Cost difference between organic, non-organic foods may be decreasing

Organic, natural and health foods are on many shoppers’ grocery lists today. Following the COVID-19 pandemic, staying healthy has become a priority for many.

“Throughout the pandemic, health has been top of mind and many consumers began to take a deeper interest in their health in a more holistic, pre-emptive way,” said Mackenzie Reichardt, senior manager of commercial planning and analytics at KeHE Distributors, citing data from SPINS.

“This new interest in wellness helped drive record unit growth in natural, specialty and organic positioned products, outpacing the conventional product growth and driving a 165bps share increase from pre-pandemic to now.”

Naperville, Illinois-based KeHE is a distributor of natural, organic, specialty and fresh products to more than 30,000 natural food stores, chain and independent grocery stores, e-commerce retailers and other specialty products retailers throughout North America.

Organic and natural foods have been around for a while, but their higher prices may have been a deterrent for some shoppers. Today, however, the cost difference between organic and non-organic foods seems to be decreasing in some instances.

“Natural, specialty and organic prices have increased at a slower pace than conventional, which has caused the delta between these two products positions pricing to shrink -1.2 percent in the last year and -4.7 percent in the last two years,” Reichardt said, citing SPINS data.

Inflation is impacting the organic and natural products industry as well as conventional goods, causing total units to trend down. However, Reichardt said they have observed two interesting behaviors – an increase in away-from-home food consumption (restaurants) and an increase in purchases of products with larger pack or volume size.

“The latter signifies that consumers are looking for value when purchasing in bulk or larger sizes. Nonetheless, conventional product declines outpace natural, specialty and organic products, which have continued to drive natural, specialty and organic share increases in the current year, growing 21bps compared to January 2022,” she said, citing SPINS data.

According to Reichardt, it is important to note that lower-earning households are feeling inflationary pressures the hardest.

“The natural and organic shopper tends to be in a higher income bracket, therefore not experiencing the same pressures as the rest of the population.”

KeHE’s 2023 Macro Trends report identifies five major trends within the grocery industry for 2023:

• living a sustainable lifestyle;
• becoming a more conscious consumer;
• elevating the culinary experience;
• Tuning in to body and mind; and
• Inspiring food innovation with unique ingredients.

The report states that today’s natural consumer is “motivated by an overlapping combination of factors such as health and nutrition benefits, environmental sustainability, convenience and adventurous flavor experiences. As demand for food products that meet these needs grows, shoppers are looking to brands to continue to deliver innovation at an ever-increasing rate.”

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