Abstract
- Is it a sign of the times when organic candy bars are found on sale in a
prominent counter display at the U.S. House of Representatives snack bar?
- What market pressures are bearing down when supermarket buyers are telling
farmers that they will be left behind if they haven' t converted to organic
within three years?
- Major organic ingredient suppliers don' t want to discuss any contracts of
less than three years; business is too good and supply still too tight to
consider anything less.
- Supermarket chains are competing on a significant scale with Whole Foods,
the leading natural foods supermarket chain.
- Competition is heating up and the number of organic product introductions
is at an all time high.
- The market for organic products is exploding and yet some cautions still
apply; not all categories are mega opportunities.
- Entrepreneurs, as well as leading brands, are questioning how to enter the
organic arena in a meaningful way - should they enter under their icon brand
or create a new sub-brand?
- What are the real risks and potential R.O.I.?
- Is the household penetration of organic products really growing?
- How are consumers' attitudes changing toward the category?
These are just a few of the market conditions and questions the Natural
Marketing Institute (NMI) considered as we undertook this study and report.
The 2007 Organic Consumer Trends Report (OCTR) presents new and additional
data that provide a plethora of insight into organic consumers, their healthy
lifestyles, and marketplace opportunities. At the time of this writing, the
House of Representatives' version of the 2007 Farm Bill (HR2419) just passed
by a vote of 231 to 191 with significant appropriations for the organic
industry that will now be reviewed in the U.S. Senate. The future is brighter
with the likely possibility of increased organic transition support, research
grants, and certification cost share, plus crop insurance program improvements
and expanded USDA organic data collection.
NMI is pleased to present the fourth edition of the Organic Consumer Trends
Report, a bi-annual publication. The data compiled in the 2007 OCTR is taken
from several NMI proprietary research vehicles including the Health and
Wellness Trends Database, the LOHAS Consumer Trends Database (Lifestyles Of
Health And Sustainability), The Evolution of Personal Care Study, HealthBeat
Interactive and our Product Attribute Trend Identifier service, along with
qualitative insights from NMI in-depth interviews. These databases contain
over ten years of information across more than 40,000 consumers.
The primary objective of our report this year is to take a look at the future.
We examined information across several sources including general market
trends, scientific advances, government initiatives, supply issues, consumer
insights, new product introductions and claims across each category within the
organic marketplace. This in-depth analysis gave us a picture for the future
which we present in our NMI predictions in Chapter One. What is the size of
the opportunity and sustainability of each organic category?
NMI undertook several new surveys over the past two years since our last
publication of this report, and we specifically targeted our proprietary
organic consumer segments - DEVOTEDS™, TEMPERATES™,
DABBLERS™, and RELUCTANTS™ - to provide a custom analysis to
marketers that can be used in the planning of new product/category
opportunities, brand extensions, communication strategies, and overall
marketing strategies. From the look at the future in Chapter One and new
segment biographies in Chapter Two, to understanding their pathways and
barriers in Chapter Four, the research is rich and opportunistic. Understand
the Wal-Mart and Target effect in Chapter Three and note the interest of the
early adopting, loyal organic segments in many other "healthy" ingredients and
claims. Finally, don' t miss the focus on organic categories in Chapter Seven.
We' re confident that you' ll find much "food for thought" here as you consider
how these trends will affect your business over the next few years.
New to this edition, NMI provides details on new organic product introductions
on a U.S. and global basis. We are covering introductions by U.S. and global
region in Chapter One, by health claims in Chapter Five, and by category in
Chapter Seven. We believe assessing the past five year trends in new product
introductions along with the consumer insights will give you a clearer picture
of the marketplace and where it' s headed.
As consumers seek a "deeper values experience," their relationships with
brands and retailers have become integral to success. Consumers want to know
what brands and retailers are doing to protect the environment and their
health, and they are seeking more information than ever before. As always, we
took an intensive dive into organic consumers. By adding over forty new
organic measures to our surveys this past year, the insight is deep and
rewarding. Those new measures, along with over 200 more, were used in all new
factor and cluster analysis, grouping the general population into four
distinct groups that have varying attitudes and emotions toward organic
products and brands. This market adjustment analysis confirmed two segments,
DEVOTEDS and TEMPERATES who are the most integrated and loyal organic
consumers. One hundred percent of the consumers within these two segments use
organic products and marketers must have their buy-in to be successful in the
marketplace. Together, they represent over three-fourths of all organic
spending! And yet, they are vastly different, with different motivations,
needs and beliefs. And while TEMPERATES, the larger of the two, appears to be
a good mainstream target, marketers must address their product desires and
structure communications at their level of understanding.
The remaining segments, DABBLERS and RELUCTANTS, are less integrated, with
only 36% and 21% of them, respectively, having used any organic product in the
past year. As expected, their attitudes vary, with DABBLERS exploring and
RELUCTANTS just not believing. There is opportunity to grow DABBLERS into
TEMPERATES and TEMPERATES into DEVOTEDS. Doing so will take a keen
understanding and faithful application of the learning provided herein.
The overall household penetration of organic products is 57%, up only slightly
from last year. While greater penetration was expected, we know from
one-on-one interviews and quantitative work within this study that many
consumers don' t recognize the organic label, especially within portable
products such as fresh juices and nutrition bars. Some consumers of these
products simply purchase on taste and convenience and have no recognition that
the product is organic. What we can see is that DEVOTEDS and TEMPERATES are
using more organic categories and are using with increasing frequency.
Increased selection and availability have driven increased frequency of usage
and 20%+ sales increases over the past year. And it is frequency that could be
key to increased sales in the future. There is room for significant growth in
frequency even among DEVOTEDS, the most integrated consumer segment. There
will be expansion of emerging categories such as clothing, linens, lawn and
garden as well as continued growth of new personal care and food and beverage
products from which to choose. The future is bright for those marketers who
speak the language of organic correctly, and connect their brands on an
emotional level with Integrated Organic Users.
The most comprehensive report of its kind, the OCTR seeks to assist marketers
and retailers in understanding the interrelationship between general drivers
of health and wellness, including health and medical conditions and the
specific drivers of organic usage. Examined within this report is the
intersection of lifestyle, beliefs and attitudes, shopping patterns, product
usage and brand purchase patterns, with marketplace influences such as new
product introductions, supply, and politics. Every page offers unique insight
with the presentation of charts, graphs, or tables, accompanied by analysis
and commentary on associated market elements and key opportunities. The 2007
OCTR is an essential tool for opportunity analysis, new product development,
communications development, and overall strategic planning, as it seeks to
analyze the many marketplace changes across organic.
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