Organic products are one of the last places consumers say they are willing to trade down to fight food inflation, according to surveys from the Nutrition Business Journal.
That’s welcome news for Ciranda, a leading organic ingredient supplier based in Hudson, Wisconsin.
“What’s cool about the natural and organic shopper is that if they value that, they’ll prioritize it over other ways to adjust spending because they realize how important it is,” said Tonya Lofgren, marketing manager at Ciranda.
Still, organic has pushed far enough into the mainstream that it follows overall trends in the food industry — namely, higher prices and lower volumes.
“We are seeing consumers rationalizing their spending decisions,” said Doug Audette, Ciranda’s recently hired CEO. “Overall that has tempered the growth in organic. But we see no letting up in the long-term growth of organic, sustainable and fair-trade ingredients.”
Organic food sales declined for the first time in decades in 2021 on an inflation-adjusted basis, according to data compiled by the U.S. Department of Agriculture. Pandemic pantry-stocking — and a sudden focus on healthy foods — had pushed sales to record heights in 2020.
“More than 15 million new customers entered the organic and natural foods market between early March and mid-April 2020,” the USDA said in an organic market report issued in March.
But whether those new shoppers are sticking around remains to be seen.
Early sales data for 2022 show organic fruits and vegetables growing revenue but declining in sale volumes, according to Organic Produce Network. That’s a common theme across the food industry as consumers pay more for less in the face of heavy inflation.
Total organic food and beverage sales for 2022 should show a return to the steady pre-pandemic growth the industry long enjoyed, according to Nutrition Business Journal estimates shared at New Products Expo West in March.
“The food industry really is making a shift to that being more top-of-mind as they’re creating and launching new products,” Audette said. “We’re always keeping an eye on what’s coming next,” which includes a greater focus on regenerative agriculture.
Ciranda, which imports organic and fair-trade ingredients like cocoa and palm oil, has seen an average of 10% annual growth in volume and revenue since becoming employee-owned in 2017.
Lofgren said the consumer focus on health and wellness that grew during the pandemic is here to stay and will continue to show up in new products.
“As you find more functional or Ayurvedic ingredients, things people see as healing — you need a vehicle for those,” she said. “Which is why we see ashwagandha added to a bar or in a supplement.”
A quarter of consumers surveyed by the Nutrition Business Journal over the past year said they’re unlikely to stop buying organic produce, packaged food and meat to save money on groceries. Fewer than half of respondents said they are likely to cut those products out.
The USDA says “a typical organic food consumer is difficult to pinpoint, with organic consumers coming from all types of consumer demographics.”
“Organic consumers are diverse in terms of race, ethnicity, education, and income, though millennials purchase organic food at larger rates than other generations,” the USDA’s March report found. “Households with children are also more likely to purchase organic food than households without children.”
