From The Fall 2002 Issue of Natural Grocery Buyer

A Little Taste Will Do Ya

Demo programs draw new customers to familiar flavors with an organic flair

Dana Coffield

A small sample gives big marketing muscle to organic brands that might otherwise barely register on a supermarket shopper's radar.

"We used to take the labels off a can of Muir Glen organic tomatoes and a can of conventional tomatoes, dump them out on the buyer's desk and have them try them," says John DePaolis, head marketing guy at General Mills' Small Planet Foods division, which produces the Muir Glen brand. "Without fail, they would pick the organic product—and that's before we talked about the added benefits of organic.

"Organic tastes better than conventional," he says.

Packaged-goods shoppers are fiercely brand loyal and a bit price sensitive; they're also reluctant to abandon familiar flavors in favor of new organic products. Manufacturers hope to take down those hurdles by handing out coupons and samples and by making sure new customers don't have to sacrifice on price or flavor.

But until they taste the product for themselves, consumers are reluctant to take the organic plunge. In a June survey of 435 people in 35 states, SupermarketGuru.com found that 29 percent of respondents have never purchased organic foods. Of that group, 41 percent say they don't buy organic products because they don't know enough about them.

Once the uninitiated do take a bite of organic pasta, taste an organic sandwich creme cookie or sip a cup of organic coffee, often they're sold—but only if the flavor meets their expectations and the prices don't bust the family budget.

"Products that will be successful in the nonnatural food channels will be great tasting, within a reasonable price range and will deliver value beyond what the consumer expects in terms of taste, convenience, packaging or added health or nutritional value," says Michael Neuwirth, corporate communications director for Acirca Inc. in New Rochelle, N.Y. Acirca manufactures shelf-stable soups, juices, sauces and salsas sold under the Walnut Acres, ShariAnn's Organics, Mountain Sun and Frutti Di Bosco brands.

Care For A Sample?
Now is the time to start unfolding the demonstration tables and handing out coupons, say brand managers, who anticipate the U.S. Department of Agriculture's National Organic Program will boost interest in healthier foods.

The NOP, which governs the way organic foods are grown, processed, handled and labeled, takes effect Oct. 21. In theory, the new rule will remove some confusion from the shopping experience because only products that are made with at least 95 percent organic ingredients may bear the USDA Organic seal. Foods made from at least 70 percent organic ingredients may say "made with organic ingredients" on the label but cannot carry the USDA seal.

The result, experts say, is that consumers who are concerned about feeding their families wholesome products or who are worried about the environment can choose products with the organic seal and know for certain what they are getting. Both Neuwirth and T.J. McIntyre, who manages the Simply Organic line of side dishes, add-meat dinners, sauces and spice mixes for Frontier Natural Brands in Boulder, Colo., say their companies deliberately worked the word organic prominently into their product labels in anticipation of the new rule.

"Organic is going to grow like it never has before," says McIntyre.

But because there are only a handful of recognized organic brands—about 57 percent of respondents to SupermarketGuru.com's survey say they can't name one—the market is open to all comers.

"There aren't many established national brands in organic foods today," Neuwirth says. "The opportunity certainly is there for an organic brand to build its own identity."

Building brand identity and introducing customers to organic versions of familiar products may be as simple as issuing a coupon. In a promotion designed to clue consumers in to the wide variety of organic products on the market, Londonderry, N.H.-based Stonyfield Farm, the nation's largest organic yogurt producer, has partnered with 20 other natural foods companies to offer electronic coupons (www.stonyfield.com) for such products as butter, pretzels, juices, coffee, cooking oil and sugar.

Coupons and discounts boost sales and get customers to try new products, but sampling keeps customers coming back to Country Choice Naturals, a certified organic cookie maker based in Eden Prairie, Minn. Open a box of Country Choice sandwich cremes, gingersnaps or soft oatmeal cookies and you're likely to find a flavor profile comparable to familiar conventional brands. "One of our objectives is to convince the mainstream consumer that organic products do taste just as good as regular, mainstream products," says President and co-founder Chuck Enderly.

Customers apparently are convinced; Enderly says sales are growing about 20 percent a year, much of that from the supermarket channel.

Manufacturers that are performing best in the supermarket are those that understand consumers may be willing to pay a few cents more for an organic product, but they won't compromise on taste. They've invested a lot of research into developing products that can stand up against tried-and-true brands.

Simply Organic, which launched last March with 70 SKUs in six categories, finds that its best performing products are the same flavors that perform best for Lipton and Betty Crocker. "Simply Organic Beef Stroganoff, Cheeseburger Macaroni and Beef Lasagna are best sellers because those are Betty Crocker's best sellers. Among the side dishes, Alfredo Noodles is our best seller because that's Lipton's best seller.

"Their customers are trying these products," McIntyre says.

Simply Organic is now carried in more than 1,000 stores, mostly supermarkets. It's taken his company a lot of in-store demonstrations, but McIntyre only has to look as far as Frontier's mailbag to know consumers like the products, and as far as store scan data to know they're buying them again and again.

"We have to overcome some trial barriers in [supermarkets] that we don't have to overcome in the naturals market," he says. "The consumer is not identical. We're trying to get them to trade off current mainstream products for organic and convince them the flavor profile is identical.

"We're getting letters from moms across the country, thanking us for introducing a brand of affordable organic dinners and not trying to sell an esoteric flavor profile to their kids," he says.

Price Counts—Or Maybe Not
Most manufacturers acknowledge that grocery customers are price sensitive and have attempted to keep prices within a comfort zone. In the SupermarketGuru.com survey, 91 percent of respondents say they think organic foods cost more than conventional products. About 52 percent say better prices would encourage them to buy organics.

Simply Organic's McIntyre estimates consumers are more comfortable paying a 10 percent to 15 percent premium, though his company is as aggressive about reaching price parity as it is about matching conventional flavor profiles. "If Kraft Macaroni & Cheese is 89 cents, we're at 89 cents," he says.

"The No. 1 reason consumers don't buy organic is price," McIntyre says. "We've seen it time and time again."

Pat Turpin, analyst and head of the Food Products Group at USBX Advisory Services, an investment bank in Santa Monica, Calif., says already converted organic consumers aren't as price sensitive as one might expect. "Look at the growth rate in organics," he says. "Consumers have shown they are willing to pay for that perception of better health."

Organic foods sales in all channels grew 17 percent in 2001 to $6.8 billion, according to Nutrition Business Journal. "Supermarkets are not going to stand by and let the traditional health food stores take all of that business," Turpin says.

Acirca's Neuwirth says his company estimates consumers are willing to pay a 25 percent to 40 percent premium for organic products, especially if they are parents making food choices for their children or if the manufacturer has developed a unique, tasty product.

"When we did a lentil soup, we did a Mediterranean lentil soup with added notes of cumin. When we did a carrot soup, we went the extra mile and did a ginger carrot soup," Neuwirth says.

Innovative packaging also attracts shoppers' attention. Acirca recently introduced Walnut Acres Fruit Squeezies—2-ounce tubes of organic applesauce snacks for "kids on the go." Eight tubes will retail for between $2.99 and $3.69. "We thought there was an opportunity to create a snack mom feels good about giving to her kids."

Best known conventional brands likely will cash in on that sentiment, too. If mom already trusts the Heinz brand, the thinking is that she'll trust a Heinz organic product even more.

H.J. Heinz Corp. introduced organic ketchup in the United States earlier this year, priced just more than 30 percent higher than its conventional version.

"We're planning to target core organics users. We'll be doing some sampling for them, getting the product into their hands so they can taste it," Brand Manager Michael Vaszily says. "We think they'll feel it is the same great Heinz taste and that the premium is worth it to get the organic variety."

Heinz Organic Ketchup performed so well in the United Kingdom that within 12 months of the September 2000 launch, the organic ketchup market had doubled and Heinz controlled 78 percent of it. Heinz took that performance as a sign and rolled out organic versions of British staples: baked beans, salad cream (a condiment similar to Miracle Whip) and canned organic spaghetti.

Heinz, a reliable, recognizable conventional brand, helped legitimize and mainstream the organic concept in the United Kingdom. USBX's Turpin, who was in operations management at Costco Wholesale Corp. for nine years before joining the investment bank, says he expects similar magic in the U.S. market, and he won't be surprised if grocers start rolling out house-branded organic products hoping to keep a bit more margin for themselves.

Small Planet Foods' DePaolis says betting on organics is a solid wager. "All things being equal, would you rather have an organic product? More times than not, if you're talking to a female head of household, the answer is yes," he says. "They would much rather have organic for their kids, so long as there are no trade-offs."