US organics – too expensive?

The US organic sector is at a turning point. The segment has now become mainstream, with organic products found in nearly every kitchen across the country. The success of natural foods supermarkets has pushed all forms of retail to get in on the act, with plenty of margin for value added in this category. Nearly 75% of conventional grocery stores in the US stock organic products and there are around 20,000 natural foods stores. Kroger’s Simple Truth organic products brand had the highest sales in 2018, at US$2 billion.

However, according to USDA data, organic foods only account for between 4%-5% of total US grocery sales. This is perhaps because organic products are so pricey. For this percentage to rise, it may require a change to the three-tier distribution system whereby organic products go through distributors who take a margin, thus adding to the retail price.