ORGANIC FOODS FIND FERTILE GROUND
GROWING DEMAND MAY OFFER OPPORTUNITIES FOR AGRI-MARKETERS
Barb Baylor Anderson, Contributing Editor
A "bean-sprouts-and-Birkenstocks" stereotype used to come to mind when the word organic was bandied about. But in the new millennium, organic may become as traditionally mainstream as apple pie and baseball. Leading food companies are adding organic products to their portfolios. The key to success will be in matching production and consumption together.
"When you look at the low-fat trend or the low-salt trend, it really didn't impact commodities. Food scientists altered foods to fit those roles," says Ann Woods, executive director, Organic Alliance, Minneapolis, Minn. "Food scientists can't alter the basic food supply to become organic. It's got to be a different raw product, and farmers and agri-marketers will need to learn more about how the business operates to participate in it."
Organic Alliance works with retailers to help promote organic food products. The Alliance also works with the University of Minnesota's Experiment Station in Lamberton to help conventional commodity producers switch to organics.
The organic business seems to have plenty of production opportunities to offer. The industry has been growing at more than 20 percent annually for a decade and is one of the fastest growing segments in the food business, Woods says. Sales of organic foods and beverages could top $6.6 billion this year.
On the production end, the most recent USDA study done in 1997 revealed that nearly 1.35 million acres of U.S. cropland are certified organic, primarily in fruits and vegetables. That's up almost 50 percent from 1995. Industry watchers now peg total farmer numbers near 12,000.
"We really didn't move from niche market to mainstream until about two years ago," says Woods. "But if you pick up any major trade journal now, organics are generally featured, and that creates interest with food companies."
For example, Gerber has created the "Tender Harvest" organic baby food line and General Mills has introduced Sunrise Cereal, made from organic corn and wheat.
Press materials state: "General Mills created Sunrise in response to customers asking for cereal that was made from ingredients without the use of fertilizers and chemicals."
"Companies such as General Mills are putting huge sums of money into promotion and advertising of organic products and are reaching a new level of acceptance and awareness of organic foods among consumers," says Woods.
Other companies to jump on the organic bandwagon include H.J. Heinz Co., which created a new organic and nutritional foods category. Heinz also acquired a stake in natural snacks maker Hain Food Group, Inc. Dole Fresh Vegetables, Inc., launched "Organic Blends" ready-to-eat salads earlier this year in the Midwest and North Atlantic states.
"Growth continues to be in the organic value-added and take-away meals categories and also now meat categories," confirms Mark Ritchie, president, Institute for Agriculture and Trade Policy (IATP), Minneapolis, Minn. "Not only are we seeing all kinds of new products on the consumer end, but we are also seeing a lot of expansion in the production and especially the processing end of the business."
WHETTING AG'S APPETITE
But farmers and agri-marketers may already be behind the eight ball when it comes to participating in the growing market, warns Woods. Now that retailers see the potential of organic foods and market research shows that consumers are open to purchasing organic foods, companies are looking for farmers that can produce the certified organic raw products. Even General Mills acknowledges that one of the first hurdles cleared was locating millions of pounds of certified organic grains.
"Unfortunately it appears that agri-marketers and farmers were last to learn about this trend," Woods says. "Farmers and agri-marketers need to be more aware of the demand end of the spectrum. They are not as connected to consumer trends as they should be and that puts a lag between demand and distribution."
Dakota Growers Pasta Co. in Carrington, N.D., recognizes the value of connecting quickly with consumers. Dakota Growers is the third-largest pasta company in North America and the only grower-owned pasta cooperative. Corporate marketing director, Liz Reinhiller, says that when cooperative officials were approached recently by several of their customers about making organic pasta, they jumped at the opportunity. This year, Dakota Growers will offer a line of pasta made from organically-grown durum to be sold under its own label and other store-brand labels.
"Whether it's a trend or fad, we don't know yet," says Reinhiller. "But large chains are adding whole new departments to oversee the natural and organic foods section." She adds that this is the second time Dakota Growers has gotten into the organic market. In the early 1990s, the company produced an organic pasta line for a private-label customer but slow sales forced them to abandon the product.
"The good news is our first experience with organic production gave us a lot of the knowledge we needed to get back in the market quickly," says Reinhiller.
Dakota Growers is in the midst of package development for their pasta, which Reinhiller terms a learning process. "The label must identify whether the product is 100 percent certified organic, and if it is 100 percent it has to be marketed accurately to consumers," she says. "There's a lot of market positioning and detail work with this project."
Reinhiller says employees and farmer-members of the cooperative are up for the challenge. "Our sales staff is working with retail customers and getting great feedback," she says. "Our farmer-members are also very positive. Since durum wheat is grown for pasta only, they understand how to work in specialized markets."
IATP's Ritchie adds that marketing organic products and services to producers is really no different than marketing traditional products. "Agri-marketers look to get new products and crop inputs into the hands of innovators within agriculture so that their producers are visible to other producers," he says. "It's a valid way to effectively market organics, too, as long as agri-marketers also focus on marketing the end-product to consumers."
To better understand how the organic market works, Woods encourages agri-marketers to join the Organic Trade Association and read such journals as Supermarket News, Organic and Natural News, and Natural Food Merchandiser.
"You have to be aware of what it takes to grow organics and market directly to consumers or to companies that service consumers," she says. "You also have to be aware of what products and services farmers require to become organic certified. The industry itself is a great source for learning about this growing market." AM
Barb Baylor Anderson is a freelance writer from Edwardsville, Ill., who covers a wide variety of ag issues.