Safeway grocery's private-label brand, O Organics, is becoming the leading brand of organic foods in the United States, according to a new market research report by Organic Monitor.
The private label now houses more than 300 certified organic products and exceeds $400 million in annual sales. It has also expanded into foodservice outlets and is even developing an international presence in Latin America, Asia and Africa.
"Private labels are leveraging organic values and winning consumers by marketing products at competitive prices," explained Amarjit Sahota, president of Organic Monitor and co-author of the new report "Global Market for Organic Food & Drink." "Organic brands are having to re-invent themselves, with many adopting new values to broaden consumer demand."
The organic food industry has been built by brands that have crossed over from specialist to mainstream retailers. But retailer private labels are becoming prominent in every geographic region. They are most evident in Germany, where they have been introduced by discounters, drugstores, supermarkets, as well as organic food shops.
In most product categories, private-label products are outselling branded products of organic foods. "Retailers are proving to be quite successful with private labels because they offer organic products at competitive prices," Sahota said. "In some cases, the organic products are even cheaper than conventional ones."
Pioneering brands are re-inventing themselves to widen consumer appeal. One strategy is to adopt a new additional marketing strategy, such as Organic Valley in the U.S., which is now promoting itself as an ethical brand.
"Organic Valley has positioned itself as a sustainable brand that supports family farms," Sahota said. "It has also adopted a brand extension strategy, expanding from organic dairy to several product categories. Its success has made the co-operative the largest organic food enterprise in North America, reporting $520 million in sales in 2009."
Organic Monitor sees successful brands as those that can adopt new values to expand their consumer base. Those that do not may be confined to specialist retailers – the same channel where many organic brands have worked hard to expand from.
The evolution of the organic food industry is a major theme of the upcoming Sustainable Foods Summit, taking place in San Francisco on Jan. 18-19, 2011. The summit will discuss the role of brands and retailer private labels, bringing together Safeway (O Organics), Organic Valley, Earthbound Farm, Honest Tea, Equal Exchange and other leading brands.
For more information, visit www.organicmonitor.com.