Natural & Organic Foods Consumption

The Hindu Business Line  Nov 22  Comment 
A host of companies including Alkyl Amines Chemicals, Bedmutha Industries, Esteem Bio Organic Food Processing, Kesar Terminal & Infrastructure, Manugraph India, Mohit Paper, Monarch Networth Cap...
The Hindu Business Line  Nov 15  Comment 
Over one dozen companies will announce their financial performance on Thursday for the July-September quarter. Among these are Ahluwalia Contracts (India), Esteem Bio Organic Food Processing, Gati, ...
The Hindu Business Line  Nov 8  Comment 
The Food Safety and Standards Authority of India has launched an “Indian Organic Integrity Data Base”, to help consumers verify the authenticity of organic food. ‘Jaivik Bharat’It has also introduce...
Clusterstock  Nov 3  Comment 
The National Organic Standards Board, an advisory committee to the US Department of Agriculture, voted to allow some crops grown hydroponically and aquaponically to have organic labels. Organic food sales totaled $47 billion in the US in...
Reuters  Sep 14  Comment's recent price cuts at Whole Foods drew more shoppers to its newly acquired natural and organic grocery chain, according to two companies that track retail traffic.
Motley Fool  Sep 10  Comment 
Organic food companies have seen sales explode over the past decade, but there's reason to be cautious.
TechCrunch  Sep 7  Comment 
 John Foraker, who led the well-known organic food brand Annie’s for 17 years, is working on a new organic food startup in Berkeley. General Mills bought Annie’s for $820 million in 2014. Foraker was supposed to stay for one year. He stayed...


Organic and natural foods are those produced au naturel, without the use of any chemical fertilizers, pesticides, or additives. Organic foods were historically grown on small, family-run farms, limiting the sale of these goods to small grocery stores and farmers' markets. Natural foods are now much more popular and widely available, as evidenced by the growing number of natural/organic retailers like Whole Foods Market (WFMI) and Wild Oats Markets (OATS). The sales of organic and natural foods have boomed as well, significantly outpacing the growth of conventional food sales.

Natural and organic foods have become increasingly popular for a number of reasons, the most significant of which is the health and wellness benefits associated with naturally grown foods. Though there is some controversy over the details, organic foods nonetheless have a reputation of being healthier, safer, and more sustainable than conventionally grown foods. Additionally, purchasing organic and natural foods has become somewhat trendy, adding to its popularity.

1997-2007 U.S. organic foods sales
1997-2007 U.S. organic foods sales

Drivers of organic and natural food consumption

Health and Wellness

The principal driver behind the organic movement is a public desire for increased health and wellness. It is widely believed that organic and natural foods are healthier, better for the environment, and more sustainable, than conventionally-grown foods.

Specifically, organic foods are promoted as being:

  1. Safer - Natural and organic foods are produced without the chemical pesticides and additives commonly used in conventional foods. Advocates of natural foods argue that this makes organic foods safer, which is widely believed by the public. Though this has not been explicitly proven, the belief that organically grown foods pose fewer health risks remains.
  2. Better-tasting - A study at Washington State University in 2001 found that organic apples were sweeter and had better texture and firmness than conventionally grown apples. Studies such as these have contributed to the opinion that organic foods are not only healthier, but taste better than traditional foods.
  3. Environmentally friendly - Organic farms have been shown to use less energy and produce less waste than conventional farms. Also, natural farming doesn't use synthetic pesticides, some of which can harm the environment and wildlife.
  4. Farmer friendly - Farmers who grow crops in the conventional method generally use pesticides, which studies have linked to various health problems ranging from headaches to cancer. Again, this is not a scientific fact, but it is used as another reason to buy organic and natural foods.

In addition to these reasons, health scares can make organic and natural foods seem like better options than conventional foods. For example, the recent recall of cat and dog food made from wheat gluten imported from China has raised some questions about conventional farming methods. The wheat gluten contained melamine, an industrial compound that is commonly used as fertilizer and animal feed in China, despite laws preventing its use in food products. It has not been proven that melamine caused the deaths of cats and dogs who ate the contaminated food (which are estimated to be in the thousands), but the negative publicity has still led some to question the use of artificial chemicals in food products.[1]

"Conspicuous Consumption"

Another force driving the demand for natural and organic foods is the upscale, trendy image associated with the segment. Organic foods are more labor-intensive to produce and are generally more perishable than conventional foods, requiring special care. As such, natural foods often carry higher price tags and are purchased primarily by higher-income consumers. Though health reasons are the biggest driver of natural/organic food demand, buying organic can also be something of a status symbol, signifying refined tastes and the ability to afford the luxury of eating healthier, natural foods. This "conspicuous consumption" effect, while difficult to measure, can lead to increased demand for "luxuries" such as natural and organic foods.

Companies that benefit from an increase in organic and natural foods

Retailers & Distributors

  • Whole Foods Market (WFMI) is the largest grocer in the natural/organic niche. They recently announced their intended acquisition of fellow natural retailer Wild Oats Markets (OATS). Though this merger has been blocked by the Federal Trade Commission, the two companies have united to challenge the FTC in court.
  • The success of Wal-Mart Stores (WMT) is yet to be determined; it's entered the organic foods segment, but its primary customer base (low- to mid-income consumers) is not the key demographic that purchases natural and organic foods.
  • United Natural Foods (UNFI) is a national distributor of natural and organic foods for U.S. retailers.

Food Manufacturers

  • Hain Celestial Group (HAIN) produces a large portfolio of healthy and organic foods, which are distributed and sold throughout North America and Europe.
  • Hansen Natural (HANS) offers a line of natural soft drinks, which have become increasingly popular due to rising demand for natural beverages.

Restaurant Retail

Related Products

  • Bodisen is a micro-cap company based out of China that produces organic fertilizers and pesticides.

Companies that benefit from a decrease in organic and natural foods

Dairy Producers

  • Dean Foods Company (DF), Kraft Foods (KFT), and other companies that sell dairy products in the U.S. would likely be harmed by an increase in natural and organic food consumption. Dairy farmers in the U.S. commonly use artificial growth hormones to increase milk production, which is not in keeping with organic practices.

Food Manufacturers

  • Coca-Cola Company (KO) and its perennial competitor Pepsico (PEP), the two largest traditional beverage manufacturers, could could be negatively impacted by an increase in demand for natural and organic products. PepsiCo also makes snacks and other foods, though few are of the natural or organic variety.

Restaurant Retail

Related Products

  • E.I. du Pont de Nemours and Company (DD), Syngenta AG (SYT), and BASF AG (BF) are companies that offer genetically modified food seeds and pesticides. As such, they would be doubly hit by the continued growth of organic and natural foods.
  • Monsanto Company (MON), in addition to manufacturing crop seeds and pesticides, also produces recombinant bovine somatotropin (rBST), a synthetic hormone injected into dairy cows to increase milk yield. Monsanto is the only producer of this hormone, which is banned in Japan, Australia, Canada, New Zealand, and all 27 members of the European Union.
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