Does Walmart's move mean organics are mainstream?

Another sign of the American consumer's changing tastes and demands?

Walmart (WMT), the country's largest grocer, says it will team up with the Wild Oats brand of organic foods later this month. The company says the brand, which began as an independent, Colorado-based company in the 1980s, will offer consumers "a new, more affordable price point on quality products covering a broad variety of categories."

They'll also be priced 25 percent or more below comparable national-brand organic products. The nearly 100 Wild Oats products will help remove "the price premium associated with organic groceries," according a Walmart press statement.

Despite the household belt-tightening associated with the Great Recession, the U.S. Department of Agriculture says consumer demand for organically grown produce has grown significantly since the USDA established national standards for organic production and processing a dozen years ago.

And while the USDA doesn't keep official statistics on organic food sales, it does quote industry analysts, who estimate those sales came in at $28 billion in 2012 -- or over 4 percent of all at-home food sales, up 11 percent from a year earlier.

According to the Organic Trade Association (OTA), demand for organic foods is now international, with a worldwide market that's projected to reach $100 billion by 2015.

"Global consumption of organic products is increasing eight percent annually, and there is strong overseas demand for U.S organic products," Laura Batcha, OTA executive director and CEO, announced last month.

Does Walmart's announcement mean organic foods have finally become mainstream? Not necessarily, says Neal Hooker, a professor of food policy at Ohio State's John Glenn School of Public Affairs.

"It's still a very small portion of the market," he noted. "That said, usually somewhere in the vincinity of 60 percent of consumers, if we ask them if they purchased at least one organic food or beverage item in the last month, will say yes."

And while a relatively tiny proportion of U.S. crops, livestock and other produce are raised organically, rising market demand could shift those numbers.

There's also the issue of what the "organic" classification means. Hooker pointed out that, when it comes to multi-ingredient products, the USDA has a four-tier organic labeling system: 100 pecent organic, at least 95 percent organic, at least 70 percent and less than 70 percent.

Referring to the branded packaged foods and beverages Walmart will focus on, he says, "it's going to be interesting to see: Are they selling probably 95 percent-plus organic product, or are they selling a lower-tier -- (and) do consumers really distinguish between those sorts of products?"

  • Bruce Kennedy

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