The organic section of the grocery store is no longer a small corner of the produce department. Organic options have shifted beyond fruit and vegetables and now feature products in almost every aisle. Sales of natural and organic products, including food, beverage, supplements, household, and personal care, are pacing +4-5% growth and may surpass $300 billion by 2023 and $400 billion by 2030. (Nutrition Business Journal).
Let’s explore trends in the North American organic food and beverage market to learn what’s driving recent innovations, which categories are growing, and which flavors are trending.
State of Organic Food and Beverage
Growing Organic Sales Make for a Strong Foundation
The demand for organic foods and beverages in North America has seen steady growth over the last few years. In 2020, U.S. consumers purchased $56.5 billion worth of organic foods and beverages (a 12% increase over 2019), and in Canada, 2020 sales increased 33% over 2019 and totaled $6.5 billion (Food Navigator).
While some of the gain reflects pantry-stocking and inflation during the pandemic, Food Navigator notes organic categories have a stronger base compared to pre-pandemic levels and continue to grow.
Innovation Slowing in Organics, But Extending Across Categories
Though the outlook is positive for organic food and beverage sales, the pace of organic innovation is slowing compared to non-organic. Innova reports organic launches as a percentage of total food and beverage launches from 2016 to 2020 remained relatively flat in the U.S. and declined in Canada:
- In the U.S., organic launches moved from 13% to 15%
- In Canada, organic launches declined from 15% to 10%
Despite the slowing rate of activity, producers have given consumers organic choices across more of the grocery store. The number of categories with organic launches in the last 52 weeks has increased nearly 13% compared to 10 years ago (Mintel).
The audience for organic food and beverage brands is hungry for more, giving manufacturers opportunities to respond with additional new product development.
What’s Driving Consumer Interest in Organic?
Health & Lifestyle Goals
Organic is starting to feel “mainstream” as more consumers look for food and beverage options to fit their health and lifestyle goals. According to Innova, 52% of U.S. consumers believe organic foods and beverages are healthier than products that are not organic. Along with eating more meals at home during the pandemic, interest in “food as medicine” has picked up.
Need for Transparency
Consumers are looking for transparency from the products they buy, including ingredient origins, production processes, and ethical treatment of humans, animals, and the earth. Because the organic seal in North America reflects compliance with strict regulations, people feel more confident products labeled organic contain no pesticides, growth hormones, or genetically modified organisms (GMOs).
Which Categories are Featuring Organic Innovation?
According to Mintel, here are the top five categories with the most organic launches in the U.S. and Canada (last 52 weeks):
|Category||Key Sub-Categories||United States||Canada|
|Sauces & Seasonings||Oils, Seasonings, Dressings||1||1|
|Snacks||Snack Bars, Fruit Snacks||2||2|
|Hot Beverages||Coffee (U.S.), Tea (Canada)||3||4|
|Bakery||Mixes, Breads, Cookies (U.S.), Crackers (Canada)||4||3|
|Baby Food||Fruit Products||5|
|Nutritional Drinks||Kombucha, Meal Replacement||5|
The top five categories with the most growth in organic launches (compared to previous 52 weeks) include:
- Sports & Energy Drinks (+81%)
- Baby Food (+36%)
- RTD coffee and tea (+31%)
- Nutritional Drinks (24%)
- Bakery (+11%)
- Breakfast Cereals (+113%)
- Soup (+100%)
- Carbonated Soft Drinks (+100%)
- Snacks (+43%)
- Hot Beverages (0% - holding steady)
Navigating Organic Regulations
Organic is closely regulated in North America and producers must obtain certification to make an organic claim.
In the U.S.:
- The National Organic Program (NOP) develops rules and regulations for the production, handling, labeling, and enforcement of all USDA organic products.
- Organic products must be produced without chemical or synthetic fertilizers, pesticides, herbicides, insecticides, or fungicides.
- Certification includes meeting extensive requirements around production, land management, pest/weed/disease management practices, prevention of commingling with non-organic products, and more.
- The Canadian General Standards Board’s Committee on Organic Agriculture develops organic standards, which are enforced by the Canadian Food Inspection Agency (CFIA).
- Only products with 95% or more organic content may be labeled “organic.” Products are certified by a CFIA accredited certification body.
- Certification requirements include limits and prohibitions on pesticides, synthetic fertilizers, genetic engineering, and the use of artificial food colors, flavors, sweeteners, preservatives, and other processing aids and ingredients.
Regulation also includes extensive guidelines for incorporating flavor into organic foods and beverages. For a flavor to make an organic claim, it must meet the same criteria as outlined by the end product's standard. It must:
- Consist of at least 95% organic ingredients
- Have no more than 5% non-organic ingredients
A NOP ruling in 2019 now requires manufacturers to incorporate certified organic flavors into their products whenever available to broaden organic flavor use. The recent change about sourcing organic certified flavors increased the launch complexity for brands and may be a factor affecting the pace of innovation.
How are Flavor Trends Changing for Organic Products?
Many of the leading organic food and beverage categories don’t have added flavor. According to Mintel, around 38% of launches in the last 52 weeks were unflavored (Mintel). With over one-third of launches omitting flavor solutions, formulators have a unique opportunity to innovate with taste.
Despite slowed launch activity and little flavor incorporation, recent history shows a pattern of innovation with taste. The variety of flavors was increasing until the last 52 weeks (Mintel).
Top ten flavors in organic launches (last 52 weeks)
- Dark Chocolate
Classic “tried and true” flavors that are popular in non-organic products like chocolate and vanilla are also used often in organic products. Additionally, flavor profiles of organic products are more likely to feature singular tastes, aligning with consumer expectations about organics and reducing the complexity of sourcing.
Flavors with highest growth (compared to previous 52 weeks)
- Banana (+175%)
- Apple (+150)
- Dark Chocolate (+85%)
- Blueberry (+66%)
- Apricot (+25%)
- Chocolate (+21%)
- Date (+10%)
- Cinnamon (+9%)
- Mango (+6%)
Organic flavors associated with health and immunity like lemon, ginger, turmeric, and cinnamon saw increased activity during the pandemic. While growth has slowed with organic launches, the use of immunity-linked taste profiles remains above pre-pandemic levels (Mintel).
What’s Your Next Organic Innovation?
The future of organic foods and beverages remains bright as consumers continue seeking foods and beverages to fit health and lifestyle goals. Manufacturers have new opportunities to tailor organic options to address functional needs like immunity or align with specific lifestyle goals like reducing food waste.
Are you looking for ideas for your next organic product launch or do you need help sourcing certified organic flavors? Our e-book includes tips on locating and evaluating organic flavor vendors, using and labeling certified organic flavors, and tapping into organic flavors that resonate with consumers.
Don’t hesitate to connect with our team with any questions. Our flavor experts can help you meet regulatory requirements, navigate development hurdles, and speed time to market.