Growing the Organic Market

Christine BushwayExecutive Director / CEO

Organic Trade Association

CCOF Annual Convention - Education Conference & Annual MeetingFebruary 18-20, 2011 - Ventura Beach, CA

Organic Market 2010

• Challenges

• Solutions

• Macro Trends in US 2010

• US Organic Consumer in 2010

Three quarters of US families have purchased at least some organic products

27% 27%

20%21%

32%36%

21% 16%

2009 2010

Within the past 2 years

2 to 5 years ago

5 to 10 years ago

10 to 15 years ago

More than 15 years ago

I do not buy organic products

Experienced Organics

Seasoned Organics

Non-buyers

Newly Organic

Q. When did you first buy organic products, if ever? (n=1197)

(n=763)

As in 2009, we’ve constructed a profile of “organic buyer groups” among US families using self-reported organic buying data.

Newly Organic families, those who only began purchasing organics in the past two years, comprise about 3 in ten US households (32% in 2009, 36% in 2010).

Experienced Organics, encompassing about 2 in 10 families (20% in 2009, 21% in 2010),first starting buying organics up to 5 years ago.

Seasoned Organics have been buying organics for more than 5 years and in some cases up to 15 years. They represent about 2 in 10 households (21% in 2009, 16% in 2010.)

Non-Buyers, about 3 in 10 households, neverbuy organic products.

The size of each buyer segmentremained consistentwith 2009 findings.

3

US Families are buying more organicsthan ever before

Buying less

Buying moreBuying same amount

Q: Compared to 12 months ago, are you buying more, less or the same amount of organic foods in general?

Base: Total parents

2009(n=1197)

2010(n=763)

Compared to 12 months ago…

Do not buy organics in this category

27% 28%

25%

6%

31%

30% *

12% *

41% *

Purchases of Organic Foods Compared to 12 Months Ago4

One third say trust in organic products has increased over the past year

Q: Compared to one year ago, has the extent to which you trust that products labeled as “organic” really are organic…

IncreasedDecreased

Base: Total parents

Stayed the same

Organic Buyers

Total parents

87%

92% *

85%

91% *

Changes in Trust of Organic Labeling

2009

2010

2009

2010

5

47%

58%

59%

34%

28%

9%

15% *

8%

13% *

51%

44% *

34% *

Organic Market Size and Growth

2002 2003 2004 2005 2006 2007 2008 2009 20100

5

10

15

20

25

30

35

0%

5%

10%

15%

20%

25%

US Organic Product Sales Growth

Food

93%

7%

Non-Food

Trends in U.S. Organic Agricultural Production

2008 Organic Production Survey*

– 14,540 organic farms & ranches in U.S.– 4.1 million acres– Organic farms in all 50 states– 78% of farms report planning to

maintain or increase organic production levels over the next five years.

* The 2008 Organic Production Survey conducted as a follow-on to the 2007 Census of Agriculture by the U.S. Department of Agriculture’s (USDA’s) National Agricultural Statistics Service (NASS).

Trends in U.S. Organic Agricultural Production

U.S. organic farms on average have higher sales, higher production expenses,

and higher operating profit than U.S. non-organic farms

* The 2008 Organic Production Survey conducted as a follow-on to the 2007 Census of Agriculture by the U.S. Department of Agriculture’s (USDA’s) National Agricultural Statistics Service (NASS).

Organic Farms All Other Farms

Gross Sales $217,675 $134,807

Production Expenses $171,978 $109,359

Operating Profit $45,697 $25,448

13 week dollar % change:

Organic Food Sales UP 10.7% Conventional Food Sales UP .7%

FDM ending 10/02/2010

13 week unit %

change:

Organic units UP 11.1% Conventional Units UP .5%

Recent Trend Sales: Jul. – Sept. 2010

Trends- Local and Regional Food Systems

Market Update – Local, Regional, Direct to Consumer

Reports Cause Consumers to Question

• President’s Cancer Panel

• ADHD Research

• Center for Science in the Public Interest’s warning re: food dyes

• FDA guidance on antibiotics for food-producing animals

Challenges

Economic climate

Competitive pressure from conventional

Political climate & budget cuts

Foods/beverages can be labeled as 'natural' so long as they meet a government standard

Foods/beverages can be labeled as 'organic' so long as they meet a government standard

Organic and 'natural' mean the same thing to me when I see them on product packaging

Organic and/or natural foods/beverages are more likely to make me sick since they don't contain preservatives or pesticides

I can trust the term 'natural' when I see it on labels

I can trust the term 'organic' when I see it on labels

59

65

28

8

33

45

25

22

18

20

33

30

Trust and understanding of the terms ‘natural’ and ‘organic’, September 2009

Total don’t know

Total agree

%

Mintel survey September 2009

SOURCE: MINTEL “Organic Food and Drink Retailing U.S. Report 2009” produced in collaboration with SPINS

Connect the DotsConnect the DotsNatural and Organic – Consumer Confusion Persists

One third of all consumers don’t know the truth about organic standards, as it relates to organic foods they see in retail outlets.

Connect the Dots

Online ad campaign positions organic as the solution

Ads appear on Google and Facebook, and newspapers such as The New York Times and Washington Post

Ads drive traffic to www.OrganicItsWorthIt.org

First 60-days:• 22 million+ impressions• 25,000+ clicks/web visits• 5,000+ social media fans/followers

GE Alfalfa Decision

Consumer Action Alert distributed via email, social media, blogs, newsletters

25,000+ messages (and counting!) messages sent to the White House

Obama Administration approves the unrestricted cultivation of genetically engineered (GE) alfalfa, sugar beets and amylase corn in three weeks

GE alfalfa can now be planted without any federal requirements to prevent contamination of organic and non-GE crops

OTA continues work to protect organic

Solutions- Policy and Political Pressure

1. Protect our base ($)

2. Push the envelope (policy)

3. Grassroots engagement

Build New Relationships | Nurture Old Friends

Solutions- Advance Organic Together

Solutions- Advance Organic Together

Solutions- New Data Continues to Point to the Value of an R&P Order

Thank You

Christine BushwayExecutive Director / CEOOrganic Trade Association

cbushway@ota.com

Additional ResourcesOrganic Trade Association

www.OTA.com

Organic business directory www.TheOrganicPages.com

Transitioning to organic production www.HowToGoOrganic.com

Directory of U.S. organic exporters www.USOrganicProducts.com

Consumer educationwww.OrganicItsWorthIt.org