• by Karl Greenberg , November 7, 2008

Brand consultancy Mintel of Chicago sees the specialty market for pesticide-free, un-radiated and generally untainted food items suffering as much as the market for glowing apples and preternaturally well-preserved lettuce.

The company sees rising food and gas prices, the credit crunch and economic uncertainty affecting shopping habits enough to convince even free radicals to consider cheap over ultra-healthy.

While Mintel sees the organic foods and beverage segment reaching $7.2 billion this year--a 140% increase versus 2003--the firm contends that sales growth is slowing.

"Across the board, Americans are spending less and 'organic versus traditional' is a decision many people are thinking about carefully," says Marcia Mogelonsky, senior analyst at the agency.

The twin pincers squeezing the juice out of those organic blood oranges are rising food prices and private-label brands. Mintel says the price of all food at home increased more than 7% in the past year. "To cope with higher prices, many shoppers are simply opting not to buy pricey organic or premium brands," says Mogelonsky.

Mintel's Global New Product Database (GNPD), which tracked over 540 new private-label organic foods in 2007, reported a big increase in new private-label products. Three in five survey respondents said they reached for "whatever is available" when shopping, not discerning between private-label and branded organic lines.

"Economic struggles will undoubtedly change the way organic food and drink is sold. But we don't expect people to completely stop buying organics," says Mogelonsky. "We anticipate more subtle changes, such as the formerly all-organic shopper who returns to traditional cookie brands while sticking with organic produce. These small changes will slow market growth."

Of the adults surveyed, 47% said they purchased organic food in the past year, while 21% reported purchasing organic beverages. Mintel GNPD, which tracked over 2,000 new organic food and drink launches in 2007 in the U.S., expects 2008 totals to top that figure.