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Methodology

Qualitative

Focus groups, shop-alongs and virtual interviewswere conducted among a mix of respondents with various levels of engagement with organic and natural food and beverages.

Topics explored included:

• Perceptions of organic, natural and other associated language

• Motivations and criteria for purchasing organic and natural foods

• Shopping behaviors

• Trade-offs and decision making

Quantitative

Nationally representative online survey of n=2,274 U.S. adults (ages 18–70), primary household grocery shoppers.

In 2016 we sought to uncover distinctions between organic and natural. To compare attitudes and behaviors, participants were assigned at random to one of two cells that focused on specific questions related to organic or natural food.

Survey was fielded August 2016 to a nationally representative sampling frame, with sampling error of ±2.0% at 95% confidence level.

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Over 8 in 10 U.S. adults are users of organic or natural food and beverages

82%ORGANIC USERS

(Past 3 months)

+9 pts since 2014

89%NATURAL USERS

(Past 3 months)

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27% 31%25% 27% 27%

18%

44%42%

42% 37% 37%44%

6%8%

10% 11% 10% 10%

14%12%

14% 16% 17% 18%

9% 7% 9% 9% 9% 10%

2006 2008 2010 2012 2014 2016

Daily

Weekly

Monthly

Occasionally

Never

Organic participation continues to grow

Past 3 Months ORGANIC Food and Beverage Usage - By Total -

Significant change from 2014 at 95% CL

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Grown naturally Made simply

Grown without unnecessary chemicals – respecting rhythms and

interdependencies present in nature

Simple ingredients – no unnecessary ingredients – no unnecessary stages of

preserving or processing

Consumers today idealize food that is as close to its “natural” form as possible

Consumers across the board express the belief that food closer to its natural state is superior to food changed by scientific or industrial processes (particularly when that change is seen to be motivated by profit). At its most basic level, this means foods that are:

Multi-ingredient, preparedSingle ingredient, raw

Prioritized for:

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Properties Implied or Suggested by the Terms “ORGANIC” and “NATURAL”- By All Primary Shoppers -

68%

64%

41%

61%

63%

57%

49%

45%

26%

50%

52%

49%

Absence of pesticides

Absence of herbicides

Environment-friendly

Absence of antibiotics

Absence of growthhormones

Absence of geneticallymodified foods

Most differentiated in favor of Organic

47%

40%

45%

61%

28%

21%

35%

34%

41%

57%

24%

19%

Real

Fresh

Pure

No artificialflavors/colors/preser

vatives

Whole

Better taste

Natural

Organic

Most differentiated in favor of Natural

Organic is clearly differentiated from natural by connotations of purity at the farm level while natural symbolizes purity in production/processing

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45%

43%

40%

39%

36%

33%

26%

26%

25%

24%

21%

20%

20%

19%

Avoid products that rely on pesticides/chemicals

Safer for me

Avoid products that rely on growth hormones

Avoid products that rely on antibiotics

Avoid genetically modified products

They are higher quality

They taste better

For nutritional needs

Safer for the environment

To support the environment

Health reasons other than allergies

To buy local products

To support small/family farmers

To support sustainable agriculture

Top Reasons for Buying ORGANIC Food and Beverages- By Organic Purchasers -

+5 pts

+8 pts

+4 pts

Significant change from 2014 at 95% CL

This absence of farm-level chemicals is the primary motivator for purchasing organic

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Shared values and trust

Smaller-scale production

Support of local economy

Freshness and seasonality

Knowing where it’s not from

A sensible way of sourcing food

“Local” can trump organic for all but the most dedicated organic consumers, offering a more tangible quality assurance and feel-good factor

You know the story, you can trust the quality, …you also feel like you’re supporting the local economy instead of some big corporation when you don’t know what’s happening. (Inner Mid-level, female)

38% (+9% from 2014) of

consumers say they are buying

more local than a year ago

Local food and beverage continues to offer consumers a constellation of tangible benefits. These benefits can outshine those of organic, particularly when supported by a warm narrative. Consumers associate local with:

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Of ORGANIC purchasers

Average number of ORGANIC food and beverage products purchased in the past 3

months (single categories, not net categories): 6.5

56%

47%

34%

32%

31%

27%

23%

22%

18%

14%

20%

Fresh Produce (net)

Beverages (net)

Snacks (net)

Refrig. Dairy Foods (net)

Fresh Meats/Seafood (net)

Packaged Foods (net)

Canned Foods (net)

Packaged Frozen Foods (net)

Packaged Meat (net)

Sweets (net)

None of these

ORGANIC Categories Purchasedin Past 3 Months

- By Total -

Significant change from 2014 at 95% CL

5%

46%

49%Buying more

of

Buying about the same

Buying less of

Change in ORGANIC Shopping Habits Vs a Year Ago - By Organic Purchasers -

+11 pts

-8 pts

The majority of consumers have purchased organic versions of products, with more than half participating in organic fresh produce

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As their organic purchasing increases, consumers add categories according to the traditional organic adoption pathway: fresh to packaged

Organic is adopted first in fresh produce, where pesticides are top of mind; then in other products where farm origins are salient; and then in products used for positive nutrition and that are slightly

more processed.

FRESH PRODUCE, BABY FOOD AND PET FOODAmong Periphery shoppers, often the only categories purchased organic

FARM-FRESH (e.g., dairy milk, beef, cheese, chicken, yogurt) Shoppers strongly associate these categories with their agricultural origins

POSITIVE NUTRITION and other FRESH PERIMETER categories (e.g., granola bars, juice/smoothies, fresh bakery, fish/seafood)

Adoption Pathway for Organic Food & Beverages

SNACKS, PROCESSED MEATS and INDULGENCES (e.g., popcorn, sliced lunch meat, ice cream)

DIET OR HIGHLY FUNCTIONAL and FROZEN CONVENIENCEe.g., diet soda, diet frozen entrees, energy drinks, alcoholic beverages, frozen snacks, frozen non-breaded chicken

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43% of all

consumers are avoiding/reducing GMOs

in their daily diet

because

66%

43%

36%

30%

27%

21%

Concerned about theirpossible impact on

personal health and well-being

Want to know exactly whatgoes into the food I eat

Don’t want to support companies that use GMOs

Concerned about theirpossible impact on the

environment

Don't know enough aboutthem

Concerned about plantbiodiversity*

Reasons Avoiding/Reducing GMOs- By Total -

Consumers continue to be most motivated to avoid GMOs by concerns for their potential health impacts

While health is the primary concern, consumers rarely connect GMOs to a specific, tangible health concern

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Diners make organic or non-GMO greater priority at food service channels most associated with quality, healthfulness and innovation

25%

24%

21%

20%

16%

16%

14%

14%

9%

24%

23%

24%

23%

22%

22%

21%

20%

23%

51%

53%

55%

57%

62%

62%

65%

66%

68%

Must have/will seek out ORGANIC menu

Might affect restaurant choice

Does not affect choice/nice to have ORGANIC options

Impact of ORGANIC Menu Items on Restaurant Selection

- By Organic Users -

Grocery store or grocerant

Fine-dining restaurant

Food trucks

Fast casual restaurant (e.g. Panera)

Full-service casual (e.g. Applebee’s)

Local casual restaurant, pub, bar

Cafeteria/buffet in schools, univ/hosp.

Café or coffee shop (e.g. Starbucks)

QSR/Fast food (e.g. McDonald’s)

22%

25%

20%

19%

17%

19%

18%

17%

13%

25%

22%

20%

25%

22%

21%

19%

31%

21%

53%

53%

60%

56%

61%

60%

63%

62%

66%

Must have/will seek out NON-GMO menu

Might affect restaurant choice

Does not affect choice/nice to have NON-GMO options

Impact of NON-GMO Menu Items on Restaurant Selection

- By Organic Users -

ABOUT THE HARTMAN GROUP

The Hartman Group is the premier food and beverage consultancy in the world. Companies and brands across all segments of the food and beverage industry benefit from our unparalleled depth of knowledge on consumers, culture, trends and demand-side market strategy. We listen closely to understand our clients business challenges and tailor solutions that deliver transformative results. Through a unique suite of integrated custom, primary research capabilities, market analytics, and business strategy services, we uncover opportunity spaces and avenues for growth. We deliver more compelling insights that fuel inspiration and ideas for innovation.

3150 Richards Road, Ste. 200 Bellevue, WA 98005Tel (425) 452 0818 Fax (425) 452 9092www.hartman-group.com

For more information on the study, please contact:Blaine Becker, Senior Director of Marketing

blaine@hartman-group.comPh: 425-452-0818