Natural Foods Merchandiser

Big challenges and big opportunities with private label organics

When it comes to the integrity of organic private label products of any variety, it’s all about traceability and accountability. That was the message at Thursday’s seminar “Organic Integrity Behind Private Label.”

Panelists’ expertise spanned the spectrum from food, represented by Chad Hagen, vice president of sales and marketing for the consumer products division of Sun Opta Food Group; to supplements, covered by Phil Vigeant, CEO and vice president of Reliance Private Label Supplements; and personal care, with Karl Halpert, president and CEO of Private Label Select, a manufacturer of organic and natural personal care products.

Of the three areas, food is the most established organic private label offering. Hagen said organic food products are expected to be a $23.6 billion category for 2008, up from $1 billion in 1990. He noted that private label foods, organic and nonorganic, continue to grow in popularity as consumers trade down from more expensive brands; and consumers are finding store-brand products to be higher quality than expected. Industry leaders anticipate the current recession will end with new customers loyal to store brands, Hagen said. From a retailer and manufacturer perspective, the challenge in private label is that it requires volume to make it worthwhile. Hagen said if a private label product doesn’t sell, it’s important for the retailer and manufacturer to have an understanding about who will carry the brunt of the excess inventory. And you also have to consider how you will get your product from the factory to the store shelves. Thousands of food miles could offset the environmental benefit of going organic, Hagen said.

The supplements world faces additional challenges, Vigeant said. Not only is there a scarcity of organic raw materials, but many processing and manufacturing aids in the supplements industry don’t meet organic standards, and neither do many herb treatments used to eradicate pathogens, he said. Under National Organic Program standards, most supplements can, at best, meet the “made with organic” standard, which states that the product contains 70 percent organically produced ingredients. Supplements are also at a disadvantage for private labeling due to higher price points, Vigeant said. The opportunities, he said, come with the increasing availability of organic ingredients and new entries into the organic market—such as vitamin C and excipients such as gum acacia and maltodextrin.

Organic certification of personal care and cosmetic products is a hot topic at the moment. Halpert said it’s an area that’s gone from being nonexistent to utterly confusing. Because the NOP standards for food don’t cover all the considerations of personal care products, trade organizations like OASIS—the Organic and Sustainable Industry Standards—which Halpert helped found, have emerged. Ultimately, at the personal care ingredient level, it’s still the NOP standards that hold the most weight, he said. When asked how long it might take for organic personal care to reach a similar level of oversight to the food realm, Halpert observed that, while the food standards took more than a decade to develop, personal care standards have only gained attention in the past five years, and they seem to be on a fast track.

Cara Hopkins
Associate editor
Natural Foods Merchandiser

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