New Market Surveys on Organic Food

USA: MANUFACTURED ORGANIC PRODUCT SALES SHOW STRONG GROWTH
12 October, OTA

Sales of U.S. manufactured organic products grew 38 percent during the past
year, manufacturer members of the Organic Trade Association (OTA) have
reported. This rate far surpasses the estimated 20 to 25 percent annual
growth for the organic market in general and the conventional grocery
industry's annual growth rate of 3 to 5 percent.

Fastest-growing categories between 1999 and 2000 were soyfoods and other
meat/dairy alternatives (215 percent growth), meat and poultry and eggs (64
percent growth), miscellaneous canned and jarred products (51 percent
growth) and dairy (40 percent growth), according to results released today
from OTA's "2001 Manufacturers' Market Survey." The survey projects
continued strong growth in the industry with an overall rate of 38 percent
from 2000 to 2001. Individual projected growth rates for 2000 to 2001 are:
soyfoods and other meat/dairy alternatives (94 percent growth), fiber (53
percent growth), meat and poultry and eggs (59 percent growth),
miscellaneous canned and jarred products (45 percent growth), and dairy (41
percent growth). Manufacturer member companies reported an average annual
growth rate of 36 percent during the past five years.
"This survey reaffirms the strength of organic manufactured products in the
marketplace, and is heartening news," said Katherine DiMatteo, OTA's
executive director.
OTA hired Starr Track, an independent market research firm based in Arcata,
CA, to conduct the survey and analyze the results. Starr Track contacted all
OTA members with branded products sold through retail channels to verify
their eligibility for the survey and to gain their cooperation. The survey
was fielded between March and September 2001. Of the 221 surveys sent out,
156 were returned, for a 71 percent response rate. This is a follow-up to a
1998 survey conducted by Starr Track for OTA. In addition to the categories
covered in the 1998 survey, this latest study included organic fiber
products as well as herbal and food-based supplements and pet food using
organic ingredients.

Besides product category growth, the survey tracked retail outlet
penetration for branded organic products. One of the most dramatic changes,
when compared to the 1998 results, was the shift to mass-market channels. In
the 2001 study, less than half (49 percent) of organic food manufacturers'
products moved through health and natural food stores, down from 62 percent
in 1998. Mass-market groceries, meanwhile, accounted for 45 percent of
organic food product sales in 2001, compared to only 31 percent in the 1998
survey.

The 2001 survey also includes an analysis of barriers to growth mentioned by participants.
Copies of the 86-page Organic Trade Association's 2001 Manufacturers' Market
Survey may be ordered from OTA (phone: 413-774-7511, Ext. 12; fax:
413-774-6432; e-mail: info@ota.com). The price is $50 for OTA members, and
$100 for non-members. Members of the media may request a free copy of the
report's executive summary by contacting the Communications Department at
OTA (413-774-7511, Ext. 11).
The Organic Trade Association, based in Greenfield, MA, is the business
association representing the organic industry in North America. Its more
than 1,200 members include growers, shippers, processors, certifiers,
farmers' associations, distributors, importers, exporters, consultants,
retailers and others. Founded in 1985, OTA encourages global sustainability
by promoting and protecting the growth of diverse organic trade.

___________________________________________________________________________
Spending on Organic Foods Rises As American Consumers
Seek to Balance Health and Nutrition
Needs, According to FMI Study

WASHINGTON, DC — October 18, 2001 — In an effort to achieve
more balanced health and nutrition, a growing number of consumers
are turning to organic products, according to a new white paper from the Food Marketing
Institute (FMI) titled Organic Shoppers May Not Be Who You Think
They Are. The study is based on data contained in FMI’s Trends in the United States:
Consumer Attitudes & the Supermarket, 2001.

The organic industry has grown from an average of $6 billion in
revenue in 1999, to $7.8 billion in 2000, according to the report.

“Supermarkets have seen a steady rise in consumers seeking to
achieve better nutrition and overall health. According to this study, many
consumers see organic products as being the most natural food available in the
stores and thus we have seen a sharp increase in their popularity,” said
Janice Jones, director of research at FMI. “While most used to view organic
shoppers as a small group of individuals who were considered more
nature-conscious and earthy, we see that today’s organic consumers comprise about one-
third of all shoppers and represent nearly half of all grocery shoppers in
stores that carry organic products.”

According to the report, organic and non-organic shoppers both
share and differ in their shopping preferences. However, the key
differences can be seen among organic consumers in:

Organic shoppers rank high-quality fruits and vegetables as the
number one factor in choosing a primary grocery store (90 percent),
whereas non-organic shoppers chose a clean/neat store as their top factor
(88 percent) Organic shoppers earn a high annual income (35 percent make
over $50,000 annually) and spend more money on groceries ($81 on
average per week) Organic shoppers are usually more educated (61 percent have
some college experience and 10 percent have postgraduate degrees)

In addition, organic shoppers are likely to be women who work more
than 20 hours per week (45 percent), and the largest percentage of
these shoppers are between the ages of 25-39 (31percent).

Where Organic Shoppers Shop

Of the 1,000 males and females surveyed for the report, 69 percent
report that their primary store offers natural or organic foods.
Incidentally, when broken
down by region, 77 percent reported more stores in the East carrying
organic products in their primary store. This is followed by 76 percent in
the West, 70 percent in the South, and 58 percent in the Midwest. Suburban and
urban areas also have the highest percentages of natural or organic
foods in their primary store, 76 percent and 73 percent respectively.

“The Pacific Coast, the Northeast and college towns remain the
most fertile markets for sales of organic products, but other regions of
the country are experiencing the fastest rate of growth,” said Jones.

Organic and non-organic shoppers do share similarities in the
planning of their grocery trips. Both classes of shoppers look in the
newspaper for grocery special fairly often (59 percent) or every time they shop (50 percent).
They also use newspaper and magazine circulars and compare prices
at different stores. However, non-organic shoppers (80 percent) are more likely to cite
low prices as a top factor in selecting a supermarket more often than
organic shoppers (72 percent) do. This is perhaps because organic products generally
are higher priced than non-organic products.

Interestingly, organic shoppers remain loyal in their shopping habits,
only visiting an average of 2.5 grocery stores a month. In comparison,
non-organic shoppers visit an average of 3.1 grocery stores in a month.

“Clearly, organic shoppers are much more likely to cite the
availability of, and the broad selection of, organic products to be the
most important factor in selecting their primary supermarket. They also tend to be much
more loyal to one store, indicating that retailers may want to pay
particular attention to this group as it grows.”

Meal Preparation

Perhaps the most significant difference between organic and non-
organic shoppers is the their use of short cuts, such as bagged salads,
pre-cut and cleaned vegetables, or marinated meats. Forty-five percent of organic
shoppers use these short cuts at least once a week, compared with 37
percent of non-organic shoppers.

Although they use short cuts, organic shoppers tend to eat home-
cooked meals more often than non-organic shoppers. In fact, 41
percent of organic shoppers say that they eat home-cooked mails almost every time
they eat, compared with only 30 percent of non-organic shoppers.

Organic shoppers also eat out less often, according to the study.
The largest percentage of organic shoppers (40 percent) eats out at
full-service restaurants only one to three times a month. Only 31 percent eat out one or two
times a week. Most cite the limited availability of menu items prepared
with organic products at most full-service restaurants.

To purchase Organic Shoppers May Not Be Who You Think They
Are ($10 members/ $25 nonmembers) or for more information, please
contact FMI Publication and Video Sales at (202) 452-8444 or visit the FMI
website at www.fmi.org.

FOR MORE INFO:
FMI Media Relations
FMI Research
FMI News Center

Food Marketing Institute (FMI) conducts programs in research,
education, industry relations and public affairs on behalf of its 2,300
member companies - food retailers and wholesalers - in the United States
and around the world. FMI's U.S. members operate approximately
26,000 retail food stores with a combined annual sales volume of $340
billion - three-quarters of all food retail store sales in the United
States. FMI's retail membership is composed of large multi-store chains,
regional firms and independent supermarkets. Its international
membership includes 200 companies from 60 countries.