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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.
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:
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.
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.