• Ad Age, Monday, October 16, 2006 12:15 PM

Consumers are balking at the high price of organic foods, leading some observers to speculate that it's a fad destined to crash like the low-carb craze. Organics are a $14 billion business with a brisk growth rate, but they account for only 2.5 percent of total food sales, despite hundreds of millions spent by major marketers in the past 12 months to make them mass. Major marketers' success in the segment has come not from organic versions of their stalwart brands but from independents they've snapped up, such as General Mills' Cascadian Farm and Kraft's Back to Nature.

With the notable exception of Wal-Mart, which has pledged to sell organic products at only 10 percent higher than average price, all but the very high-end grocers tend to treat organic foods as niche, ditching many entries from large marketers and turning away new ones. "Organic tends to play best in fresh produce and in fresh dairy, and it has far less relevance to shelf-stable products," says Allen Adamson, managing director of Landor Associates.

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