Adjust your organic outlook and strategies as the plots thicken
By Jody Shee
An organic researcher went grocery shopping with an ordinary consumer. As they
happened upon the organic strawberries, which cost 50 percent more than the
conventionally grown ones, the shopper snatched up the organic berries. When asked
why, the shopper said she didn’t care about the price because they were for her kids, and
the organic berries were healthier for them.
This illustrates a shift in the thinking of today’s organic shopper compared to the
original organic purchasers, says the organic researcher Laurie Demeritt, president and
chief operating officer of The Hartman Group Inc. in Bellevue, Wash. Organic advocates
of yesteryear were concerned about the environment. Today, it’s all about doing
something healthy for the family.
At retail, organic produce sales jumped from $4.8 billion annually in 2004 to $6.7
billion in 2006, according to ACNielsen statistics. Organic produce sales represent about
7 percent of total produce sales.
As you tweak your organic program for 2008 and beyond, arm yourself with the
consumer’s perspective along with industry trends to help you determine how to manage,
merchandise and promote the burgeoning category.
Through consumers’ eyes
The Hartman Group’s research has shown over the past eight years that organic
purchases can not be pegged to highly educated, high-income consumers. “It has little to
do with demographics, but more with the lifestyle consumers want to participate in – the
health of their family,” Demeritt says. The company’s research has found that Hispanic
Americans tend to buy more organics, and the number of kids has a heavy influence on
their purchases. She says she expects that trend to continue when the company releases
its 2008 organic study in May.
Organic produce sales have doubled over the past three years at the six Sendik’s
Food Markets with headquarters in Milwaukee, says owner and produce buyer Patrick
Balisturi. He attributes the growth to improved flavor and appearance and to consumers’
interest in making conscious decisions to do something good for themselves by avoiding
Absence of pesticides and other chemicals is the No. 1 reason core organic
purchasers select organics at 73 percent, according to The Hartman Group’s research.
Sixty percent of them also said they select organics for nutritional needs.
Still, more work can be done to bring those longing for organics into the
traditional grocery store. In 2000, the grocery store was a choice outlet to purchase
organics by 63 percent of consumers. Five years, later, that number slipped to 58 percent.
Meanwhile, natural food stores were a chosen outlet for 29 percent of organic purchasers
in 2000, but that increased to 49 percent in 2005, according to the report.
Growing and hot
The trend toward organics isn’t slowing – in the least. Growers have increased
acreage substantially to meet the demand.
Between 2000 and 2005, certified organic vegetable acreage increased by 60
percent, and certified organic fruit acreage increased 126 percent, according to USDA
statistics. With that increase, organic produce still only accounted for about 0.5 percent of
U.S. total farmland in 2005.
Yet some organic categories shine. Organics made up 6 percent of the U.S. carrot
acreage in 2005; organic lettuce made up 4 percent of lettuce acreage; and organic apples
made up 3 percent of apple acreage, according to the USDA.
Besides its fame for carrots, Grimmway Farms in Bakersfield, Calif., also offers
45 additional organic vegetables year-round and more than that seasonally from 25,000
organic acres, says Phil Gruszka, vice president of marketing.
He says he believes that the 20 percent annual growth the organic industry has
enjoyed for years will continue as consumers keep reading articles about the benefits of
organics and as retailers get more serious about the category and dedicate larger sections
New products also help the category, and within the past several months,
Grimmway added 1-pound bags of organic baby yellow carrots to its lineup. “It has a
sweet flavor profile, and consumers we’ve shown it to are excited,” Gruszka says.
Misionero Vegetables in Salinas, Calif., also has enjoyed 20 percent-plus growth
annually over the past several years, but Greg Gattis, vice president of sales and
marketing says, “I think the days of an automatic 20 percent for organic vegetables may
be behind us. Organics’ growth will be driven by new product introductions and
increased supply. As more mainstream retailers provide consumers with better choices,
the vegetable category will continue to grow. Then, as supply increases, the organic
premium will shrink, and that will allow more consumers the chance to buy organics.”
Misionero’s newest organic offering is washed organic romaine leaves in the
company’s Earth Greens line. The leaves are packaged in resealable clam shell
Packaged salads are the most mature organic category, but sales decreased after
the 2006 spinach crisis, says Frank McCarthy, vice president of marketing for Bridgeport,
N.J.-based Albert's Organics Inc., a division of Dayville, Conn.-based United Natural
Foods Inc. Only recently have their sales bounced back up. Apples and sweet potatoes are
the categories he has seen the greatest growth in over the past few years. And he sees
great potential ahead for organic celery, broccoli and bulk lettuce.
The tender leaf salad category is the powerhouse segment, “even surpassing
iceberg and romaine-based salads for the first time,” says Tonya Antle, vice president of
organic sales for the Earthbound Farm line of products from San Juan Bautista, Calif.-
based Natural Selection Foods LLC. In organics, the stand-out varieties were mache, up
26 percent, and arugula, up 32 percent between 2005 and 2006, for Natural Selection.
Success in store
In Kansas City, Kan., the 28 Ball’s Price Chopper and Hen House stores have
doubled their variety count over the past three years, says produce merchandiser Steve
May. That’s because the stores have determined to carry at least one organic SKU for
each category and even included some organic dry items like banana chips and snack
To keep organic salad sales up, Hen House advertises organic salads more often
than conventional. The chain’s goal is for 4 percent of produce sales to come from
organics. “We’re at that or above now,” May says.
The stores merchandise the organics in a separate section in most cases, he says,
usually in a four-shelf 4- to 16-foot case.
For the six Chicago-based Angelo Caputo's Fresh Markets, organic sales increase
20 percent to 30 percent each year, partly because the stores give it so much space and
attention, says produce buyer Vince Ottolino. Organics make up 10 percent to 20 percent
of produce sales in the spring and summer, merchandised from a 24- to 36-foot multi-
shelf section. The store ad also has an organic section each week, incorporating items
from each department, that features one or two organic produce items.
At Sunset Foods Mart Inc., Highland Park, Ill., where organic produce sales have
increased 5 percent to 10 percent in the past few years, produce and floral director Vince
Mastromauro has discovered success from running four or five weekly in-store organic
produce specials in the four stores. “And I always have vendors search for the best price
to make sure I can price them at or beneath conventional and still show a profit. I don’t
want customers to go to Whole Foods,” he says. Though the stores feature organics in the
ad, additional in-store specials don’t tie the departments to the product or price when the
item suddenly becomes unavailable.
Usually, independent retailers do much better with their organic sections than
chains, says Bob Scaman, president of organic produce company Goodness Greeness
Inc., Chicago. “They are in tune with the wants and needs of those in their neighborhoods
and respond to customer wants. Some of the more mass markets are more stale with their
McCarthy with Albert’s Organics says that independent natural food stores do
well with organics because they work with their suppliers and distributors to help manage
the category, whereas large chains rely on the sophisticated systems and rules they have
set up for the conventional produce and handle organics the same way. That doesn’t
always work, he says.
Learn more: www.albertsorganics.com; www.ebfarm.com; www.ers.usda.gov;
www.goodnessgreeness.com; www.grimmway.com; www.hartman-group.com;