The organic food market may have  been hot, but U.S. economic challenges have cooled down sales. While sales have increased 140 percent since 2003, and food and beverage sales are expected to reach $7.2 billion this year, growth has slowed in recent months, reports the research firm Mintel.

Economic concerns are causing Americans to take a harder look at grocery purchases. "Across the board, Americans are spending less and 'organic versus traditional' is a decision many people are thinking about carefully," says Marcia Mogelonsky, Mintel's senior analyst points out.

The research firm cites two major cost-related challenges for organic food producers: rising food prices and private-label brands. Prices for food consumed in the home increased 7 percent this past year, according to Mintel's report. "To cope with higher prices many shoppers are simply opting not to buy pricey organic or premium brands," says Mogelonsky.

However, there are more private-label organics brands to choose from than ever before. Mintel tracked more than 540 private-label organic food introductions in 2007, that compares to 2003 when 35 new organic products hit the market.

"We don't expect people to completely stop buying organics," says Mogelonsky. "We anticipate more subtle changes, such as the formerly all-organic shopper who returns to traditional cookie brands while sticking with organic produce. These small changes will slow market growth."

One example worth noting is that Whole Foods has watched fourth-quarter profits drop, dropping to $1.5 million in the quarter ended Sept. 28, compared to $33.9 million for the same time in 2007.

John Mackey, Whole Foods' chief executive officer told market analysts, "The unrelenting negative economic news appears to be shifting buying behavior to making fewer trips and to making more value conscious decisions."

Source: Mintel,