Organic food is grown without the use of any additives, synthetic chemicals genetic manipulation or coloring agents. The companies involved in organic farming must fulfill the standards set by USDA National Organic Program (NOP). Increasing consumer awareness regarding the impact of inorganic food on human health has shifted the industry trend towards developing organic food, and this trend is expected to remain a key driving factor for the market over the forecast period. Organic farming is practiced in more than 160 countries worldwide. Organic farmland accounted for just less than 1% of the total farmable area worldwide in 2011. U.S., Australia and Argentina emerged as the leading countries with maximum organic farmland in the world. The market for organic food & beverages comprises various small, mid and large-sized establishments, operating with a focus on different markets and products.
In this highly dynamic industry, distribution plays a very important role and is the key to success. The demand for organic ingredients has grown over 10% from 2007, due to the desire of improving overall health, and due to awareness about the harmful effects of synthetic ingredients. Many health risks are associated with the use of conventional food due to the presence of chemicals, such as pesticides, antibiotics, and other drugs. This has resulted in consumers preferring organic food & beverages products which are non-toxic and also environment-friendly. In spite of their higher cost and limitation, the market for organic food and beverages is witnessing growth. In addition, government participation in helping the consumer understand the difference between legitimate organic products and falsely labelled ones which have also helped in overall market development. However, high prices of organic food compared to their conventional counterparts coupled with short shelf life are expected to hinder the market growth over the forecast period.
Organic fruits and vegetables emerged as the leading products, accounting for over 35% of total market revenue in 2013. However, on account of growing meat consumption, meat, fish & poultry are expected to be one of the fastest growing product segments, at an estimated CAGR of 14.6% from 2014 to 2020. The global market for organic frozen & processed food is expected to grow at a CAGR of 12.5% from 2014 to 2020. Organic coffee and tea emerged as the leading organic beverages and accounted for 39.6% of total market revenue in 2013. However, organic beer and wine are expected to be the fastest growing product segment at an estimated CAGR of 25.6% from 2014 to 2020.
Global Organic Food Market Revenue Share, by Product, 2013
North America emerged as the leading consumer for organic food & beverages and accounted for over 48% of total market revenue in 2013. North America was closely followed by Europe, which accounted for just over 45% of total market revenue in 2013. However, Asia Pacific is expected to be the fastest growing market for organic food & beverages, at an estimated CAGR of 28.5% from 2014 to 2020.
The market for organic foods & beverages are highly fragmented and has further room for consolidation thus; the market is highly competitive. In order to keep up with the market pace and to gain some amount of competitive advantage, companies are continuously looking to develop new products along with new functions which will come to them through frequent research and development activities. The technological up gradation combined with the energy/labour cost and scientific expertise will help the companies to continuously develop innovative, nutritional and healthier products which will increase the profitability of the companies.
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