How Do Organic Point of Purchase Labels Affect Sales?

The demand for organic and GMO-free foods has increased rapidly in recent years, so it stands to reason that the presence of GMO-free or organic labels on the food packaging would have an effect on the product sales, especially if the price increase is nominal.

In 2008, a study was performed at the Swedish research institute to establish whether the shelf-labeling or organic foods would increase sales. On March 10, 2008, displays were introduced for all organic foods in the supermarket. They began tracking sales on those products on April 18, 2007, and continued doing so for the next 521 days, until September 22, 2008. The introduction of a low-cost point-of-purchase display was associated with a 43% increase in sales for organic olive oil and a 48% increase for organic coffee. Surprisingly, they found that the organic labels led to a 29% reduction in sales for flour.

In spite of the drop in sales for flour, it’s clear that even six years ago, organic labels had a significant impact on sales for a product. During the time since the study was performed, there has been a rapid increase in the demand for organic to the United States. (Did you even know what organic or GMO-free was at that time? I’m going to go out on a limb and say that I did not.) Today, if given the option between GMO-free or organic and a version that I know has likely been genetically altered and sprayed with chemicals, I’ll choose the GMO-fee or organic version every time – unless there is a significant price variance.

According to Gregg Proctor, who heads up natural foods for Kroger, one of the largest mainstream grocers in the nation, “[used] to be this was all very faddish. Not anymore. We’re adding new items constantly because if we don’t get it when it comes out, our competition will.”

Nationwide, natural and organic food sales grew eight percent in 2010 and an additional five percent each year from 2005 to 2009. The benefit of all this growth? The prices of organic and natural foods are falling. While there is a definite price deferential, the food has grown to be far more affordable than it was in the past.

One cause for all this growth in the industry? Parents are becoming far more aware and educated than they were in the past as well. Many parents want better, more natural options for their children. They don’t want to have to wonder how eating foods that have been genetically altered or sprayed with hormones will affect their children’s health down the road.

What can we learn from all this? If you sell a food product that is organic or free of genetically modified ingredients, you MUST use USDA organic or GMO-free labels on your packaging! If your food isn’t organic or GMO-free, you should start to explore the possibility of making the change to open your business up to an even wider market. What originally began as a fad is here to stay and more and more of your customers will be looking to make the switch.