Although the market for organic foods and beverages is expected to reach $7.2 billion in 2008 — a 140 percent increase since 2003 — year-over-year sales growth has been slowing, reported Chicago-based research firm Mintel.

According to Mintel, economic concerns are causing Americans to reconsider their shopping habits, including those concerning organic foods. "Across the board, Americans are spending less and 'organic versus traditional' is a decision many people are thinking about carefully," said Marcia Mogelonsky, senior analyst at Mintel, in a news release.

The research firm sees two major cost-related challenges for organic manufacturers: rising food prices and private label brands. Prices for food consumed in the home increased 7 percent over the past year, according to Mintel. "To cope with higher prices many shoppers are simply opting not to buy pricey organic or premium brands," explained Mogelonsky.

Shoppers do, however, have more private label organics brands to choose from than ever before. Mintel tracked over 540 new private label organic foods in 2007, a massive increase from the 35 new products introduced in 2003.

"We don't expect people to completely stop buying organics," said Mogelonsky. "We anticipate more subtle changes, such as the formerly all-organic shopper who returns to traditional cookie brands while sticking with organic produce. These small changes will slow market growth."

Whole Foods
Meanwhile, organic foods purveyor Whole Foods has seen its profits slide considerably in its fourth quarter. The grocery chain's profits have fallen to $1.5 million in the quarter ended Sept. 28, 2008, compared to $33.9 million for the same period last year.

In a conference call with analysts, CEO John Mackey was quoted as saying, "The unrelenting negative economic news appears to be shifting buying behavior to making fewer trips and to making more value conscious decisions."

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