With the organic segment still on the rise, retailers can keep sales blooming with a well-stocked produce aisle.
By Elizabeth Louise Hatt
Organic foods was once a small segment fighting for a facing or two of shelf space. Today the fast-growing category claims not just aisle space, but in some cases, entire sections.
Leading the way is organic produce, which has grown in popularity over the last decade as consumers become more concerned for their health and that of their families. Industry observers say that based on current trends they do not expect sales to slow any time soon either.
“Many shoppers who purchase organic foods are committed to a lifestyle choice and are used to spending a higher percentage of their disposable income on their food purchases,” says Simcha Weinstein, director of marketing for Bridgeport, N.J.-based Albert’s Organics. “Although the organic category has dipped during this challenging economy, it is still showing positive growth. Prior to the recession, from 1999 to 2008, the organic industry was averaging a nearly 20% growth rate per year. Currently it is at about 5% growth, which is still positive.”
Part of this growth is likely due to a boost in organic produces’ quality and appearance. Observers recall a time when retailers could sell organic apples with brown spots—just because they were organic. “Organic used to be a category with a different set of expectations and quality standards,” says Addie Pobst, import coordinator and food safety officer for Sedro-Woolley, Wash.-based CF Fresh. “The supply was quite small so people would take what they could get. Now, and for the last seven or eight years, organic produce has the same appearance and size as conventional produce.”
Every type of produce available in the conventional category is now available organically, observers remind retailers. While the category used to consist only of primarily hardcore organic shoppers, today mainstream consumers are filling their carts with organics as well. Many of those mainstream shoppers who now buy organics are also some of the most lucrative in the store.
“The organic target market is directly correlated to income and education,” says John Burge, vice president of sales and marketing for Watsonville, Calif.-based Classic Salads. “Organic shoppers make about 25% more in average salary, and the higher the level of education, the more prone they are to be an organic buyer.”
Some observers say consumers that meet those demographics are generally more aware of health issues and concerned about the long-term affects pesticides used on conventional produce may have. However, as prices become more in line with conventional and consumers become more educated, observers say the organics market will continue to expand.
Diane Henderiks, culinary expert and personal chef, also known as Dietician in the Kitchen, encourages her clients to choose organics because they are free of any potential pesticide residue and because they support agriculture and the environment. “The cost may be higher for retailers but there is something called the Dirty Dozen—a list of the foods that absorb the most pesticides and should be purchased organic—it’s a very cool angle for supermarkets [to promote].”
While the full benefit of organics is still inconclusive, observers say what is clear, through shoppers actions, is that they want to eat cleaner produce. “Nobody really knows what the long-term affects of exposure to pesticides are going to be but people look at their families and they don’t want to be the ones that find out that it wasn’t good for them,” says Pobst.
Weinstein says that the organic shopper used to be narrow and specific; however it is no longer so predictable. “Organic foods now appeal to a broader sampling of people. For example, one of the fastest growing population segments within the organic and natural foods industry is the Hispanic community,” he adds.
One thing most organic consumers have in common is that they are dedicated to their cause. Pobst says that CF Fresh is encouraged by the fact that people who buy organic tend to gradually increase the amount of organic dollars they spend. “They start by buying one organic item and then gradually increase their consumption—across all demographics,” she says. “There is a lot of loyalty.”
College-educated middle-class moms, the main organic demographic, do most of the shopping, which observers say can make a retailers’ jobs easier. For grocers that know these products are in demand, much of the success becomes about location and merchandising, particularly grocers with little experience in organics.
“For retailers that have never offered organic produce in the past and are just getting started, it is better to have a segregated section of organics, with all the organic commodities together in the same place,” says Burge. “It will get noticed by the hard core organic shopper who hasn’t seen organic in that store before.”
Once introduced however, the continued growth comes from the crossover shopper who buys both conventional and organic. To entice this type of buyer, observers say it is better to have an integrated section within the store. “This consumer isn’t necessarily looking for a separate section of organic items. They are going through the mainstream displays and if they see organic celery and conventional celery right next to each other, then they can compare the price differential. And at a small enough price premium—usually about 10%—the crossover shopper will often opt for the organic,” says Burge.
Keith Mixon, president of SunnyRidge Farm, based in Winter Haven, Fla., says retailers should not be afraid to keep pushing organics either. “Many retailers want to target that organic consumer who may be skeptical,” he says. “We can help by providing quality organic fruit that can stay on the shelf for the needed periods of time.”