Organics Fail to Yield Cash Crop for Food Giants: $14 Billion Category's High Prices Turn Off Consumers

copyright Adage.com
by Stephanie Thompson
published October 15, 2006

NEW YORK (AdAge.com) -- It's been enthusiastically embraced by marketers, blessed by Wal-Mart and touted as the holy grail of growth for an industry desperately in need of it. But after a stupendous start, organic foods are looking suspiciously like a sensation sizzling out.

$14 billion

Organics are a $14 billion business with a brisk growth rate, but they account for only 2.5% of total food sales despite hundreds of millions spent by major marketers in the past 12 months to make them mass. Some marketers are spending more to introduce organic versions of mainstream foods than they are earning from sales of organics, as consumers balk at paying double the price for organic versions of their favorite products. It's all mounting evidence that the trend, like the low-carb craze before it, is hurtling toward a crash.

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