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You may think that sales of organic foods will be relegated to the Whole Foods and other "green" grocers of the world, but you'd be wrong. With the U.S. organic market projected to grow by 44 percent over the next five years, according to Mintel research, more and more consumers will be looking for convenient places to purchase natural and organic products, and c-stores who ignore this market will be missing the boat.
Consumer demand, driven by a well-to-do, aging baby boomer and Gen Yers, along with increased availability of organic foods through mainstream channels, will drive the $3.6 billon organic food market to new heights, according to the Mintel report. Last year's E. Coli spinach scare raised consumer consciousness and increased the desire to avoid pesticides, hormones, antibiotics, chemicals, bacteria and genetically modified organisms. Over the past two years, the mainstream food/drug/mass channel increased sales by about 37 percent in organics, illustrating the push by mainstream retailers. These retailers have actively cultivated the organic and natural shopper by expanding private label offerings and lowering prices on organic goods.
Indeed, price remains one barrier to consumers, with 62 percent of respondents to a Mintel survey saying they would purchase more organic food if it were less expensive. Wal-Mart's expansion of its organic offerings will bring prices down further. The retailing giant recently pledged to sell organic foods at only 10 percent over the cost of conventionally grown products, as opposed to the traditionally higher prices for organic foods charged by other retailers. A Food Marketing Institute study published last year found that half of all supermarket chains are experimenting with organic/natural store formats. Organic products also play a key role in the marketing strategy of Tesco, the United Kingdom-based retailer that plans to open a convenience store concept in the western United States this year.
The growth of organics is just the tip of the iceberg. You don't have to be a vegetarian c-store, like the Portland, Ore.-based vegan c-store called Food Fight! (see CSNews, June 19, 2006). The health and wellness trend, which dates back to the eighties with the popularity of low/no calorie products like diet cola, is going to touch multiple product categories in a c-store as consumers pay greater attention to healthier living and eating.