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April 24, 2008
By the end of 2002, companies producing purely organic foods in the United States will have something in common other than a desire to produce foods without pesticides or chemicals. For the first time, the "USDA Organic" seal will appear on officially certified packages of "100 percent organic" and "organic" (95 percent) foods.
With organic products' retail sales achieving double-digit compounded annual growth for more than a decade now, it's difficult to imagine any food company today not considering organic options. By 2005, organic product sales could reach $20 billion in the United States, according to Organic Consumer Trends 2001, a research study published jointly by the Natural Marketing Institute and Organic Trade Association.
To capitalize on this trend, and, for many, to remain true to socially responsible ideals, some companies produce only organic foods. These companies reach retailers and consumers with their organic messages, and build brand loyalty, in a variety of ways.
For Horizon Organic, based in Boulder, Colo., its first-to-market position in organic dairy products helped the company blaze new trails throughout the conventional marketplace. The company recently sealed a deal to sell single-serving milk cartons in 2,500 Starbucks' outlets nationwide. For smaller, newer companies, and at least for one well-established European organic company, the road to a national brand synonymous with "organic" starts with a simple mission.
Mission Statements: Why Do They Do It?
"We have a kid on every single package—an actual niece or nephew of mine—to remind us that we have a juice and a mission that feels organic is better for the next generation," says Matt McLean, CEO and president of Uncle Matt's Organic, a 3-year-old organic juice and concentrate company based in Claremont, Fla. "It really goes back to the purpose of organic. You've got a better place for [the next generation] to live if you can farm organically. That's what I feel."
For Simon Goode, CEO of allGoode Organics, an 18-month-old Santa Barbara, Calif.-based manufacturer of organic medicinal-blend teas, nutrition bars and snack mixes, the reason he started an all-organic company is threefold: "The business reason is that there's a really strong consumer trend behind the growth in organics, and I feel it's going to continue to grow. The second reason is that I eat a lot of organic foods and have felt there are certain categories where there are big gaps. The third reason is that I've always wanted to start a socially responsible, environmentally friendly business," Goode says. "Organic fits all of these three things together."
The triad of healthy living, sustainable agriculture and pure foods is also what prompted three friends in Germany to found Rapunzel Pure Organics in 1974. "They went out in the mid-'70s and sought out farmers and regions where raw materials and agricultural products could be grown organically," says Dale Kamibayashi, vice president and director of marketing and sales for Rapunzel, which has its U.S. headquarters in Valatie, N.Y. "Emphasis became very strong on [Rapunzel's] sourcing," he says, "and they've never wavered from trying to obtain 100 percent certified organic products."
Most organic companies, it can be assumed, are determined to "do the right thing," be it for the little people or for the planet. It's this dedication to the organic cause that motivates these companies to put their pure foods on retail store shelves.
Company Stories: What Should The Retailer Know?
Among the general population, organic use jumped nearly 10 percent in 2000 compared with 1999 when 43 percent of the population used at least some organic products, according to Organic Consumer Trends 2001. Food retailers noted this trend and stocked their shelves accordingly. But as demand for organic products grows, sourcing challenges will cause prices to increase for 100 percent organic foods.
According to Kamibayashi, Rapunzel has only one product that's not purely organic; its bouillon contains about 40 percent nonorganic yeast. "Do we take that product off the market and replace it with a 100 percent organic bouillon? We pondered that question rigorously," Kamibayashi says. The company plans to offer an organic bouillon, he says, even though the price will be much higher. "We can do it, and we feel we need to do it because of Rapunzel's reputation. We want to offer the consumer at least the ability to purchase a 100 percent organic bouillon."
Rising prices also concern Uncle Matt's Organic. Because the citrus market is predominantly nonorganic, sourcing organic juice oranges is a challenge. "There's about 850,000 to 900,000 citrus acres in Florida, and about 5,000 acres of that are organic," according to McLean. He says Horizon Organic, Uncle Matt's Organic and Organic Valley, the latter based in LaFarge, Wis., buy the majority of the organic juice oranges in Florida. Most of what's left is exported to Europe.
For some manufacturers, the premium price for organics determines distribution. "For us, organic doesn't fit into every single mass-market retailer just due to price point," says McLean. He believes that organic foods need to be priced within 30 percent of conventional products to be competitive. "You have to choose your battles wisely. You can't just go into every supermarket nationwide with an all-organic item," he says.
Consumer Marketing: How Do They Reach The Public?
Organic companies use their sales and marketing teams to educate retailers about their products, hoping the retailer will, in turn, educate the buying public. Now that the "USDA Organic" seal will level the playing field, it will become increasingly important for smaller, newer organic companies to get their messages to consumers.
"Our packaging and our brand communication is very clear; [we feature] one family of brands," says Goode. "We think that's an important tool for building awareness of our message." To clearly state that message to consumers, the company created its allGoode Manifesto, a five-point message detailing the company's beliefs. The company encourages consumers, retailers, brokers and distributors alike to visit its Web site to read the manifesto and learn more about allGoode.
Uncle Matt's Organic also uses its Web site to communicate to consumers, but McLean says packaging and point-of-sale materials are its best message makers. "We try to educate everybody who picks up a carton of Uncle Matt's by putting the information right there on the package," he says. On the back of each package is the statement, "We're organic because we care," he points out. "[The statement] talks about what organic means to us and why it's better." He believes in using pamphlets, shelf talkers and other in-store educational materials to help draw more people to the organic message.
Kamibayashi, an industry veteran from Wild Oats Markets, who also owned his own natural foods store in the '70s, looks at consumer education from an industrywide point of view: "I think the main thing right now is to follow suit with the OTA and try to really focus on education. I think that's our major, major challenge under the new guidelines and regulations for organics. How do we educate the buying consumer in the U.S. [so they] understand fully what organics [are] about?
"This is not a little marketing ploy or trick to try and have higher margins for products and/or to try to con people into eating our stuff," Kamibayashi says. "There's legitimacy behind organics in the sense of nutritional value, sustainability, quality and taste of products. Any of us in the organics industry right now is challenged with [upholding] that. We need to make sure that what we do in the organics sector right now is of high quality, done upscale with good-looking packaging, and that we are very much in line with integrity and quality in what we do."
Steve Taormina is president of PixelPort Productions, a content company currently based in Nelson, British Columbia, Canada.
Natural Foods Merchandiser volume XXIII/number 5/p. 16, 20, 22
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