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The natural and organic beef market segment, though small, is growing at a much greater rate than total beef in the retail supermarket channel. Retail sales of natural and organic beef comprise about one percent of the total beef volume and less than two percent of total beef sales, due to its higher price.
Historical growth rates indicate that short term, this segment will continue to grow at a fast pace. However, long-term projections as to the size of this niche market are difficult to predict.
Natural and Organic defined
Retail data shows niche beef sales small
The market share estimates for organic and natural beef are based on FreshLook Marketing scanner data. These data are from retail supermarkets with total sales of more than $2 million annually and covers approximately 68 percent of sales in the retail supermarket channel.
In Q1 2007, natural and organic beef volume comprised 1.4 percent of all fresh beef pounds in retail supermarkets, up from 1.2 percent in Q1 2006. Natural and organic beef’s share of pound volume is growing, but has been near the one percent mark for the past 12 quarters. FreshLook data estimates that there were 15 million pounds of natural and organic beef purchased in retail supermarkets in the first quarter of 2007 compared to one billion pounds of total beef.
Source: FreshLook
Natural and organic beef dollar sales comprise 2.1 percent of all fresh beef sales in retail supermarkets, for the same quarter. The natural and organic beef share of sales is trending upward, from a low of 1.1 percent in the second quarter of 2003 to its current high of 2.1 percent in the first quarter of 2007. In addition, sales of natural and organic beef in retail are rapidly increasing (28.5% in 2006, up from 17.2% in 2005) compared to all beef sales (up just 0.4% in 2006). FreshLook data estimate that natural and organic beef sales in retail supermarkets in the first quarter of 2007 were $81 million (up from $59 million in Q4 2005) compared to $3.8 billion for total beef.
Historical growth rates indicate that short term, this segment will continue to grow at a fast pace. However, long-term projections as to the size of this niche market are difficult to predict.
Garnering a premium price
In Q1 2007, total beef prices in retail supermarkets averaged $3.48 per pound. The price for natural/organic beef during the same quarter averaged $5.23 per pound. This is a premium of $1.75 per pound for natural/organic beef versus total beef, or approximately 50% higher. The selection of natural and organic cuts available at retail, which tend to be the higher price middle meats, may partially explain the higher average price for these niche products. Natural/organic and total beef prices have begun to level off over the last year. From the fourth quarter of 2005 to the first quarter of 2007 (6 quarters) natural and organic beef prices have increased approximately 0.1% while total beef prices decreased approximately 2.5% during the same time period. |