International Journal of Sociology of Agriculture and Food

Consolidation in the North American Organic Food Processing Sector, 1997 to 2007

International Journal of Sociology of Agriculture and Food

Volume 16, issue 1 (2009), pages 13-30

Author: Philip H. Howard
Affiliation: Department of Community, Agriculture, Recreation and Resource Studies, Michigan State University, East Lansing, MI, USA

ISSN: 0798-1759


Abstract

Significant structural changes have accompanied the phase-in of a national organic standard in the United States over the last decade. The organic processing sector was particularly amenable to change due to its location downstream from production, where concentrations of capital encounter fewer biological barriers, and currently benefit from greater economies of scale. Consolidation of this emerging industry in the US and neighboring Canada is characterized visually using information graphics. These graphics provide a broad overview of the current industry structure by depicting the processes of horizontal integration and concentric diversification. Horizontal integration has occurred through acquisitions and strategic alliances, although these transactions are often hidden from consumers through ‘stealth’ ownership. Concentric diversification has occurred through the introduction of organic versions of mainstream brands, and the introduction of private label organics. These trends are expected to continue, and strongly support the conventionalization thesis as it applies to off-farm segments of the organic food industry.

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This movie depicts organic industry changes from 1995 to 2007. The small green circles indicate organic brands, the medium blue circles indicate investment firms, the large yellow circles indicate multinational food processors, and the small red circles indicate introductions of organic versions of mainstream brands. Gray lines denote ownership ties. The gray text in the upper left displays the year, which advances as the animation is played.
In 1995 the organic processing industry was relatively 'fragmented', as indicated by the 81 independent organic brands shown at the beginning of the animation. By 2007, however, all but 15 of these were acquired by multinational food processors, many of which also introduced organic versions of their mainstream brands. Note the extent to which investment firms played a role in this process of consolidation by acquiring one or more organic brands before selling them to multinational processors.