Price gap between organic and conventional food is shrinking
The price gap between organic and conventional foods is shrinking.
Why it matters: Organic food has historically been harder to afford than regular items, putting it largely out of reach of many lower-income shoppers.
- But big-box grocers like Walmart and Kroger are making organic options more accessible with private-label goods.
- “Any growth in private-label product, organic or conventional, has the potential to depress prices,” Organic Trade Association spokesperson Reana Kovalcik tells Axios.
What they found: Private-label organic items were 14.7% more expensive than regular food in January, down from 22.7% in April, according to an analysis of 1,500 organic products conducted for Axios by DataWeave.
- “The positive of these lower cost, private label options … is that they can create new access points for lower-income shoppers,” Kovalcik says.
Be smart: Inflation is hitting conventional foods harder, with DataWeave finding price increases of 2% to 4% for organic food and 11% for regular items over the last year.
- DataWeave President Krish Thyagarajan posited that retailers may have been afraid to increase organic food prices too much for fear of pricing them out of the market.
- “Brands are trying to figure out ways to keep the price in check,” Thyagarajan tells Axios.
By the numbers: The shrinking price gap is particularly noticeable in produce.
- Organic apples cost 33 cents more per pound in January, down from 43 cents a year earlier. And organic tomatoes cost 10 cents more, down from 23 cents more.
Of note: The supply chain for organic products is “more resilient against sudden disturbances, like market spikes or extreme weather,” Kovalcik says, and “that makes our industry and our products less prone to major shocks.”
Yes, but: The prices of some organic products have jumped in recent months. The price gap between brand-name organic items and regular food increased month-over-month in December and January, according to DataWeave.
Context: Although debate continues about the value of organic items, the Mayo Clinic reports that there's "a growing body of evidence that shows some potential health benefits of organic foods when compared with conventionally grown foods," including more nutrients and less exposure to pesticides.
The bottom line: Organic food is no longer exclusive to the shelves of stores like Whole Foods and Trader Joe's — and that means it’s no longer commanding the same price premium as it once did.