Organic Foods Market Size, Share & COVID-19 Impact Analysis, By Category (Fruits & Vegetables, Dairy, Meat, Fish, & Poultry, Frozen & Processed Foods, Cereals & Grains, Beverages, and Others), By Product Type (Processed and Unprocessed), By Distribution Channel (Supermarkets/Hypermarkets, Specialty Stores, Convenient Stores, Online Retail Stores, and Others), and Regional Forecast, 2022-2029

The global organic foods market size was valued at USD 140.46 billion in 2021. The market is projected to grow from USD 157.48 billion in 2022 to USD 366.66 billion by 2029, exhibiting a CAGR of 12.83% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with the organic foods experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a growth of 18.87% in 2020 as compared to 2019. 

Food and beverage products, including fruits, vegetables, dairy products, and grains produced by the standards of organic farming are called organic foods. The increasing health consciousness among consumers and focus of the government on expanding organic foods production primarily drive the industry's growth. Since the demand for organic type of food is increasing worldwide, companies are introducing several novel products in the packed foods category to expand their footprint in the market. The rising income level of consumers, enhancement in the standard of living, and rapid urbanization to support the global organic foods market growth.

COVID-19 IMPACT

Increased Retail Sales of Organic Foods to Drive the Industry Growth Amid COVID-19 Pandemic

The outbreak of the COVID-19 pandemic led to a significant surge in demand for organic foods globally. The pandemic triggered consumers' consciousness of nutrition and health, which was the key driving factor during the pandemic. Since the product aids in boosting consumers' immunity, individuals are intended to buy more organic and healthy foods. As a result, retailers have witnessed a demand spike for products worldwide. For instance, in April 2020, Abel & Cole Limited, a U.K.-based retailer, reported a nearly 25% increase in food orders under the organic category. 

Surge in product demand impacted supply, and as a result, the supply network across the world came under pressure. Many industry players across North America and Europe were dependent on raw materials produced in Asia Pacific and South America. Emergency measures such as travel restrictions and market closures to control the spread of the COVID-19 halted exports and food processing activities in the initial phase of the pandemic. It moderately affected the global market growth during the COVID-19 pandemic.

LATEST TRENDS

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Celebrity Endorsement and Fund-raising Activities to Propel the Market Growth 

Industry players are intensifying their focus to trigger consumers' interest in adopting healthy food options, including organic, natural, and vegan, over traditional ones. Companies, including General Mills Inc, Nestle S.A., and Danone S.A. partner with various celebrities and athletes to promote their brands and products. This factor is likely to increase the organic foods demand in the forthcoming years.

Over the past decade, the industry witnessed a significant increase in the number of new entrants. Entrepreneurs in the industry seek financial support to expand their business operations, which encourages capitalists to invest in the industry. The increasing prevalence of fundraising is another supporting factor to the industry's growth. For instance, in November 2021, Amara Organic Foods, a U.S.-based emerging startup, raised nearly USD 12 million in Series A funding to expand its organic infant foods product portfolio.

DRIVING FACTORS

Evolving Agriculture Farming to Push the Market Growth

Over the past two decades, organic farming practices have rapidly evolved worldwide. Usage of chemical fertilizers and pesticides severely affects the environment. Thus, governments worldwide are promoting organic farming to reduce the use of hazardous chemicals in agriculture. According to the Food and Agriculture Organization, in 2021, organic agriculture was practiced in 187 countries, and nearly 72.3 million hectares of agricultural land, increased by nearly 1.1 million hectares from 2019, were managed organically. The emerging organic farming trend worldwide increases the product availability and makes it more affordable. This is also one of the key driving factors for the market.

Increasing Number of Product Launches to Expand the Global Organic Foods Market Size

Increasing diversity in the industry is likely to support the steady growth of the market. The industry players are coming up with innovative products in several categories, such as snacks, infant formulas, confectionaries, beverages, and bakery products, to increase their prominence in the market. For instance, in February 2022, Sprout Organics Inc, an American company, launched organic meals and snacks for babies. The new Yes Veggies meal is made from organic peas, pears, apples, bananas, and other fruits.

Furthermore, the increasing popularity of fortified processed foods with organic labels is getting traction in the marketplace. This trend encourages the industry players to introduce products with enriched nutritional content. For instance, in May 2022, Cocos Organics, a British food company, launched a new dairy-free yogurt alternative enriched with Bifidobacterium BB-12.

RESTRAINING FACTORS 

High Prices and Limited Shelf Life of the Products to Impede Market Growth 

Organically cultivated food products are generally more expensive than their conventional counterparts, mainly due to the limited supply compared to demand. High labor input and low crop yield led to high production costs. The costs are nearly 50% more than conventional food products. The price factor has limited product penetration, especially in developing countries.

Organic fruits and vegetables are not treated with preservatives during production, handling, and delivery. Thus, products tend to spoil faster as compared to conventional. For instance, several products such as turnip greens, mustard greens, and endive have a short life span. Several tons of uneaten organic fruits and vegetables are wasted in the marketplace each year due to their short shelf life. It is also one of the key factors to hamper industry growth.

SEGMENTATION

By Category Analysis

Fruits & Vegetables to Dominate Due to Increasing Consumption

Based on category, the market is divided into fruits & vegetables, dairy, meat, fish & poultry, frozen & processed foods, cereals & grains, beverages, and others.  

The fruits & vegetables segment accounts for a prominent share in the global market in 2021, and it is anticipated to continue to dominate throughout the forecast period. The nutritional value of organic fruits and vegetables is the major driving factor in the global market. It contains a rich amount of minerals, vitamins, fibers, and antioxidants as compared to conventionally grown varieties. Several studies have proven that organic fruits and vegetables are tastier than conventional ones.

Increasing demand for healthy and clean label products within the dairy products category pushes the organic dairy category sales. The surge in retail advertisement for organic dairy products across developed nations remains a key factor for segment growth. According to the U.S. Department of Agriculture (USDA), in 2022, the total organic dairy retail advertisements increased by nearly 110% from last year. As a result, organic whole milk sales in 2022 increased to 114 million pounds, nearly 5.0% from last year.

By Product Type Analysis

Freshness, Quality, and Convenience Surge the Demand for Unprocessed Foods

On the basis of product type, the market is divided into processed and unprocessed.

Unprocessed segment accounts for the largest market share in the global market. The product's popularity has been evolving rapidly over the past two decades due to its fresh-like appearance and convenience associated with these foods. The quality aspect of unprocessed foods plays a key role in securing consumers' acceptance globally. Furthermore, unprocessed or minimally processed foods, including organic meat, fruits, vegetables, dairy products, cereal, and grains are more nutrient-dense than processed foods. Since these foods are rich in nutrients and tasty, consumers prefer unprocessed foods.

By Distribution Channel Analysis

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One-stop Shopping Experience to Propel Sales in Supermarkets/Hypermarkets

By distribution channel, the market is segmented into supermarkets/hypermarkets, specialty stores, convenience stores, online retail stores, and others.

Supermarkets/hypermarkets segment holds the largest market share, as it offers a range of brands and product varieties in a single place. The convenience in product selection is the prominent aspect of increasing the foot count in such stores. Furthermore, supermarket chains are expanding their presence in tier 2 and 3 cities to reach a large consumer base, which is another major factor positively supporting the segment growth.

Online retail stores segment is anticipated to expand with the highest growth rate during the forecast period, as internet penetration is emerging globally. Since it offers flexibility in shopping and an easy home delivery option, individuals rapidly opt for online mode to purchase the products. Moreover, key players in this industry are collaborating with online retailers such as Amazon and Walmart to enhance their consumer reach, which is likely to push organic foods sales from the segment.

REGIONAL INSIGHTS

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Europe is currently the leading market and is projected to account for a significant proportion of the market during the forecast period. The growing environmental and animal welfare concerns encourage individuals to consume organic products, especially fruits and vegetables. According to AgenceBio, a French Agency for the Development and Promotion of Organic Agriculture, fresh fruit & vegetable was the second leading organic product consumed in France in 2020, with 17% of organic consumption at home, followed by groceries (31%).

North America is one of the major markets that contribute considerable revenue to the global market. The tremendously increasing consumers' health consciousness leads to organic type of food consumption across the United States, Canada, and Mexico. The demand for organically produced and organic labeled food products is emerging continuously in North America, as it has a lower level of conventional pesticides and fertilizers and is better for health than conventionally produced foods. According to the Organic Trade Association (OTA), the organic baby food category's dollar sales growth in the U.S. increased by 11%, followed by the beverages segment with 8% in 2021.

The market in Asia Pacific is expected to grow at a speedy pace owing to rising consumer awareness of organic products, rising availability of organic products on retail shelves, and increasing individuals earning capacity. Furthermore, the rising investment of international players in the regional market is anticipated to support regional market growth. For instance, in May 2019, Nestle S.A., a multinational food company, launched organic food products under the brand Ceregrow. This children's cereal product, made from organic ragi, wheat, milk, and rice, is the company's first organic product in the Indian market. 

The market in South America is predicted to grow at a crucial pace owing to continuous expanding organic farming in countries such as Brazil and Argentina. Government and non-profit organizations are promoting organic farming to reduce the usage of conventional pesticides and fertilizers. As a result, South America's organic agriculture area and production capacity are increasing strongly.

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The demand for products in the Middle East and Africa is increasing steadily with the rising demand for natural and chemical-free foods among consumers.

KEY INDUSTRY PLAYERS

Rising Product Demand to Encourage New Companies to Enter the Market

The global industry is becoming more consolidated owing to new product launches, brand loyalty, a wide range of product offerings, and a strong distribution channel presence of prominent companies in developed and developing economies. Furthermore, the industry is experiencing a surge in the new entry of players with a range of innovative products, especially in developing nations. For instance, in May 2022, Amul, an Indian-based brand operated by the Gujarat Cooperative Milk Marketing Federation Ltd., announced to enter the organic food industry by launching a range of products, including organic whole wheat atta, moong dal, tur dal, chana dal, and basmati rice.

LIST OF KEY COMPANIES PROFILED:

• General Mills Inc. (U.S.)


• Danone S.A. (France)


• Dole plc. (Ireland)


• Organic Valley (U.S.)


• Organic India Pvt. Ltd. (India)


• Amy's Kitchen, Inc. (U.S.)


• Arla Foods Amba (Denmark)


• Eden Foods Inc (U.S.)


• Hain Celestial Group, Inc. (U.S.)


• SunOpta Inc (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• June 2022: Sprout Organic Inc., an Australian infant nutrition startup, signed a partnership agreement with one of the largest online retail platforms, Amazon, to offer its plant-based organic baby formula to consumers across the country.


• May 2022: Barry Callebaut, a Belgium-based chocolate-producing company announced to expand its plant-based portfolio by adding dairy-free organic chocolate to serve its consumers across North America.


• May 2022: Organic India, an Indian-origin multinational company, launched new organic tea products such as Tulsi Detox Khawa, Peppermint Refresh, Moringa Hibiscus, and Simply Chamomile.


• April 2022: Nestlé S.A, a multinational food and drink manufacturing company, launched a plant-based organic baby food product called Plant-tastic under its brand Gerber. The newly launched full range of products, such as the Lil' Crunchies White Bean Hummus, Banana Berry Veggie Smash Pouch, Toddler Snacks, and the Mediterranean Medley Harvest Bowl, is available on Amazon and at Walmart.


• January 2021: L.T. Foods Ltd., an Indian rice milling company, acquired a 30% stake in the Netherlands-based organic specialty food company Leev.nu. Leev offers a vast range of food products, including breakfast bars and healthy snacks under the organic label. The acquisition assists the L.T. foods in strengthening its presence in the Netherlands.

REPORT COVERAGE

An Infographic Representation of Organic Foods Market

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The research report provides qualitative and quantitative insights into the organic food products market and a detailed analysis of the global organic foods market share, market size, and growth rate for all possible segments in the market. The report also provides an elaborative industry analysis of different countries’ markets. The report provides various key insights, the overview of related markets, market dynamics, SWOT analysis, recent industry developments such as mergers & acquisitions, regulatory scenario in key countries, key market trends, and the competitive landscape.

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