New research from Mintel found that while organics would seem tailor-made for shoppers seeking foods and beverages that are healthier for them, their families and the planet, many Americans perceive that the organic label is an excuse to sell products at a premium.

The biggest selling point for organics is the perception that the products are healthier. Overall, 72% of US consumers purchase organic food and/or beverages for health or nutrition reasons, while slightly fewer (69%) factor environmental or ethical reasons in their purchase decision.

In fact, only 29% of consumers recognize that organic products are highly regulated, and 51% agree that labeling something as organic is an excuse to charge more.

While sales of organic products are on the rise, with the OTA’s 2015 Organic Industry Survey in the US showing certified organics grew 11% to US$39.1 billion, Mintel said that actual consumer penetration has plateaued.

Female shoppers appear to choose products that avoid certain characteristics: 43% purchase them because they do not contain unnecessary ingredients or chemicals, and the same percentage do so to avoid food made with pesticides.

And 73% of women and 71% of men purchase organics for health and nutrition reasons. Those numbers fall to 31% of women and 29% of men who purchase organics because they are less processed than their non-organic counterparts, and 20% of women and 16% of men purchase organics because organic companies treat animals more ethically.

Products at a premium

Generation X (51%) and the Swing Generation (57%) in particular regard an organic label as a premium price tag.  Only 39% of Gen X trust that organic-labeled products are actually organic. This number decreases to 35% of Swing Generation consumers.

Furthermore, only four in 10 Millennials (40%), the demographic that most supports organics, recognize that organic products are highly regulated. More than a third of all consumers (38%) regard organic as a marketing term with no real value or definition.

“Our research finds half of consumers (51%) say labeling something as organic is an excuse to charge more. Considering the typically higher cost of organic foods and beverages, consumers are increasingly hard pressed to justify the added expense,” said Billy Roberts, senior food and drink analyst at Mintel.

“As such, sales have hit something of a plateau, where they likely will remain until consumers have a clear reason to turn to organics. This could come in the form of a growing number of lower-cost organic options, bringing a new degree of competition to the category.”

Love for Non-Millennial Shoppers

Whether due to a lack of availability, the increased price, or simply a lack of desire for organics’ perceived attributes, organic food and beverages clearly have room to grow, as only a third of consumers (33%) indicate they purchased a food or beverage labeled as organic within the last three months.

However, organics consumption is greatest among the younger generations with nearly half of Millennials (49%) choosing organic for at least half of their food/beverage purchases, a drastic comparison to the 43% of Gen X, 51% of Baby Boomers, and 58% of the Swing Generation who consume no organic products.

Additionally, more than half of Millennials (51%) indicate they feel better about themselves when they purchase organic products, a factor that declines notably among older generations, to less than a quarter of Baby Boomers (24%).

While nearly three in five Millennials indicate they purchased an organic food or drink in the last three months, purchase rates drop dramatically among Baby Boomers and older consumers. Millennials are significantly more likely to purchase high volumes of organics: 20% indicate that organics comprise at least three quarters of their total food/beverage purchase.

For Baby Boomers and the Swing Generation, organics comprise significantly lower portions of those consumers’ food and beverage purchases (just 6% and 2% respectively).

Mintel’s Trend Prove It research shows that organic companies will have to counter consumer scepticism by making green and sustainable practices part of their business model.

Consumers are confused when shopping for organics not helped by confusion over natural versus organic claims, and limited regulation of the term ‘natural.’

“Our research shows that only 29% of shoppers recognize that organic foods and beverages are highly regulated, and an even greater percentage (38%) regard organic as a marketing term with no real value or definition,” Mr Roberts concluded.