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Is ‘Organic’ Just A Marketing Tool?

07/09/2012

The word organic is easily associated with foods that are simple, pure and small, independent producers.

Turns out that over the past few years organic foods have morphed into one of the fastest=growing, highest-margin segments of the food industry. According to the New York Times, “The fact is, organic food has become a wildly lucrative business for Big Food and a premium-price-means-premium-profit section of the grocery store. The industry’s image — contented cows grazing on the green hills of family owned farms — is mostly pure fantasy. Or rather, pure marketing. Big Food, it turns out, has spawned what might be called Big Organic.”

Many organic brands come from the operations of companies such as Kraft, General Mills and Kellogg’s.

Why did “Big Food” jump into the organic game? Higher margins and faster growth. Once smaller producers established value-added attributes to organic, higher prices could be justified. Here are some interesting stats from the Organic Trade Association’s website:

  • U.S. sales of organic food and beverages have grown from $1 billion in 1990 to $26.7 billion in 2010. Sales in 2010 represented 7.7 percent growth over 2009 sales. Experiencing the highest growth in sales during 2010 were organic fruits and vegetables, up 11.8 percent over 2009 sales.
  • Organic non-food sales grew 9.7 percent in 2010, to reach $1.97 billion.
  • Total U.S. organic sales, including food and non-food products, were $28.682 billion in 2010, up 9.7 percent from 2009.
  • Mass market retailers (mainstream supermarkets, club/warehouse stores, and mass merchandisers) in 2010 sold 54 percent of organic food. Natural retailers were next, selling 39 percent of total organic food sales. Other sales occur via export, the Internet, farmers’ markets/ Community Supported Agriculture, mail order, and boutique and specialty stores.

The biggest question for consumers has to be is eating organic healthier? That’s a bigger discussion than can be resolved here. Instead, I’ll offer some clarity of organic terminology:

  • When buying organic, look for the following USDA regulated terms on food labels:
  • “100% organic” — This means the food has no synthetic ingredients and can use the organic seal.
  • “Organic” — This means the food has a minimum of 95% organic ingredients. It can also use the organic seal.
  • “Made with organic ingredients” — This means the food must contain at least 70% organic ingredients. These foods cannot use the seal.
  • Meat, eggs, poultry, and dairy labeled “organic” must come from animals that have never received antibiotics or growth hormones.
  • Standards for organic seafood and cosmetics have not been set.

Websites like WebMD.com have good guidelines for what products you should buy that are organic (berries) and those that are better if conventional (avacados and bananas).

Whatever you do, if you choose to buy mostly organic – hang on to your wallet. They don’t call Whole Foods, “whole paycheck” for nothing.

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