Organic sales hit record as regenerative organic sees growth, investment
Organic growth rates post-COVID have not quite met expectations, Tom Chapman, co-CEO of the Organic Trade Association, said during the Future of Organic webinar hosted by CIRANDA earlier this month.
The organic market has historically oscillated between periods of slow and rapid sales growth, particularly from 2014 to 2023, according to OTA data. However, data shows some promise. In 2023, total sales of certified-organic products rose to a new record of $69.7 billion, a 3.4% increase over the previous year.
Consumers are hesitant to purchase premium organic products due to high inflation rates and because these prices do not match conventional food prices, Chapman noted.
While consumers express a willingness to pay more for organic products, OTA’s survey indicates they do not value them at the necessary premium – which highlights a disconnect between consumer perception and actual costs, he added.
OTA’s survey also indicated that over 70% of consumers trust organic products after the AHA Heart-Check Mark (75%). Regenerative organic-certified is still in its infancy with consumer awareness, with only 34% of consumers saying they trust the certification.
More funding needed for organic agriculture
Federal investment in organic agriculture is nominal compared to US agriculture, Chapman pointed out.
In the 2018 Farm Bill, organic received 0.1% of the $428 billion allocated to agricultural programs, despite organic products seeing a consistent rise in market share. This growth also reflects an evolving shift in consumer preferences towards health-conscious and sustainable food options.
The lack of funding restricts the ability of organic farmers to access resources that could improve productivity, sustainability and market competitiveness, Chapman said.
Further, limited federal funding tacks on barriers for smaller organic producers from growing. These barriers may include higher certification costs and challenges in accessing organic seeds and inputs. Without sufficient funding from the government, farmers struggle to innovate and scale their operations, which impacts availability of organic products downstream, Chapman said.
Regenerative organic-certified products see significant sales growth
Regenerative Organic Certification (ROC) focuses on three pillars: soil health, animal welfare and social equity. The certification promotes continuous improvement and encourages farms to progress through levels of certification – bronze, silver and gold – according to Elizabeth Whitlow, executive director, Regenerative Organic Alliance.
ROC certification continues to gain momentum with over 15 million acres and 210 brands now certified, Whitlow said.
Since last year, ROC saw significant growth from $40 million in sales to $170 million, which excludes other markets like wine, spirits and clothing, she said.
This growth is also attributed to retailers like Whole Foods that are prioritizing products with rigorous certifications, making it essential for food and beverage brands to align with those standards.
Differentiating between regenerative organic and organic requires more industry education
As the market expands between regenerative organic and organic-certified products, concerns about greenwashing are surfacing. The lack of stringent requirements in some regenerative certifications could mislead consumers, Whitlow said.
“Regenerative that does not require organic is a big concern … consumers are going to start reaching for regenerative over organic” thinking it is automatically better, Whitlow cautioned, emphasizing the need for transparent, third-party verification in all claims.
With the rise of litigations around climate claims like carbon-neutral plastic bottles, certifications “are going to continue to represent a really important way for brands to make these claims and substantiate [them],” she added.
