Six in ten Aussies buy organic: Inside the $2.4 billion industry

The organic food industry has burst onto the consumer scene in the last couple of years and new research released by Australia Organic suggest that it isn’t slowing down anytime soon.

The research, conducted by Mobium Group, suggests that more than six in 10 Australian households buy organic products in any given year.

Furthermore, the same report reveals more than 1 in 10 Australians (12%) consider themselves to be highly committed organic purchasers, outlaying roughly 40% or more of their annual grocery spend on organic food or even household products.

The research is based on online surveys completed across seven days in February by 1000 primary grocery shoppers, aged between 18 and 69 years.

The health of the organic market is trending upwards; it’s currently worth $2.4 billion and the retail market is estimated at $1.6 billion, an increase of 88% since 2012. According to the report, the retail market accounts for more 70% of Australia’s organic market, which includes everything from fresh produce, to meat, to household products, while exporting accounts for the remainder. 

Despite the growth numbers collected in the study, the local organic industry is still confronted with a number of hurdles. A whooping 67% of respondents to the Australian Organic research suggested cost is still a major barrier in making a more meaningful switch to organic products.

Meanwhile, 40% of respondents indicated that an inability to trust whether food is actually organic or not plays a part in whether to purchase organic products.

Australian Organics general manager Sue Willis says the education of consumers in regards to the “thousands of new chemicals and pesticides” being used in consumer goods is “inspiring”.

“Our findings show that Australians are become more health and environmentally-conscious,” Willis said in a statement.

“(Australians) are thinking carefully about what they are putting in their bodies, the products they are choosing to use and the effects this has on their health.” she said.

The concerns around pricing and trust are validated, according to co-producer at South Australian meat supplier Border Park Organics, Peri McIntosh.

“Because it (organics) has had a surge in popularity, I guess that everyone is looking to get on board,” McIntosh told SmartCompany.

“Manufacturers are understandably trying to get a piece of the pie. We always suggest that you look for certification logos whenever you can.” she says.

McIntosh believes the price factor is a genuine issue facing the industry and education into why this is the case is important.

“We are a lot more restricted, so the outturn is lower (than other distributors), but I guess it’s the value you put on organics,” she says.

“Often, people can see that it validates the reason for paying more.”

But the market is definitely growing and McIntosh believes people are turning to organic products for a variety of reasons, sighting health, environmental and animal welfare issues as the key concerns. 

Founder of organic children’s food company Whole Kids, Monica Meldrum, has been in the organic market for over a decade and told SmartCompany “the numbers don’t surprise me at all”. 

“It has been increasing and building over time as it becomes more mainstream,” she says.

Whole Kids burst onto the scene in 2005 after Meldrum found it difficult to find healthy snacks for children in the supermarkets. Best known for it’s organic fruit bars in its early days, Whole Kids has now expanded its range into a wealth of organic snack options including popcorn, biscuits, juices and dried fruits.

The company made headlines in early 2016 for its partnership with airline giant Jetstar, which involved Whole Kids’ organic fruit bars becoming available on all domestic Jetstar flights. At the time, Whole Kids was on track to turn over $6 million by the end of the 2015-16 financial year.

Meldrum shares McIntosh’s sentiments; she too believes education surrounding organic certification is imperative to the future of the industry.

“I think that the important thing is certification and more regulation of the word organic,” Meldrum told SmartCompany.

Meldrum believes in the early years of mainstream organic branding, less stringent regulation allowed foods to be labelled ‘organic’ without following the correct processes, ruining consumer trust in the meantime.

“People are recognising the Australian Certified Organic logo. It’s an education factor and the supermarkets, especially Coles, are really good in only allowing certified organic products onto the shelf,” she says.

The industry’s growth, whilst reassuring, isn’t the end for the organic landscape in Australia, as Meldrum believes sales will “increase by 75-80 percent in the next few years”.

At the end of the day, she believes going organic is “about investing in your health upfront”, and that it’s difficult to price on what you’re putting into your body.

Key findings from the Australian Organic report

• More than six in 10 Australian households buy organic in any given year;
• ‘Chemical free’ (82%) and ‘Additive free’ (71%), along with being ‘Environmentally friendly’ (70%) are viewed as the large benefits of the organic market.
• Cost continues to dominate as the biggest hurdle in greater purchasing of food (67%), followed by ‘trusting it is organic’ at 40%; and
• Millennials are becoming more health and environmentally-conscious and educated about benefits of organic.

The idea that millennials and younger people are a driving force in the growth of the organic market is strongly supported by McIntosh, who believes a resounding percentage of Border Park Organics clientele is of a much younger demographic than previously.

“We have a number of older customers who have been with us for a number of years, but not because of our organic product,” she says.

“I would say that 95% of our new customers come from the 28-30 age group, through to about 35-40, so it is sort of mid-range.”

NOW READ: How this entrepreneur risked her home deposit to start a $6 million business providing healthy snacks for children