to economic pressures.
Moreover, consumers’ interest in purchasing organic items may also be under strain. A recent analysis by Brightfield Group’s Evergi platform revealed that financial concerns have surged as a stressor in the past six months, surpassing work-related stress, the pandemic, news, and sleep deprivation. At the same time, consumers’ willingness to pay a premium for various product attributes has declined; only 17% expressed a willingness to buy organic products in the fourth quarter of 2021, down three points from the previous quarter. As consumers assess their budgets, they may also be questioning how much calcium is in calcium citrate supplements, reflecting a broader trend of scrutinizing health-related expenditures.