Once confined to health food stores, the organic category has grown exponentially and shows no signs of slowing. In 2015, the total category was worth $4.7 billion at Canadian retail, according to Tia Loftsgard, executive director of the Canada Organic Trade Organization (COTA), which has reported 16% year-over-year growth in the segment since 2010.
Two in three Canadians (66%) are spending at least some of their weekly grocery budget on organic items, according to an Ipsos poll conducted earlier this year on behalf of COTA. Among those consumers who buy at least some organic foods, these items account for 21% of their weekly grocery budget. Fruits and vegetables (76%) remain the most commonly bought organic food, well ahead of meat and poultry (28%) or dairy products (27%), according to the poll.
“In the produce world, all categories are seeing growth,” says Robert Kuenzlen, executive vice-president of Mike & Mike’s Organics, a Woodbridge, Ont.-based distributor of certified-organic produce and packaged grocery items.
According to the Free-from Food Trends Canada 2015 report, issued by market research firm Mintel, a little more than one-fifth (22%) of Canadians who claim to use “free-from foods and/or beverages” identify organics as among the factors most important to them when purchasing foods or beverages for home.
A driving force for organic purchases is health-conscious millennials, who, as a group, will surpass boomers’ organic consumption by 2020, says Loftsgard, adding that the fastest-growing new sub-category is snacks.
Organic packaged foods, including snacks, saw 6% growth in 2016, with sales reaching $1.1 billion in Canada, according to research firm Euromonitor.
In Canada, the organic movement “is consistent with growing concerns over hormones or steroids in beef, chicken and eggs, pesticides and herbicides in agricultural products, and a deep-rooted wariness over GMO products,” according to the Euromonitor report. “Organic products are associated with socially and environmentally-responsible farming practices as well.”
Attuned to consumers’ growing appetite for organic, manufacturers are bringing new and innovative products to market.
In May, Beretta Farms reintroduced its organic hot dogs featuring new labelling, a smaller size and lower price point to “be more competitive,” says company founder Cynthia Beretta.
This fall, McCormick Canada plans to introduce Club House Organic Seasoning Mixes—in varieties such as Fajita, Kung Pao and Garlic Ginger—as well as Billy Bee 100% Canadian Organic Honey.
Among the newer products offered by Tree of Life Canada, a B.C.-based specialty foods distributor, is Monteli Pizza, made from organic, non-GMO ingredients using 100% solar energy and hydroelectric power from certified renewable energy sources. Another is Nineteen02 Kombucha fermented tea, brewed in British Columbia and touted for its probiotic health benefits.
“Companies may look to explore other claims that offer similar benefits as organics [such as pesticide-free for produce, free-from meats with no hormones, antibiotics, animal by-products and/or steroids used] but prove more cost effective and relevant to a broader base,” says Joel Gregoire, senior food and drink analyst at Mintel.
Strong organic sales have boosted grocery stores’ bottom lines on a number of fronts. John Roden, marketing manager at Vancouver-area Stong’s Market, says in the last two to three years, sales of organic packaged foods have grown in tandem with their increased availability.
At Nature’s Emporium, operator of three Greater Toronto Area food stores, customers are very vocal about their interest in organic products, says Ryan Dennis, director of communications. “We’ve met that demand by investing in organics, both in our fresh department and our exclusively organic produce department, and by increasing the availability of organics throughout our grocery and supplement sections.” He adds that Nature’s Emporium has also “seen sustained strong and consistent growth in our prepared foods categories.”
The category’s future appears to be bright with sales of organic packaged food expected to reach $1.3 billion in Canada by 2021, according to Euromonitor. “Over the forecast period, as the health and wellness trend continues to evolve and consumers become increasingly careful of what they consume and constantly examine product labels and ingredient lists, organic packaged food will see rapid take-up,” says the research firm’s report.
Retailers, however, “need to put thought in to how to merchandise the category. What gives consumers the message that you’re serious about organics?” says Mike & Mike’s Kuenzlen.
Noting that “demand is growing and organics is a strong growth category that builds consumer loyalty,” Loftsgard says the increasingly large selection of organic products available may force retailers to rethink their planograms. “Organic products likely will no longer fit solely into an organic aisle. How will grocery stores address the influx of new products into their shelves?”