It is also important to remember that the economy is cyclical. The current
downturn is indeed severe, and its impact is not to be underestimated, but growth
will return, in organic and in the economy at large. The trends underlying the
growth of organic are deep and strong in nature, driven by macro changes in consumer concerns regarding health, safety, family, personal well-being and the well-being of the earth. Trends based on consumer beliefs of this depth are not fads,
nor will they dissipate when economic cycles swing from boom to bust.
The key to success for organic companies is to understand the true nature of
the current consumer economy, to build the company’s resilience and strength to
persevere amid the downturn and to thrive by providing true lasting value to
consumers.
These days there are no “spare dollars” in the consumer’s pocketbook. There
is also less room on the retailer shelves for poorer-performing products. Consumers and retailers are separating “must-haves” from the “nice-to-haves” in their
shopping carts and planograms. More
than ever, organic companies need to
embrace and master a new reality;
one of nurturing resources and careful
decision-making.
ganic movement. These trends may
create long-term connections with
food that will last long after the recession is over, encouraging overall
growth in organic.
Another positive trend for organic
companies is the tendency of Americans to give themselves small “rewards”
when bigger sacrifices are being required. The family might need to cancel the trip to Disney World, so instead
they spend the day at the local aquarium. A tough day searching for work
might be ended with a dinner at home
The Current Marketplace
Looking at total U.S. organic sales
data, the growth rate for organic products has slowed dramatically over the
past year, decreasing from more than 25
percent in early 2006 to closer to 5 percent in October 2008. Although, this
growth rate is still higher than conventional consumer goods, many of which
are not growing at all, it’s still a shock to
Figure 1. Source: Consumer Cutbacks in Today’s Soft Economy report. National Research
Network, June 2008.
the organic community.
But the organic industry is not alone. Recent reports and articles have identified the current consumer attitude of frugality and conservation. In November
2008, the Hartman Group and the National Research Network(NRN), leading
market research companies, released new information about consumers and their
purchase behaviors. As shown in Figure 1, Hartman and NRN found that consumers are demonstrating a desire to economize by reducing certain types of purchases, from cutting back on dining out to forgoing coffee house lattes.
As Hartman and NRN have shown, the current consumer mood is to prepare
more food at home. There are two principal reasons for this trend. First, the desire to conserve resources has driven consumers to less-expensive meal solutions.
Also, in times such as these, families tend to move closer to be together for support. The family dinner table is a positive, affirming place for family togetherness
in times of stress.
“Having been in business since 1968, we’ve been through several economic
downturns and I have actually found that times of recession have been good for
business. Families go back to the basics. They prepare meals at home, and when
they do they become more aware of the food they are eating,” said Michael Potter,
president of Eden Foods, the oldest natural foods company in the United States
and manufacturer of a wide range of staples like organic grains, beans and pastas.
Food awareness and going back to the basics are two fundamentals of the or-
featuring organic food and a nice bottle of wine.
The Hartman Group, in its recent
research into changes in consumer behavior, found clear evidence that consumers were giving themselves small,
inexpensive “rewards” as compensation or a “pick-me-up” amid tough circumstances.
According to Hartman, “While consumers may be scaling down or cutting
back on food consumption, in the face
of economic uncertainty, consumers
find some version of small and
‘doable’ indulgences a necessity.”
Organic food may often qualify as
this “doable” indulgence and the fact
that it is healthier for them and the
planet also helps justify the
indulgence.
