NBJ Organic Report Featuring OTA Data

Transcription

1 NBJ Organic Report Featuring OTA Data 2010 An NBJ analysis of the trends and drivers in the organic industry featuring market data from the Organic Trade Association

2 NBJ s 2010 Organic Report Featuring OTA Data Penton Media, Inc.

3 Table of Contents Organic Food Market Organic Non-Food Market Private Label ORGANIC LABELING, CERTIFICATION & MATERIALS SUPPLY ABOUT THE ORGANIC TRADE ASSOCIATION ABOUT NUTRITION BUSINESS JOURNAL NBJ ACKNOWLEDGEMENTS OTA DATA METHODOLOGY Data Collection Data Compilation and Industry Model DISCLAIMER COPYRIGHT DEFINITIONS Product Categories Sales Channels ORGANIC MARKET OVERVIEW ORGANIC FOOD MARKET Sales & Growth Channel Distribution Category Performance Growth & Forecast ORGANIC NON-FOOD MARKET Sales & Growth Channel Distribution Category Performance Growth & Forecast AN ORGANIC HISTORICAL PERSPECTIVE PRIVATE LABEL Private Label Keeps Organic Growing in Sour Economy Organic Supplements Join Ranks of Private-Label Products Private Label Personal Care GLOBAL ORGANIC Organic Thought Leaders Emphasize Importance of Standardized Regulations Case Study: U.S., Canadian Organic Deal Could Pave Way for Global Equivalency Case Study: Differences Between Canadian & U.S. Organic Standards TRENDS & CASE STUDIES Pricing Issues of Natural vs. Organic Tree of Life Purchase Alters Distribution Landscape for Natural & Organic Economy Eases Organic Supply Crunch But Integrity Questions Remain Industry Issue: Is Natural & Organic Processed Food a Problem? Industry New: Organic Agriculture Better at Pest Control Consumers Savvy About Organics Limiting Inventory Health Concerns Drive Sales Penton Media, Inc. 3

4 NBJ s 2010 Organic Report Featuring OTA Data Organic Image Makeover Organic Supply: SunOpta Nell Newman Q&A GMO Attacks Heat Up in the United States Organic Seeds Increasingly in Danger of GMO Contamination Case Study: Nest Collective s Focus on Healthy Kids Renegade Lunch Lady Ann Cooper Takes on School Lunch Programs Company Trends: WhiteWave Committed to Organic Despite Move into Natural Company Trends: Clorox Natural and Organic Brands See Reduced Growth at the End of DAIRY Milk & Cream Yogurt Eggs Cheese Butter, Cottage Cheese & Sour Cream Ice Cream Trend: Organic Dairy Producers Optimistic BREADS & GRAINS Frozen & Fresh Baked Cookies Crackers & Rice Cakes In-Store Bakery Baking Needs Dry Breakfast Goods Rice, Grains & Potato Pasta Company Spotlight: Lundberg Family Farms BEVERAGES Fresh Juice Frozen Juice Canned & Bottled Juice & Drinks Soymilk Non-Soy Dairy Alternatives Beer Wine Tea Coffee Coffee Substitutes & Cocoa Soft Drinks Product Spotlight: Hard Liquors Product Spotlight: Organic Beer Product Spotlight: Organic Wine FRUITS & VEGETABLES Frozen Fruits & Vegetables Produce Canned Fruits & Vegetables Dried Beans, Fruits & Vegetables Product Trend: Organic Packaged Salads SNACK FOODS Nutrition Bars Chocolate & Candy Bars Penton Media, Inc.

5 Table of Contents Other Candy Salty Snacks Nuts Product Trend: Organic Chocolate PACKAGED/PREPARED FOODS Frozen Prepared Food Refrigerated Prepared Food Food Service & Deli Canned Prepared Food Dried Prepared Food Nut Butters Baby Food Baby Formula Meat Alternatives & Veggie Burgers Tofu/Tempeh Canned & Dry Soup & Broth Pasta Sauces Desserts Product Trend: Organic Baby Food Product Issue: The Possible Ban on Synthetic Fatty Acids in Organic Baby Formula CONDIMENTS & SAUCES Salad Dressing Salsa (Refrigerated and Shelf Stable) Dips Jams/Preserves Ethnic Sauces Ketchup Other Condiments Spices Oil/Shortening Sweeteners Company Spotlight: Once Again Nut Butter MEAT, POULTRY & FISH Beef Lamb Pork Poultry Fish Sausages/Deli Meats Regulatory Issue: Proposed Organic Fish Rules PERSONAL CARE Regulatory Issue: Personal Care Organic Standards OTA Organic Personal Care Position Product Trend: Skincare Good Enough to Eat Company News: Whole Foods Cracks Down on Organic Personal Care Products Product Trend: N&OPC Ingredients Company Spotlight: Yes To Ltd Product Trend: Kids Personal Care Market Regulatory Trend: Safe Cosmetics Bill Aims to Regulate Personal Care FIBER Penton Media, Inc. 5

6 NBJ s 2010 Organic Report Featuring OTA Data Product Trend: Organic Fiber Meeting the Mainstream SUPPLEMENTS Product Trend: Growing Popularity of Organic Supplements Company Spotlight: WI Specialty Protein PET FOOD Consumer Trend: The Humanization of Pets HOUSEHOLD CLEANERS Product Trend: Green Cleaning FLOWERS ORGANIC CONTENT USDA ORGANIC SEAL Do you display the USDA Organic seal on any of your products? If no, do you intend to display the USDA Organic seal on any of your products in the next three years? How have the USDA labeling requirements and certification programs affected your ability to generate sales of organic products? INVENTORY AND SALES How did your inventory levels change in late 2008 and 2009? If sales were down in 2009, what was the biggest factor? How did order levels from distributors and direct-order retailers change in late 2008 and 2009? RAW MATERIALS Is a lack of a dependable supply of organic raw materials limiting your company from generating more sales of organic products? Which organic raw material supplies need to be more reliable? How do you expect your use of organic ingredients to change over the next 3 years? Penton Media, Inc.

7 Index of Figures Figure 1-1 U.S. Total Organic Sales & Growth, Figure 1-2 U.S. Organic Food vs. Total Food Sales, Growth and Penetration, Figure 1-3 U.S. Organic Food Sales by Product, Figure 1-4 U.S. Organic Food Sales by Channel, Figure 1-5 U.S. Organic Non-Food vs. Total Non-Food Sales, Growth and Penetration, Figure 1-6 U.S. Organic Non-Food Sales by Product, Figure 1-7 U.S. Organic Non-Food Sales by Channel, Figure 1-8 Do you display the USDA Organic seal on any of your products? Figure 3-1 U.S. Total Organic Sales & Growth, Figure 3-2 Total U.S. Organic Sales and Growth by Product Category in Figure 3-3 Total U.S. Organic Sales, Figure 3-4 Total U.S. Organic Sales and Growth, Figure 3-5 U.S. Organic Food Penetration of Total Food Market by Category, 2004 vs Figure 3-6 U.S. Organic Non-Food Penetration of Total Food Market by Category, 2004 vs Figure 3-7 U.S. Organic Food Sales by Product, Figure 3-8 U.S. Organic Food vs. Total Food Sales, Growth and Penetration, Figure 3-9 U.S. Organic Food Sales & Growth, Figure 3-10 U.S. Organic Food Sales by Channel, Figure 3-11 U.S. Organic Food Sales by Channel, 2005 vs Figure 3-12 U.S. Organic Food Sales by Category, Figure 3-13 U.S. Organic Food Sales Growth by Category, Figure 3-14 U.S. Organic Food Sales by Category as % of Total, Figure 3-15 Organic Food Forecasted Compound Annual Growth vs Figure 3-16 U.S. Organic Non-Food Sales by Product, Figure 3-17 U.S. Organic Non-Food vs. Total Non-Food Sales, Growth and Penetration, Figure 3-18 U.S. Organic Non-Food Sales & Growth, Figure 3-19 U.S. Organic Non-Food Sales by Channel, Figure 3-20 U.S. Organic Non-Food Sales by Channel, 2005 vs Figure 3-21 U.S. Organic Non-Food Sales by Category, Figure 3-22 U.S. Organic Non-Food Sales Growth by Category, Figure 3-23 U.S. Organic Non-Food Sales by Category as % of Total, Figure 3-24 Organic Non-Food Forecasted Compound Annual Growth vs Figure 3-25 U.S. Organic Private Label Category Growth, Figure 3-26 U.S. Organic Private Label as % Total Category Organic, Figure 3-27 NBJ Global Survey: Importance of Regulatory Issues Figure 3-28 OTA Survey: Initial Affect of U.S./Canadian Organic equivalency agreement on U.S. Companies Figure 4-1 U.S. Organic Dairy Sales by Subcategory, Figure 4-2 U.S. Organic Dairy Sales & Growth, Figure 4-3 U.S. Organic Dairy vs. Total Organic Food Sales, Growth and Penetration, Figure 4-4 U.S. Organic Dairy Penetration into Total Dairy Market, Figure 4-5 U.S. Organic Milk & Cream Sales & Growth, Figure 4-6 U.S. Organic Milk & Cream vs. Organic Dairy Sales, Growth and Penetration, Figure 4-7 U.S. Organic Yogurt Sales & Growth, Figure 4-8 U.S. Organic Yogurt vs. Organic Dairy Sales, Growth and Penetration, Penton Media, Inc. 7

8 NBJ s 2010 Organic Report Featuring OTA Data Figure 4-9 U.S. Organic Eggs Sales & Growth, Figure 4-10 U.S. Organic Eggs vs. Organic Dairy Sales, Growth and Penetration, Figure 4-11 U.S. Organic Cheese Sales & Growth, Figure 4-12 U.S. Organic Cheese vs. Organic Dairy Sales, Growth and Penetration, Figure 4-13 U.S. Organic Butter, Cottage Cheese & Sour Cream Sales & Growth, Figure 4-14 U.S. Organic Butter, Cottage Cheese & Sour Cream vs. Organic Dairy Sales, Growth and Penetration, Figure 4-15 U.S. Organic Ice Cream Sales & Growth, Figure 4-16 U.S. Organic Ice Cream vs. Organic Dairy Sales, Growth and Penetration, Figure 4-17 U.S. Organic Breads & Grains Sales by Subcategory, Figure 4-18 U.S. Organic Breads & Grains Sales & Growth, Figure 4-19 U.S. Organic Breads & Grains vs. Total Organic Food Sales, Growth and Penetration, Figure 4-20 U.S. Organic Breads & Grains Penetration into Total Breads & Grains Market, Figure 4-21 U.S. Organic Frozen & Fresh Baked Breads & Grains Sales & Growth, Figure 4-22 U.S. Organic Frozen & Fresh Baked Breads & Grains vs. Total Organic Breads & Grains Sales, Growth and Penetration, Figure 4-23 U.S. Organic Cookies Sales & Growth, Figure 4-24 U.S. Organic Cookies vs. Total Organic Breads & Grains Sales, Growth and Penetration, Figure 4-25 U.S. Organic Crackers & Rice Cakes Sales & Growth, Figure 4-26 U.S. Organic Crackers & Rice Cakes vs. Total Organic Breads & Grains Sales, Growth and Penetration, Figure 4-27 U.S. Organic In-Store Bakery Sales & Growth, Figure 4-28 U.S. Organic In-Store Bakery vs. Total Organic Breads & Grains Sales, Growth and Penetration, Figure 4-29 U.S. Organic Baking Needs Sales & Growth, Figure 4-30 U.S. Organic Baking Needs vs. Total Organic Breads & Grains Sales, Growth and Penetration, Figure 4-31 U.S. Organic Dry Breakfast Goods Sales & Growth, Figure 4-32 U.S. Organic Dry Breakfast Goods vs. Total Organic Breads & Grains Sales, Growth and Penetration, Figure 4-33 U.S. Organic Rice, Grains & Potato Sales & Growth, Figure 4-34 U.S. Organic Rice, Grains & Potato vs. Total Organic Breads & Grains Sales, Growth and Penetration, Figure 4-35 U.S. Organic Pasta Sales & Growth, Figure 4-36 U.S. Organic Pasta vs. Total Organic Breads & Grains Sales, Growth and Penetration, Figure 4-37 U.S. Organic Beverages Sales by Subcategory, Figure 4-38 U.S. Organic Beverages Sales & Growth, Figure 4-39 U.S. Organic Beverages vs. Total Organic Food Sales, Growth and Penetration, Figure 4-40 U.S. Organic Beverages Penetration into Total Beverages Market, Figure 4-41 U.S. Organic Fresh Juice Sales & Growth, Figure 4-42 U.S. Organic Fresh Juice vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-43 U.S. Organic Frozen Juice Sales & Growth, Figure 4-44 U.S. Organic Frozen Juice vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-45 U.S. Organic Canned & Bottle Juice & Drinks Sales & Growth, Figure 4-46 U.S. Organic Canned & Bottled Juice & Drinks vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-47 U.S. Organic Soymilk Sales & Growth, Penton Media, Inc.

9 Index of Figures Figure 4-48 U.S. Organic Soymilk vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-49 U.S. Organic Non-Soy Dairy Alternatives Sales & Growth, Figure 4-50 U.S. Organic Non-Soy Dairy Alternatives vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-51 U.S. Organic Beer Sales & Growth, Figure 4-52 U.S. Organic Beer vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-53 U.S. Organic Wine Sales & Growth, Figure 4-54 U.S. Organic Wine vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-55 U.S. Organic Tea Sales & Growth, Figure 4-56 U.S. Organic Tea vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-57 U.S. Organic Coffee Sales & Growth, Figure 4-58 U.S. Organic Coffee vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-59 U.S. Organic Coffee Substitutes & Cocoa Sales & Growth, Figure 4-60 U.S. Organic Coffee Substitutes & Cocoa vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-61 U.S. Organic Soft Drinks Sales & Growth, Figure 4-62 U.S. Organic Soft Drinks vs. Total Organic Beverage Sales, Growth and Penetration, Figure 4-63 U.S. Organic Fruits & Vegetables Sales by Subcategory, Figure 4-64 U.S. Organic Fruits & Vegetables Sales & Growth, Figure 4-65 U.S. Organic Fruits & Vegetables vs. Total Organic Food Sales, Growth and Penetration, Figure 4-66 U.S. Organic Fruits & Vegetables Penetration into Total Fruits & Vegetables Market, Figure 4-67 U.S. Organic Frozen Fruit & Vegetables Sales & Growth, Figure 4-68 U.S. Organic Frozen Fruits & Vegetables vs. Total Organic Fruits & Vegetables Sales, Growth and Penetration, Figure 4-69 U.S. Organic Produce Sales & Growth, Figure 4-70 U.S. Organic Produce vs. Total Organic Fruits & Vegetables Sales, Growth and Penetration, Figure 4-71 U.S. Organic Canned Fruits & Vegetables Sales & Growth, Figure 4-72 U.S. Organic Canned Fruits & Vegetables vs. Total Organic Fruits & Vegetables Sales, Growth and Penetration, Figure 4-73 U.S. Organic Dried Beans, Fruits & Vegetables Sales & Growth, Figure 4-74 U.S. Organic Dried Beans, Fruits & Vegetables vs. Total Organic Fruits & Vegetables Sales, Growth and Penetration, Figure 4-75 U.S. Organic Snack Food Sales by Subcategory, Figure 4-76 U.S. Organic Snack Food Sales & Growth, Figure 4-77 U.S. Organic Snack Food vs. Total Organic Food Sales, Growth and Penetration, Figure 4-78 U.S. Organic Snack Food Penetration into Total Snack Food Market, Figure 4-79 U.S. Organic Nutrition Bars Sales & Growth, Figure 4-80 U.S. Organic Nutrition Bars vs. Total Organic Snack Food Sales, Growth and Penetration, Figure 4-81 U.S. Organic Chocolate & Candy Bars Sales & Growth, Figure 4-82 U.S. Organic Chocolate & Candy Bars vs. Total Organic Snack Food Sales, Growth and Penetration, Figure 4-83 U.S. Organic Other Candy Sales & Growth, Figure 4-84 U.S. Organic Other Candy vs. Total Organic Snack Food Sales, Growth and Penetration, Penton Media, Inc. 9

10 NBJ s 2010 Organic Report Featuring OTA Data Figure 4-85 U.S. Organic Salty Snacks Sales & Growth, Figure 4-86 U.S. Organic Salty Snacks vs. Total Organic Snack Food Sales, Growth and Penetration, Figure 4-87 U.S. Organic Nuts Sales & Growth, Figure 4-88 U.S. Organic Nuts vs. Total Organic Snack Food Sales, Growth and Penetration, Figure 4-89 U.S. Organic Packaged/Prepared Food Sales by Subcategory, Figure 4-90 U.S. Organic Packaged/Prepared Food Sales & Growth, Figure 4-91 U.S. Organic Packaged/Prepared Food vs. Total Organic Food Sales, Growth and Penetration, Figure 4-92 U.S. Organic Packaged/Prepared Food Penetration into Total Packaged/Prepared Food Market, Figure 4-93 U.S. Organic Frozen Prepared Food Sales & Growth, Figure 4-94 U.S. Organic Frozen Prepared Food vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure 4-95 U.S. Organic Refrigerated Prepared Food Sales & Growth, Figure 4-96 U.S. Organic Refrigerated Prepared Food vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure 4-97 U.S. Organic Food Service & Deli Sales & Growth, Figure 4-98 U.S. Organic Food Service & Deli vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure 4-99 U.S. Organic Canned Prepared Food Sales & Growth, Figure U.S. Organic Canned Prepared Food vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure U.S. Organic Dried Prepared Food Sales & Growth, Figure U.S. Organic Dried Prepared Food vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure U.S. Organic Nut Butters Sales & Growth, Figure U.S. Organic Nut Butters vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure U.S. Organic Baby Food Sales & Growth, Figure U.S. Organic Baby Food vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure U.S. Organic Baby Formula Sales & Growth, Figure U.S. Organic Baby Formula vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure U.S. Organic Meat Alternatives & Veggie Burgers Sales & Growth, Figure U.S. Organic Meat Alternatives & Veggie Burgers vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure U.S. Organic Tofu/Tempeh Sales & Growth, Figure U.S. Organic Tofu/Tempeh vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure U.S. Organic Canned & Dry Soup & Broth Sales & Growth, Figure U.S. Organic Canned & Dry Soup & Broth vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Figure U.S. Organic Pasta Sauces Sales & Growth, Figure U.S. Organic Pasta Sauces vs. Total Organic Food Sales, Growth and Penetration, Figure U.S. Organic Desserts Sales & Growth, Figure U.S. Organic Desserts vs. Total Organic Packaged/Prepared Food Sales, Growth and Penetration, Penton Media, Inc.

11 Index of Figures Figure U.S. Organic Condiments & Sauces by Subcategory, Figure U.S. Organic Condiments & Sauces Food Sales & Growth, Figure U.S. Organic Condiments & Sauces vs. Total Organic Food Sales, Growth and Penetration, Figure U.S. Organic Condiments & Sauces Penetration into Total Condiment & Sauces Market, Figure U.S. Organic Salad Dressing Sales & Growth, Figure U.S. Organic Salad Dressing vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Salsa Sales & Growth, Figure U.S. Organic Salsa vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Dips Sales & Growth, Figure U.S. Organic Dips vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Jams/Preserves Sales & Growth, Figure U.S. Organic Jams/Preserves vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Ethnic Sauces Sales & Growth, Figure U.S. Organic Ethnic Sauces vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Ketchup Sales & Growth, Figure U.S. Organic Ketchup vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Other Condiments Sales & Growth, Figure U.S. Organic Other Condiments vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Spices Sales & Growth, Figure U.S. Organic Spices vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Oil/Shortening Sales & Growth, Figure U.S. Organic Oil/Shortening vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Sweeteners Sales & Growth, Figure U.S. Organic Sweeteners vs. Total Organic Condiments & Sauces Sales, Growth and Penetration, Figure U.S. Organic Meat, Poultry & Fish by Subcategory, Figure U.S. Organic Meat, Poultry & Fish Food Sales & Growth, Figure U.S. Organic Meat, Poultry & Fish vs. Total Organic Food Sales, Growth and Penetration, Figure U.S. Organic Meat, Poultry & Fish Penetration into Total Meat, Poultry & Fish Market, Figure U.S. Organic Beef Sales & Growth, Figure U.S. Organic Beef vs. Total Organic Meat, Poultry & Fish Sales, Growth and Penetration, Figure U.S. Organic Lamb Sales & Growth, Penton Media, Inc. 11

12 NBJ s 2010 Organic Report Featuring OTA Data Figure U.S. Organic Lamb vs. Total Organic Meat, Poultry & Fish Sales, Growth and Penetration, Figure U.S. Organic Pork Sales & Growth, Figure U.S. Organic Pork vs. Total Organic Meat, Poultry & Fish Sales, Growth and Penetration, Figure U.S. Organic Poultry Sales & Growth, Figure U.S. Organic Poultry vs. Total Organic Meat, Poultry & Fish Sales, Growth and Penetration, Figure U.S. Organic Fish Sales & Growth, Figure U.S. Organic Fish vs. Total Organic Meat, Poultry & Fish Sales, Growth and Penetration, Figure U.S. Sausages/Deli Meats Sales & Growth, Figure U.S. Organic Sausages/Deli Meats vs. Total Organic Meat, Poultry & Fish Sales, Growth and Penetration, Figure 5-1 U.S. Organic Personal Care Sales & Growth, Figure 5-2 U.S. Organic Personal Care vs. Total Organic Non-Food Sales, Growth and Penetration, Figure 5-3 U.S. Organic Personal Care Penetration into Total Personal Care Market, Figure 5-4 U.S. Organic Fiber Sales & Growth, Figure 5-5 U.S. Organic Fiber vs. Total Organic Non-Food Sales, Growth and Penetration, Figure 5-6 Organic Fiber Penetration into Total Fiber Market, Figure 5-7 U.S. Organic Supplements Sales & Growth, Figure 5-8 U.S. Organic Supplements vs. Total Organic Non-Food Sales, Growth and Penetration, Figure 5-9 U.S. Organic Supplements Penetration into Total Supplement Market, Figure 5-10 U.S. Organic Pet Food Sales & Growth, Figure 5-11 U.S. Organic Pet Food vs. Total Organic Non-Food Sales, Growth and Penetration, Figure 5-12 U.S. Organic Pet Food Penetration into Total Pet Food Market, Figure 5-13 U.S. Organic Household Cleaners Sales & Growth, Figure 5-14 U.S. Cleaners Approved for Use in Organic Facilities vs. Total Organic Non-Food Sales, Growth and Penetration, Figure 5-15 U.S. Cleaners Approved for Use in Organic Facilities Penetration into Total Household Cleaners Market, Figure 5-16 U.S. Organic Flowers Sales & Growth, Figure 5-17 U.S. Organic Flowers vs. Total Organic Non-Food Sales, Growth and Penetration, Figure 5-18 U.S. Organic Flowers Penetration into Total Flower Market, Figure 6-1 Organic Content of U.S. Organic Products Figure 6-2 Percentage of Total Sales from Products Containing More than 0% but Less than 70% Organic Ingredients Figure 6-3 Do you display the USDA Organic seal on any of your products? Figure 6-4 If no, do you intend to display the USDA Organic seal on any of your products in the next three years? Figure 6-5 How have the USDA labeling requirements and certification programs affected your ability to generate sales of organic products? Figure 6-6 How did your inventory levels change in late 2008 and 2009? Figure 6-7 Manufacturer/Marketer: If sales were down in 2009, what was the biggest factor? Figure 6-8 Distributor/Broker/Retailer: If sales were down in 2009, what was the biggest factor? Figure 6-9 Manufacturer/Marketer: How did order levels from distributors and direct-order retailers change in late 2008 and 2009? Penton Media, Inc.

13 Index of Figures Figure 6-10 Is a lack of a dependable supply of organic raw materials limiting your company from generating more sales of organic products? Figure 6-11 How do you expect your use of organic ingredients to change over the next 3 years? Penton Media, Inc. 13

14 NBJ s 2010 Organic Report Featuring OTA Data Penton Media, Inc.

15 1 Executive Summary Organic product sales took a beating last year and, although they seem to be slowly healing, the bumps and bruises are still visible on most product categories. Overall, U.S. organic sales did continue expanding in 2009 just at a much slower rate than ever before tracked by the Organic Trade Association. According to OTA estimates, U.S. consumer sales of organic foods, beverages and non-food products increased 5.3% to $26.6 billion in The U.S. organic industry grew 17% in 2008 and 19% in Some organic categories, including snack foods and beverages, could barely tread water last year, while organic dairy and packaged & prepared foods actually slipped into negative sales territory. On the positive side, organic sales growth continued to outpace total sales of comparable conventional food and non-food items by a significant margin. While organic food sales grew 5% in 2009, total food sales were up less than 2%. Organic non-food sales experienced 9% growth, while total comparable non-food item sales actually declined almost 2%. Organic products continue to account for only a small share of total product sales. Organic food share has grown to about 4% of total food sales while organic non-food still accounts for only about 0.5% of total comparable non-food sales. Figure 1-1 U.S. Total Organic Sales & Growth, $30,000 25% $25,000 $20,000 $15,000 $10,000 $5,000 20% 15% 10% 5% $ Sales ($M) Growth 0% Source: Organic Trade Association s 2010 Organic Industry Survey conducted 1/21/2010 3/3/2010 ($mil., consumer sales). After more than a decade of double-digit sales expansion, the U.S. organic food industry hit a wall in Organic food sales continued to grow in 2009, but the 5% growth was well below the 17% compound annual growth posted from The organic food categories included in the industry analysis include dairy, fruits & vegetables, breads & grains, beverages, packaged & prepared foods, snack foods, condiments and meat,fish & poultry. The organic non-food categories include supplements, pet food, fiber (linens and clothing), personal care and flowers. Although sales growth dropped from a compound annual growth rate of 29% from to a still healthy 9% in 2009, the organic non-food category continues to outpace the growth rate of total non-food sales. The organic non-food market added $151 million in new sales dollars in 2009 despite subdued growth rates Penton Media, Inc. 15

16 NBJ s 2010 Organic Report Featuring OTA Data NBJ s 2010 Organic Report Featuring OTA Data covers the trends affecting the organic industry. This 250- page report features: OTA consumer sales for organic foods in 2009 by food category along with a historical perspective on how these categories have performed since The eight food categories are: dairy, breads & grains, beverages, fruits & vegetables, snack foods, packaged & prepared foods, condiments & sauces and meat, fish and poultry. Historical analysis of the performance of and market share held by the 63 organic food subcategories including milk & cream, soymilk, baby food, sweeteners and poultry. OTA consumer sales for organic non-foods in 2009 by non-food category along with a historical perspective on how these categories have performed since Organic non-food categories include personal care, fiber (clothing & linens), supplements, pet food, household cleaners and flowers. Analysis of emerging new product categories and regulatory issues facing the industry globally Case studies profiling major successes and failures, and trends shaping the future of the organic industry Interviews with industry executives and thought leaders about the state of the organic market Penton Media, Inc.

17 1 Executive Summary Organic food sales continued to grow in 2009, although at a checked pace compared to previous years. The organic food market grew 5.1% and sits just shy of $25 billion. While it chalked up $1.2 billion in new sales in 2009, the organic food market s growth was less than a third of the 16% growth experienced in This represents the third year of sales growth decline for the organic food industry, with growth last peaking at 21% in Organic food experienced 19% average annual growth from Figure 1-2 U.S. Organic Food vs. Total Food Sales, Growth and Penetration, Category Organic Food 6,100 7,360 8,635 10,381 12,002 14,223 17,221 20,410 23,607 24,803 Growth 21.0% 20.7% 17.3% 20.2% 15.6% 18.5% 21.1% 18.5% 15.7% 5.1% Total Food 498, , , , , , , , , ,556 Growth 5.0% 4.7% 1.7% 0.9% 1.6% 4.2% 5.5% 5.0% 4.9% 1.6% Organic as % Total 1.2% 1.4% 1.6% 1.9% 2.2% 2.5% 2.9% 3.2% 3.6% 3.7% Source: Organic Trade Association s 2010 Organic Industry Survey conducted 1/21/2010 3/3/2010 ($mil., consumer sales). The $9.5 billion organic fruits & vegetables category, commanding 38% of the total organic food market, continued to be the major breadwinner for the industry. The category experienced the highest growth for any organic food category in 2009 with 11% growth, making it the only segment not recording diminished growth from Organic dairy and packaged & prepared foods were the big disappointments of 2009, both shrinking about 1%. With factors such as price drops for conventional milk, consumers trying to save money were put off by the wide price gaps of conventional vs. organic in categories such as dairy and meat. This is a sharp turnaround for these darlings of the organic industry. Organic dairy experienced 13% growth in 2008 and averaged a growth rate of 23% from Organic meat averaged 42% growth from , and grew 12% in 2008 while growing only 2% in Figure 1-3 U.S. Organic Food Sales by Product, 2009 Meat, Poultry & Fish 2% Breads & Grains 11% Fruit & Vegetables 38% Beverages 13% Snack foods 5% Packaged/ Prepared Foods 14% Condiments 2% Dairy 15% Source: Organic Trade Association s 2010 Organic Industry Survey conducted 1/21/2010 3/3/2010. The mass market channel commanded the lion s share of organic food sales in 2009 with more than half (54%) of organic food passing through mainstream grocers, club stores and retailers. Natural retailers were the runners-up with 38% of total organic food sales, conceding some sales to mass market because many consumers assume although not necessarily correctly that organic products are cheaper in mass market. The farmers 2010 Penton Media, Inc. 17

18 NBJ s 2010 Organic Report Featuring OTA Data market/co-op/csa channel, although small, generates a lot of buzz as consumers increasingly look for local and regional organic foods. Among other factors, wider distribution of organic products in various channels as well as the growth of private label in the retail channels have contributed to shifts in the allotment of sales among the various channels. When reported in the 2006 OTA report (2005 sales), the natural grocery chains and regional natural and health food stores accounted for 47% of all sales, nearly 10% higher share than in Figure 1-4 U.S. Organic Food Sales by Channel, 2009 Natural & Specialty Retail 40% Direct/Export 6% Mass Market Retail 54% Channel 2009 National Natural Grocery Chain 5,010 Regional Natural/Health Food 4,514 Mass-market Grocery 10,392 Club/Warehouse Store 1,711 Mass Merchandiser 1,389 Farmers Market/Co-op/CSA 719 Internet 446 Mail Order 99 Boutique/Specialty 273 Direct Export 248 Total Organic Food 24,803 Source: Organic Trade Association s 2010 Organic Industry Survey conducted 1/21/2010 3/3/2010 ($mil., consumer sales) Penton Media, Inc.

19 1 Executive Summary Although sales growth dropped from a compound annual growth rate of 29% from to a modest 9% in 2009, the organic non-food category continues to outpace the growth of total non-food sales. The organic non-food market added $151 million in new sales dollars in 2009 to reach total sales of $1.8 billion. Figure 1-5 U.S. Organic Non-Food vs. Total Non-Food Sales, Growth and Penetration, Category Organic Non-Food ,182 1,649 1,800 Growth 20.3% 28.0% 32.6% 25.9% 26.0% 39.5% 9.1% Total Non-Food 298, , , , , , ,300 Growth 6% 4% 4% 4% 4% -1% Organic as % Total 0.1% 0.2% 0.2% 0.3% 0.3% 0.4% 0.5% Source: Organic Trade Association s 2010 Organic Industry Survey conducted 1/21/2010 3/3/2010 ($mil., consumer sales). Organic supplements edged out personal care as the largest organic non-food category in 2007 after a year of profound growth, and the category continues to hold the top spot with $634 million in U.S. consumer sales in Organic fiber, which includes linens, clothing, mattresses and other textiles, shoved personal care from the #2 spot in 2008 and could soon threaten the supplement category for top billing, having handily crossed the $500 million threshold in 2009 and made significant inroads into the mainstream textiles market. The small, emerging categories of organic pet food, household cleaners and flowers have seen sizable sales increases over the last eight years, but are growing from a small base and still only account for 10% of non-food organic sales. Although organic non-food sales continue to grow, pushing $2 billion, growth rates took a cliff dive from astounding 40% growth in 2008 down to 9.1% in 2009, the lowest rate recorded since OTA began tracking the non-food organic industry in Figure 1-6 U.S. Organic Non-Food Sales by Product, 2009 Fiber (Linen & Clothing) 29% Supplements 35% Personal Care 26% Pet Food 5% Household Products 3% Flowers 2% Source: Organic Trade Association s 2010 Organic Industry Survey conducted 1/21/2010 3/3/2010. Non-food organic products remain a tiny portion of the total conventional industry. Organic supplements have the greatest market penetration with 2.3% of total supplement sales, while the tiny organic flower market catches only about 0.2% of total flower sales. These product categories suffer from consumer confusion over value proposition as well as lack of a broadly embraced organic certification Penton Media, Inc. 19

20 NBJ s 2010 Organic Report Featuring OTA Data For non-food organic products, sales are distributed somewhat evenly over mass and natural retail channels. Natural & health food retailers account for an estimated 41% of the market, while mass-market grocers, club stores and mass merchandisers contribute 36% of sales. This is a significant shift from 2005, when natural grocers accounted for 66% of sales. The department store channel has also seen strong growth to obtain its current 8% share. As mass retailers continue to entice consumers with value price organic products, these channels are expected to see continued strong growth. Farmers markets, co-ops and CSAs remain important outlets for organic flowers, which are still struggling to find a larger market. Figure 1-7 U.S. Organic Non-Food Sales by Channel, 2009 Mass Market Retail 44% Natural & Specialty Retail 47% Direct/Export 9% Channel 2009 National Natural Grocery Chain 396 Regional Natural/Health Food 342 Mass-market Grocery 288 Club/Warehouse Store 126 Mass Merchandiser 234 Farmers Market/Co-op/CSA 36 Internet 54 Mail Order 36 Boutique/Specialty 108 Department Store 144 Direct Export 36 Total Organic Non-Food 1,800 Source: Organic Trade Association s 2010 Organic Industry Survey conducted 1/21/2010 3/3/2010 ($mil., consumer sales). In a tough economic year, private label organic products generally thrived in center store while the perimeter store products suffered. Meat and dairy suffered due to the widening price gap between organic and conventional offerings. Private label sales are also shrinking in fresh produce as more stores switch to branded packaged products. Private label meat, poultry & fish sales were down 2% while dairy shrank 1%. The highest growth categories for private label in 2009 were condiments at 23% and snacks at 20%. While the meat, poultry & fish and fruits & vegetables categories have traditionally been strong categories for organic private label, these categories shrank in Although it was a tough year for private label dairy, rising conventional dairy prices and falling organic feed prices should both help to boost organic private label dairy sales in Strong private label categories for the future are dry, bottled and canned products such as oils, peanut butter, crackers and cereal Penton Media, Inc.

21 1 Executive Summary For the organic companies completing this year s survey, 54% reported that they do display the U.S. Department of Agriculture s (USDA) Organic seal on their products, up 3% from 51% of companies in Only one third (34%) of companies making less than $1 million in sales annually display the seal. Companies with a high volume of sales continue to be the most likely to show the label, as 92% of companies selling over $50 million in organic products reported that they display the USDA Organic seal on one or more of their products. Figure 1-8 Do you display the USDA Organic seal on any of your products? Company Organic Sales % Displaying USDA Organic Seal Total 54% Under $1M 34% $1M to $5M 48% Over $5M 82% Yes 54% No 46% Source: Organic Trade Association s 2010 Organic Industry Survey conducted 1/21/2010 3/3/2010. According to manufacturers that provided organic content information for the OTA survey, nearly two thirds of organic product sales were from 100% organic products. Most of the other remaining sales were from 95%+ organic products, while products that were only made with organic ingredients were only a small portion of sales. There has been a noticeable shift recently in key companies converting organic products to natural to compete at a lower price point. However, companies that remain organic are moving to higher levels of organic content. When surveyed in 2006, respondents replied that only 32% of their 2005 organic sales were 100% organic products while 49% were 95%+ organic. According to 2010 OTA survey results, around half of organic companies reported problems with a dependable supply of raw materials, although only 3% called it a major problem. One company, however, reported losing supply of a key ingredient that comprised 40% of its sales in previous years. Respondents cited supply shortages of a wide array of ingredients, but organic cotton, oils and grains were most frequently mentioned Penton Media, Inc. 21