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Organic Product Consumer Base Holds Steady; Volume Shifting to Mass Market Retailers


News provided by

TABS Group, Inc.

Jan 12, 2011, 10:14 ET

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SHELTON, Conn., Jan. 12, 2011 /PRNewswire/ -- For the third straight year, the percentage of US consumers purchasing Organic products has held steady in the 38-39% range, reports Shelton, CT-based marketing research and consulting company, TABS Group, Inc. (www.tabsgroup.com). While there has been no growth in the buyer count of Organic products since last year, there was a considerable shift in outlet patterns towards Mass Market and away from Natural Foods.

"We still see many fallacious reports that the number of consumers purchasing Organic products is growing; our research does not support that conclusion. The annual incidence of these products has gone from 38.4% to 38.0% to 38.6% from 2008, 2009 and 2010, respectively," stated TABS Group, Inc. President and Founder, Dr. Kurt Jetta. "What is very interesting, however, is that there were big shifts in the Outlet where consumers report that they purchase these products most often. The big winners were Traditional Grocers (41.0% to 44.1%) and Target (1.8% to 4.1%), while the losers were Wal-Mart (18.6% to 12.4%), Trader Joe's (11.5% to 10.7%) and Other Natural Foods (6.2% to 4.6%). Total Natural Foods fell from being the most preferred outlet by 26.8% in 2009 to 24.4% in January 2011, a 9% drop."

This was the first year that Organic Chicken and Red Meat were included in the survey, and the reported purchase rates were 13.4% and 6.4%, respectively. The inclusion of these two categories had only a modest impact on over Organic penetration, pushing the incidence from 38.6% to 39.8%. Stated another way, less than 10% of the Organic Meat users were incremental to the Organic product sector.

"When we see a consistent penetration over three years combined with the fact that adding more categories does not increase that penetration, we conclude that there is a well-entrenched consumer base for Organics. There is little hope of increasing that base any time soon," claimed Dr. Jetta. "Any growth in Organics from one outlet must, therefore, necessarily come at the expense of another channel."

Fresh Fruits continues to be the highest penetration category for Organics with 27% of consumers. This is followed by Fresh Vegetables (26%), Eggs (17%), Milk (16%), Chicken (13%), Skincare (7%), Red Meat (6%), Frozen Vegetables (6%), Haircare (5%), Frozen Fruit (4%), Ice Cream (4%), and Cosmetics (3%). Skincare and Haircare are the only two categories that registered consecutive years of annual gains, while Milk and Ice Cream showed declines in consecutive years.

While Organic products showed growth in Traditional Grocers, likely due to major increases in Organic SKU counts, Dr. Jetta still expressed skepticism that the category warranted major shelf space and investment by these outlets. "I am concerned that Grocers will be unduly encouraged by these numbers. It takes 20 times more outlets (1900%) to establish an 80% sales advantage, so I still don't see where the economics make sense for a major investment in the category for Supermarkets."

"By contrast, if I were a Natural Foods store owner, I would expect that mainstream Grocers will continue to expand Organic offerings and support, and I would be quite concerned at this competitive threat. Natural Foods retailers - particularly the small independents - need to consider whether they are taking these consumers for granted. Organic Foods consumers are the lifeblood of the Natural Foods channel."

About TABS Group, Inc. and the Organic Product Research

The Organic Product study was conducted among 1,000 representative respondents aged 18-75 in the TNS panel. The study was fielded from January 5-7, 2011, and it replicated a study that was completed in November 2008. TABS Group, Inc. is a leading provider of research and consulting services to the consumer products industry. TABS Group, Inc. (www.tabsgroup.com), based in Shelton, CT, has been in business since 1998.

Available Topic Expert(s): For information on the listed expert(s), click appropriate link.

Kurt Jetta

https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=94839

SOURCE TABS Group, Inc.

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