Giving Consumers What They Want: Natural or Organic

In general, the food industry understands that the sensory quality of a food or beverage is its most important attribute. The healthfulness of foods tends to increase in importance as people age and also as they must deal with health conditions such as cardiovascular disease, diabetes and so on. Foods can be formulated to help with specific health conditions; examples would include free from gluten (for those with Celiac disease) or reduced calorie for weight management.

“Back to nature” is an interesting concept.  Consumers perceive both “natural” and “organic” products to be healthier than traditional products, although in the USA, only foods that say they are organic must meet specific criteria. Saying a food is “natural” doesn’t mean as much in that such foods do not have to meet specific regulatory standards USDA products are an exception). An August 2010 Canada Organic Trade Association White Paper entitled “Consumer confusion about the difference: ‘Natural’ and ‘Organic’ product claims” makes some interesting points.

The paper points out that since organic producers and manufacturers are required by law to comply with the Organic Product Regulations, their costs (and thus their products) are significantly higher than “natural” products that are made with less expensive conventional ingredients. “There is a wide range of price differences, but organic ingredients typically cost anywhere from 20% to 100% more than conventional ingredients. Organic meat and dairy ingredients can be 400% more costly than conventional.” Overall, this cost differential and the general lack of consumer awareness of the difference between natural and organic has led to a more robust market for natural foods. A 2008 Nielsen’s Healthy Eating Report noted that foods labeled as natural generated $22.3 billion in sales in 2008, while organic foods (UPC-coded) generated $4.9 billion in sales. The global market for organic foods is projected to have revenues approaching US$ 60 billion in 2011 according to a blog for the Global Organic Market Access. It is difficult to find estimates for the worldwide market for natural foods due, in part, to the lack of an commonly accepted definition of “natural.” It’s kind of hard to count what you can’t even identify.

So, in the end, food manufacturers’ are giving consumers what they want: relatively low cost, natural foods.

— Claudia O’Donnell, Global Food Forums, Inc., a conference and seminar organizer
Posted on:May 27, 2011

3 thoughts on “Giving Consumers What They Want: Natural or Organic

  1. Sharrann Simmons said:

    The recession has reduced the attractiveness of high-priced organic products, but the consumer demand for natural has survived. The challenge for the food industry is to create foods that have a 6-week shelf life and consumer-preferred textures, but contain only “natural” ingredients…

  2. Jean said:

    You are right. And, it drives the food industry’s product development efforts. It often comes down to regulations on labeling…and advancing food technology.

    For example, bacteria naturally produce compounds called bacteriocins that inhibit the growth of other bacteria. A variety of bacteriocins are produced by lactic acid bacteria that have for thousands of years been used to naturally preserved foods. Milk is turned into yogurt in part due to Lactobacillus bulgaricus; most all pickled vegetables (e.g., sauerkraut from cabbage) are produced with lactic acid fermentation bacteria. (The increased acidity is a prime factor in preservation.) One bacteriocin, nisin, is now produced through fermentation and is sold as a natural preservative. It has been approved by the World Health Organization and does have an E-number (E234). In the U.S. it has GRAS status and in certain cases, such as “pasteurized process cheese spread,” does not have to be labeled since it is part of the standard of identity for that product.

    In another example, as consumers grew to prefer “natural flavorings,” the food industry became accomplished in the production of more good quality and sometimes economical natural flavorings. What flavors are considered natural and what are artificial are defined in the U.S. Code of Federal Regulations. A natural flavor means “essential oil, oleoresin, essence or extractive, protein hydrolysate, distillate, or any product of roasting, heating or enzymolysis, which contains the flavoring constituents derived from a spice, fruit or fruit juice, vegetable or vegetable juice, edible yeast, herb, bark, bud, root, leaf or similar plant material, meat, seafood, poultry, eggs, dairy products, or fermentation products thereof, whose significant function in food is flavoring rather than nutritional. Natural flavors include the natural essence or extractives obtained from plants listed in…..”

    In the end, the a natural or artificial flavor could be identical in composition, differing only in how they were made…and how healthful consumers believe them to be.

  3. Jim Akinson said:

    It’s interesting how the industry lumps natural and organic together, as though they are the same thing. A new market research report entitled “Natural and Organic Foods and Beverages in the U.S., 3rd Edition” says that U.S. retail sales of “natural and organic foods and beverages rose to nearly $39 billion in 2010, an increase of 9% over the previous year’s sales of $35 billion, far outpacing growth in conventional groceries, which crept ahead less than 2%.” It goes on to say sales are predicted to double by 2015 to exceed $78 billion. It also notes that this growth will be driven in great part by Frito-Lay’s changing half its snacks to all-natural formulations.
    Comments and reports like this make consumers, and even many in the industry think that organic and natural are the same. But as you pointed out, they are not.

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