Everybody in the industry is quite apprised of the fact that the demand for organics has been increasing tremendously year over year at a mind boggling rate. However, the dynamics of demand, the geographical distribution, and the consumer diversion are very interesting to study a pattern of growth in organic demand. Through this article, we try to investigate a very important aspect of the global demand of organic food and beverage market, which is the biggest share of organic demand from among the other organic categories like organic cosmetics, organic personal care, organic clothing, etc.

Global Stats

As per the report published by Grand View research in 2014, the global organic food and beverage market is expected to reach USD 211.44 billion by 2020. Organic fruits and vegetables accounted for more than 35% of revenue share and hence was the dominant product in 2013. However, increasing consumption of poultry, meat and fish, the meat segment is expected to grow substantially at a CAGR of more than 13% over the forecast period.

Non-dairy beverages such as rice, oat beverages and soy accounted for 43% of the total organic beverages market in 2013. However, organic beer and wine is projected to grow substantially at a CAGR of more than 23% over the forecast period. Global market for organic coffee and tea is expected to grow at a CAGR of over 20% over the forecast period. Global market for organic frozen and processed food is poised to grow at a CAGR of more than 11% over the forecast period.

Asia Pacific Stats

Asia Pacific is projected to witness highest growth at a CAGR of more than 25% over the forecast period. Japan dominated the region with a 44% share by revenue in 2013. However, China is expected to be the fastest growing country with CAGR of more than 27%. Growing agriculture sector in the country coupled with robust domestic demand has led to significant demand for the product, which is expected to continue over the next seven years.

Rationale behind the growing market

The market for organic food and beverage internationally is a result of highest degree of awareness that has caused the industry and the producers flourish. The demand mostly arises due to the growing inefficiency of conventional food and beverage market. The reason why people are more aware now has also a lot to do with the technology revolution where every information in every city, village or town from across the world is just a click away from your mobile phones.

Today, a human finger cropping up from a leading fast food joint was global news trending all over the social media where even a 90 year old knew the case. This is the power of social media and technology that has brought its benefit to not just organic industry, but to all the industries in its own way.

Government regulations in place pertaining to the use of artificial ingredients and flavors in foods are also limiting their use. The rapid expansion of the organic food distribution channels is also boosting the global organic food market. Moreover, rising disposable incomes and increasing awareness among middle-class consumers about the health benefits and environmental benefits of organic food, predominantly in emerging economies is benefitting the global organic food and organic beverage market.

From the traditional markets of Europe and North America for organic food and beverages, the increasing demand for organic food and beverages in China, India, Mexico, Brazil, and Argentina have aroused the attention of organic food manufacturers for expansion in these countries.

In particular, Asia Pacific is expected to be the most lucrative market for organic food and organic beverages and display a growth rate of 28.2% between 2013 and 2019. The growth of this regional market is attributed to the increasing environmental consciousness and the increasing affinity for organic ingredients.

Way Forward

There are many who advocate that the benefits of organics in general, but there are even more who think otherwise, those who we call ‘fencesitters’. People often go back to the basic arguments of price for organic foods. And then we realize that it is not the money that stops us from buying organics, but the lifestyle that we are used to that stops us from switching to organics. While the demand continues to grow, the production is now more organized and consistent. The organic producers are more confident of their products running off the shelves with the current scenario of organic foods and beverage market demand.

It will be interesting to see the great potential of the developing economies like India coming to the forefront and taking a leap from infancy to growth of organic market in general. The great wall of disparity however still continues to remain a big cause of concern for the organic producers. But the urban consumers are happily increasing adoption of organics worldwide as well as in emerging markets like India. Also, the export ratio is also increasing which means there is more bulk organics from India is being demanded from the global buyer.