• by Karlene Lukovitz  @KLmarketdaily, December 10, 2009

In 2009, there has been no growth in the number of Americans who purchased organic food and beauty products, according to new research from TABS Group, a marketing, research and consulting firm.

In this year's survey of 1,000 representative adult respondents in the TNS panel, fielded Dec. 3-6, 38% reported buying any product from the major organic food and beauty categories within the past six months -- the same percentage who reported this when TABS conducted the same survey last November.

According to this year's study, the organic food categories having the highest purchase incidences among U.S. adults were fresh fruit (26%), fresh vegetables (25%), eggs (17%) and milk (16%). Frozen organic products, including vegetables, fruit and ice cream, had purchase levels ranging from 5% to 7%.

Looking at beauty care products, purchase levels were 6% for organic skincare and 4% for organic hair care and cosmetics.

In comparison, non-organic products in the same categories have household penetration rates well above 70%, points out the research firm.

The study also found that traditional supermarkets were the preferred outlets for buying these organic products (39%, compared to 27% preferring to buy in natural food stores), and that there are 50% more organic shoppers in traditional outlets than in natural food stores.

However, TABS group president and founder Kurt Jetta points out that there are 20 to 30 times more traditional outlets than natural food stores. "When we see a dynamic that says that it takes a twenty-fold increase in store count to generate a 50% increase in buyer count, we conclude that the vast majority of retailers with a broad assortment of these products are seeing very low returns on their investment," he said.

Various research sources point to more agricultural emphasis on growing organics, and increasing numbers of store-label organics (some reportedly driving growth for chains like Safeway and Supervalu) as well as growing numbers of branded organics product launches.

And as Jetta acknowledges, numbers of people buying and sales volume trends are not one and the same. However, he says, "while it's theoretically possible that those people who are buying organics -- who are definitely an upscale demographic -- are buying more of these products, we see organics as a whole selling poorly in our analyses for specific food, drug and mass retailers. Retailers are stocking these products, but by and large, they're not selling through to the consumer."

Mainstream retailers and manufacturers should stop "marching in lockstep to this illusory trend," stick to offering modest organic selections, and refocus their efforts on more mainstream products and categories, maintains Jetta. Natural food marketers are better-positioned to serve organic shoppers, he contends.

The Agricultural Marketing Resource Center (partially funded by the USDA) estimates that organic food sales grew 15.8% (to $22.9 million) in 2008, while non-organic food sales grew 39% (to $1.6 billion), according to a Packaged Facts report. The Organic Trade Association's annual survey of its manufacturer members estimates 2008 growth of total food and non-food organic products at 17.1% (up to $24.6 billion).

Packaged Facts also recently reported that about one-quarter of U.S. adult shoppers "frequently buy certified organic food and beverage products, and one-third are usually willing to pay more for organic foods" -- numbers that don't seem to conflict much with the TABS survey's 38% frequency of purchase finding.

A Business Insights report on organic food and drinks released this past March noted that the rapid growth of this market in the decade's first half appears to have slowed, particularly in the second half of 2008.

However, it also notes that demand for organic foods and beverages has proven resilient in "a number of key markets" because organic food buyers have significantly higher than average disposable incomes and have been relatively unaffected by the recession, and because the pricing gap between organics and non-organics has closed somewhat.