organicindustry.html

Philip H. Howard

Assistant Professor, Michigan State University

Organic Processing Industry Structure

The development of the USDA National Organic Standard in place of differing state/regional standards was widely predicted to accelerate trends of increasing consolidation in this sector. The first draft of the standard was released in 1997; what changes in ownership and control have since occurred?

For articles providing more detail on these graphics see:
Howard, Philip H. 2009. Organic Industry Structure. Media-N: Journal of the New Media Caucus, 5(3). [online]
Howard, Philip H. 2009. Consolidation in the North American Organic Food Processing Sector, 1997 to 2007. International Journal of Sociology of Agriculture and Food 16(1), 13-30. [PDF]

Changes since June 2009 include (1) Coca-Cola fully acquiring Honest Tea in March 2011; (2) Nestle’s acquisitions of Cadbury (and Green & Black’s) in January, 2010, and Sweet Leaf Tea in May, 2011; (3) Sara Lee’s acquisition of Aidell’s Sausage for $87 million in May, 2011.

Most acquisitions of organic processors occurred between December, 1997 when the draft USDA standard was released, and its full implementation in October, 2002. Few companies identify these ownership ties on product labels.

Cargill's strategic alliances with French Meadow and Hain Celestial are to develop products with nutritionally enhanced organic ingredients such as phytosterols, soy isoflavones, trehalose, inulin, and chondroitin. Heinz acquired a 19.5% stake in Hain Celestial in 1999 while also transferring ownership of their Earth's Best brand, but sold all of its Hain Celestial stock in 2005.

PDF version of Organic Industry Structure: Top 30 Acquisitions

Most introductions of organic versions of well-known brands occurred after the USDA standard was implemented in October, 2002. Some, such as Dove Organic, have been developed specifically for Wal-Mart.

PDF version of Organic Industry Structure: Top 30 Introductions

Venture capitalists currently describe organic processing as "fragmented." They are acquiring brands within the same sector (bread, meat, etc.) with plans to sell them for significant gain at a later date.

PDF version of Organic Industry Structure: Significant Acquisitions and Introductions

Most remaining independent organic processors have resisted substantial buyout offers (typically 2 times annual sales).

PDF version of Organic Industry Structure: Major Independents and Their Subsidiary Brands

Network Animation of Data from the 4 Charts Above

View QuickTime Version

Produced in collaboration with Skye Bender-deMoll, an author of SoNIA - Social Network Image Animator.

An increasing number of supermarkets, wholesale clubs and distributors are introducing organic private label products, in addition to chains that specialize in organic and natural foods.

PDF version of Organic Industry Structure: Private Label Brands