Q. What are the forces driving the growth of the organic food market?
A. The global organic food market is on a growth trajectory due to several reasons. The increasing preference for foods that are grown without the use of synthetic chemicals, coloring agents, additives, or genetic manipulation are the major factors driving the organic food market. Foods that are produced organically are considered to be safe for health, provide more nutrition, and better tasting than conventionally grown food.
In particular, in urban areas, consumers are adopting health-benefitting foods, which include organic foods as well. Consumers have a strong perception about the health benefits of naturally cultivated foods in the long run. Government regulations in place pertaining to the use of artificial ingredients and flavors in foods is 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.
Q. Is the organic food and beverages market expanding in emerging economies?
A. Yes. The organic food and beverages market is in expansion mode in emerging economies. 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.
Q. What lies in store for the French dairy giant Danone with its purchase of White Wave Foods?
A. The all-cash transaction between Danone and the U.S organic food producer White Wave Foods, which valued the latter at US$12.5 billion, will lead Danone to be a world leader in organic produce. Furthermore, this will allow Danone to grow its business in the U.S. and occupy a unique position in the organic food and beverages space. The deal is expected to allow Danone to tap into consumer trends to develop healthier and more sustainable food and beverages.