Natural Foods Merchandiser

Retailers create value beyond organic

A decade ago, when growers and manufacturers were arguing over the exact qualifications to include in the U.S. Department of Agriculture's proposed organic standards, it's a safe bet that few of them ever imagined that the green-and-white organic seal they finally approved would someday be prominently displayed on Kraft Macaroni & Cheese or Kellogg's Frosted Mini Wheats boxes.

Yet organic versions of both these conventional icons are set to debut before the end of this year, along with a pumped-up organic section in Wal-Mart. Suddenly, consumers who thought the USDA organic seal protected them not only from pesticides and chemical additives, but also from mass-produced food, are finding that organics are increasingly becoming a corporate commodity.

"As the organic industry changes, people are beginning to realize there are different values served by different choices," says Sarah Miles, marketing director at New Leaf Community Markets in Santa Cruz, Calif. Consumers and retailers who want products with ecologically friendly attributes like locally grown, fairly traded or humanely or sustainably produced are spawning a new movement that has been dubbed "beyond organic."

Two of the most popular beyond organic labels are locally grown and fair trade. In fact, in many cases, these labels eclipse organic in consumers' eyes. In a 2003 study conducted by researchers at Iowa State University's Leopold Center for Sustainable Agriculture, more than 75 percent of consumers chose a "grown locally by family farmers" label over an organic label. And according to the Oakland, Calif.-based fair trade certifying agency TransFair USA, fair trade coffee sales have grown an average of 72 percent a year since 1999, compared with a 12 percent yearly growth rate during the same period for organic coffee and only 3 percent growth for the coffee market overall.

Staying home
Miles reports that the locally grown movement is so popular at New Leaf that "customers definitely prefer local over organic. I think they make the 'local business-local economy' connection and know they're supporting their own community by buying locally."

For shoppers leery of corporate organic, the locally grown designation can be more reassuring than an organic label, says Layne Rolston, marketing director at The Good Food Store in Missoula, Mont. "It helps them focus on the farmer the food is coming from. It's easier to trust a person than an entity," she says. According to a 2004 Roper Public Affairs poll conducted for Organic Valley Family of Farms, 73 percent of Americans think it's important to know whether food is grown or produced locally or regionally. Seventy-one percent say smaller-scale family farms are more likely to care about food safety than large-scale industrial farms, and 69 percent believe family farms are less likely to harm the environment.

For independent naturals retailers, successfully marketing locally grown foods can be a key differentiation from conventional stores. Rolston says The Good Food Store puts charts in its produce section tracking how much the store spends each month with local vendors. There are also posters spotlighting local producers, including photos of their farms, information on what and how they farm, and a philosophy statement.

In June, The Good Food Store has a "meet-the-farmers day," featuring samples of local products. In fall, there's a local food fair highlighting packaged goods. This can include products that aren't grown locally—like coffee or mustard—but are processed locally.

"We had quite a debate about 'What is local?' because in Montana, with the short growing season, it can be hard to get local," Rolston says. "We were asking, 'Is Spokane local?' We finally decided 'local' would be anything from Montana."

New Leaf Community Markets works with Davis, Calif.-based Community Alliance With Family Farmers, which promotes a "Buy Fresh, Buy Local" program. "They have a very clear definition of what 'local' is, and we think it's important for people to understand there are rules about that," Miles says.

New Leaf has special displays of local products and often profiles local producers in its store fliers. It also includes products like spices, which are grown internationally but processed locally, in its "locally grown" category. "In the next year, we're going to try to label all the products in our stores that are produced with local efforts," Miles says.

Going global
Miles says the fair trade label is important enough to New Leaf customers that the only kind of coffee the stores stock is fair trade certified. They also carry fair trade chocolate and tea, and gift items such as handcrafted purses and finger puppets.

Coffee is the most popular fair trade good, but TransFair USA also certifies tea, cocoa, sugar, rice, vanilla, bananas, grapes, mangos and pineapples. TransFair cites a May report by British market research firm Just-Food that projects the U.S. market for fair trade goods will hit $2.25 billion by 2012, up from $257 million in 2004.

"Tell the story of fair trade. Companies that do that are having wild success."
Still, not many consumers—only 15 percent in 2004—are familiar with the fair trade concept, says TransFair spokeswoman Nicole Chettero. "This was where organic awareness was just a few years ago," she points out. That's why TransFair's National Retail Development Manager Chris White believes it's key to "tell the story of fair trade. Companies that do that are having wild success, but those that don't do it don't have much success."

Studies suggest that making the effort to promote fair trade products will pay off for retailers. In the January-March issue of California Agriculture, University of California, Santa Cruz researcher P.H. Howard cited a survey that found consumers were willing to pay a median price increase of 71 percent for strawberries picked by farmworkers who were guaranteed a living wage and safe working conditions.

TransFair promotes a fair trade month each October and provides free shelf talkers, brochures, posters, bin stickers, window cling and other marketing tools to retailers on its Web site, www.transfairusa.org. It also will begin sending a training video to retailers this month.

The Good Food Store posts fliers in the store listing all the fair trade products it carries. New Leaf has a TransFair flier in the coffee section. "We use the coffee as sort of an excuse to explain fair trade," Miles says. "People think fair trade and organic is synonymous, and that's not true." The store also has "fair trade months" where supplier companies talk about their products and where they come from.

Vicky Uhland is a freelance writer and editor based in Lafayette, Colo.

Natural Foods Merchandiser volume XXVII/number 7/p. 14, 16

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