The global demand for organic foods and beverages has been steadily increasing over the last decade, writes Chris Harris.
Growing awareness regarding health benefits as well as the adverse effects of pesticide residues have been the key factors behind this growth of the market as well as an awareness of food safety and animal welfare issues and an increasing use of natural products.
The organic consumer is turning to these products because of the confidence that organic food production emphasises the conservation of water and soil and well as meeting environment concerns, using reusable resources and limiting the use of harmful pesticides and chemicals in food.
Thanks to the surge in the market, organic farmland and production has doubled in the last five years.
Government funding and involvement of private limited companies in the organic food market is also expected to fuel the growth of this sector.
Being the second largest economy in the world, the US market provides sizeable opportunities for expansion of the organic food industry.
Foods are grown on small, family-run farms, and in order to conserve the soil and water so as to ensure environmental quality for future generations, the sale of these goods is limited to small grocery stores and farmers markets.
The global organic food market is also growing thanks to rising consumer awareness about organic food benefits and increasing numbers of retailers providing a variety of organic products as well as the implementation of government regulations.
The global organic food market is expected to grow from $57.5 billion in 2010 to $104.7 billion in 2015 at an estimated Compound Annual Growth Rate (CAGR) of 12.9 per cent, according to Transparency Market Research.
Economies such as North America are expected to see growth in the organic market at a CAGR of 12 per cent from 2010 to 2015 while Europe has the largest market share with revenue of $28 billion.
The rest of the world, which includes Latin America, Australasia and other countries are expected to grow their organic markets at the highest CAGR of 16.5 per cent.
However, demand for organic foods is concentrated in countries where consumers have high purchasing power such as Japan and South Korea.
As an example, the South Korean market is witnessing strong organic dairy products’ demand due to increase in standard of living, spending power and awareness among people and the market is expected to grow robustly from 2011 to 2017.
The South Korean organic dairy market is predicted to reach $418.6 million by 2017.
Consumers in South Korea are increasingly willing to purchase organic dairy products as they become more aware of the importance of healthy eating and organic dairy products such as milk, yoghurt, cheese and many more are gaining popularity because of the health benefits they offer.
The buyers of these products include educated consumers and conventional shoppers and consumers are prepared to pay premium prices for organic dairy products as demand exceeds supply in the South Korean market.
To put the growth of the South Korean market into context, the global organic dairy foods market, including milk, yoghurt, cheese, butter and ice-cream, accounted for 19 per cent of the total worldwide dairy market, and amounted to sales of around $9.357 million in 2011.
It is further expected to grow at a CAGR of 9.1 per cent from 2011 to 2017.
Over the last five years, the global organic dairy market has remained stable mainly because of the low shelf premium and strong market penetration especially in yogurt and milk.
In addition, brand developments and continuous marketing investment from key market players have contributed to stable sales.
Organic dairy industry is also witnessing new markets in developing economies such as China and India.
China and India have the advantage of having large organic farmlands, which makes them potential markets for organic dairy industry in the future.
The market is dominated by the US and Europe, which together accounted for 93.1 per cent of the global organic dairy demand in 2011.
The US and Europe organic dairy sector continues to show steady growth, growing overall by 8.2 per cent and 7.9 per cent respectively during 2012.
Consumers in the age group from 38 to 45 years are primary consumers of organic dairy products and also are more concerned about food safety and pesticide / chemical residues in food products.
Consumers purchase organic dairy food and drinks products primarily because of food safety and health concerns.
Elderly consumers in the age group of 46 to 65 years give top priority to healthy and safe eating.
On a more general level, while the global organic food market is growing in the developed nations and particularly the organic dairy market, high prices and lack of information on availability of products, an undeveloped infrastructure and logistics and problems over dealing with certification in emerging economies are the factors restraining the market from growing in these regions.
But, developing the organic value chain, success in product innovation, focusing especially on product quality and packaging, as well as increasing earning capacity and concerns for overall health and development in the retail sector are helping the organic market to grow significantly in the developed regions.
However, key companies such as Earth’s Best, Amy’s Kitchen, Green and Blacks, 365 Everyday Value/Whole Foods and Organic Valley are now being forced to analyse the changing consumer tastes and eating habits and also the changing global economic situation to maintain their market place.
This is now resulting in diverse consumption patterns and new legislative guidelines.
(Source – http://www.blackseagrain.net/novosti/organic-market-growth-forecast-to-continue)