Will Organic Products Take A Dive Along With Economy?

by | Nov 6, 2008

whole_foods_organic_products.jpgAccording to Nielsen, sales volume of organic and natural products were recently growing at 20 percent a year. But as the economy declines, it seems consumers are bypassing organics, which typically cost twice as much as the conventional stuff, New York Times reports.

For the four-week period that ended Oct. 4, Nielsen Company reported that organic product’s sales volume rose only four percent compared with the same period last year. In addition, a survey of 1,000 consumers conducted by Information Resources earlier this year showed that nearly half of respondents said they were purchasing fewer organic products because they were too expensive.

Marketing Daily reported that Whole Foods Market’s fiscal fourth quarter identical-store sales fell 0.5 percent, compared to a 6 percent increase in the same period a year ago. Although the food retailer’s total sales increased 13 percent during its fourth quarter, its comparable-store sales gained just 0.4 percent, compared to an 8.2 percent increase last year.

At a recent Natural Products Expo, some vendors said Whole Foods Market’s woes should not be viewed as a proxy for the whole industry. These vendors say Whole Foods Market faces an array of problems including increased competition from traditional grocers.

Despite all the gloom looming over organic products, Laurie Demeritt, president and COO of Hartman Group, told New York Times that organic products marketed to children are likely to thrive because they appeal to parents’ concerns about health. The downside is organic products that do not have as much perceived benefit may struggle.

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