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After a rough start, 2010 could prove to mark a significant sales turnaround for the U.S. organic industry. Sales at UNFI, Whole Foods, Hain Celestial and other companies entrenched in organic have all been up in recent months. But will it be enough to bring the industry as a whole back into double-digit revenue expansion?
For a year that started out rather rough, 2010 could end up marking a significant turnaround for the U.S. organic industry. “Overall, we are definitely seeing an upswing in sales growth,” Christine Bushway, executive director of the Organic Trade Association (OTA), told NewHope360. “Our member companies seem to be doing very well right now.”
After more than a decade of double-digit growth, sales of organic products stalled considerably in 2009 and early 2010. According to OTA estimates, U.S. consumers rung up $26.6 billion in sales of organic foods, beverages and non-food products in 2009. “That represented 5 percent growth from the previous year—which is still healthy growth,” Bushway said. “But compared to the growth the U.S. organic industry had been experiencing, it felt like falling off a cliff.”
Over the course of 2010, however, the U.S. organic industry has been able to pull itself back up, Bushway said. “We are looking at getting back to double-digit sales growth by the end of 2010.” Organic categories doing particularly well include beverages, fruits and vegetables, and even dairy—which experienced a sales decline in 2009. “Organic dairy has come back really well this year.”
Greg Badishkanian, a research analyst at Citi Investment Research who follows the natural and organic industry, is also reporting strengthened sales velocity in both natural and organic.
“We believe sales momentum at the retail level within the natural/organic food industry remained strong during November and early December,” Badishkanian wrote in a Dec. 15 analyst note. “This is an encouraging sign, in our view, given continued volatility in other discretionary segments such as leisure. We believe that inventory levels at retail are low and have led to higher-than-normal out of stocks, which have negatively impacted sales. Even with these issues, we believe overall sales growth is still around the robust levels seen in 3Q and October.”