Consumers want to know where and how their produce is grown. The expanding organic segment is increasingly quelling their concerns—and boosting store sales.
Everyday the Internet is full of headlines discussing the GMO-labeling debate. Much of the dispute revolves around the impact of genetically modified organisms (GMOs) on the food supply and where disclosure falls in the spectrum of consumer rights. While shoppers try to get their head around the information flooding the media to make healthier shopping decisions for their families, organics are finding themselves in the spotlight.
“Consumer awareness of GMO’s has grown significantly,” says Simcha Weinstein, director of marketing for Albert’s Organics, based in Bridgeport, N.J. “It is pretty well understood that the only sure way to know what you are eating, with regards to the select products that are genetically modified, is by purchasing organic foods. With no labeling laws in effect, the organic label is the only assurance to consumers that the products they purchase are free from GMOs.”
This is especially the case in the produce department, where consumers shop with “nutrition” on the mind. According to observers, 75% of consumers now purchase organic across the board, and the shopper is no longer limited to the stereotypical “educated, middle-to-upper income, planet-conscious,” says Weinstein. “The organic revolution is taking hold across a wide and diverse population.”
Health continues to be the most cited reason for choosing organics, but environmental-concerns and sustainability are right behind it. Industry observers say that is the beauty of the segment—organic produce attracts a wide-range of consumers for a number of different reasons. The common denominator among organic shoppers is knowledge.
Education has been—and continues to be—a key factor in growing the organic segment. Anytime the industry raises awareness regarding consumers’ concerns, it helps organics, says Addie Pobst, organic integrity and logistics lead for Viva Tierra Organic, based in Sedro-Woolley, Wash. “This is the case for any element of the food supply, such as how food is grown, where it is coming from, what was used in the process. These concerns support growing systems, like organic, that focus on sustainability and maintaining a high degree of interest in the processes.”
Farmers and marketers are doing their part to promote the segment. Yet, growers agree, when it comes to produce, consumer loyalty lies with the supermarket, not the brand. Reaching the consumer becomes more about reaching the retailer and creating an alliance to spread the word about the benefits of organic, say observers.
In 2012, Organics Unlimited introduced an online point-of-purchase store for retailers so they could choose directly the items that work for their purposes. “We found this opens a dialog with retailers who would like to create their own materials,” says Mayra Velazquez, president of the San Diego-based company. “In many cases, we have provided retailers with elements that can be used within templates that the stores have developed for their own use.”
Educational materials like this can help persuade on-the-fence consumers. For a small percentage of consumers organic is what observers call a “lifestyle choice,” but the majority of organic dollars come from consumers who only purchase organic in particular categories or experiment when the price is comparable.
Dan Wohlford, national marketing representative for Oneonta Starr Ranch Growers, based in Wenatchee, Wash., suggests retailers keep organic prices close to conventional.
“Usually 30-cents to 50-cents a pound for bulk apples is the range where even the casual organic buyer will say, ‘my wallet can afford to buy organic,’” he says. “Additionally, retailers should let shoppers know how many organic options they have available in the produce department. Then whether you integrate your organics within a category or create an organic destination, sign them properly so shoppers can easily identify organic from conventional.”
Organic is still relatively new in the grand scheme of the grocery marketplace. Some observers say it used to be a “niche category that you could only find in health food stores,” but as more conventional retailers join the organic movement, consumers are testing the waters.
“People follow success,” says John Harley, sales manager for Anthony Vineyards, based in Bakersfield, Calif. He adds that advancements in production have also helped push the category into additional retail outlets making it is a mutually supportive relationship.
Anthony Vineyards identified early on that to maintain organic grape sales, retailers had to be able to stock organic grapes year-round. “When retailers are able to have an uninterrupted supply, they can offer it consistently, and that obviously drives sales,” adds Harley.
Observers say new products drive some of the growth, but most is due to organic expansion into mainstream markets and its acceptance into private label.
Almost all of the top chains have launched a private label line of organic packaged salads in the last two or three years. “It speaks a lot to the industry when a big retailer thinks enough of it to make it a private label item,” says John Burge, vice president of sales and marketing for Classic Salads, based in Watsonville, Calif. “It means they are willing to take a little less margin on it, and that helps move product because the price is closer to conventional packaged salads.”
Private label has seen tremendous growth across all categories in recent years. Consumers have instilled trust in private label brands, so bringing organic produce into the mix can do nothing but boost the bottom line, say observers. “When you have the same label across different departments, it shows a real focus at the headquarter level so they tend to do more promotions, which bring more attention and trial,” adds Burge.
Organic proponents, particularly farmers, do not wish for the downfall of conventional produce—and not just because many of them sell it. Without options, organic does not have the same impact on the category.
“It is all about being a one-stop shop,” says Cindy Jewel, director of marketing for California Giant Berry Farms, based in Watsonville, Calif. “All different kinds of customers with different kinds of needs walk into the grocery store. The more that retailer can satisfy these customers, the more they will buy from them. We want to satisfy our retail customers by being a one-stop shop for them, so they can be a one-stop shop for their shoppers.”
Organic farmers are proud of their product. To show it off, they are getting up close and personal with shoppers in-store. Lakeside Organic Gardens and California Giant Berry Farms, both based in Watsonville, Calif., are working with retailers to display photos of their farms where consumers will see them best—in stores.
Whole Foods was the first to jump on board with California Giant Berry Farms’ program. The retailer sent a photographer into one of Giant Berry’s grower’s field to document the origin of its berries. Photos of the farmer and his wife were featured on the retailer’s website and displayed on signage throughout the store’s produce department. Cindy Jewel, director of marketing, says it makes consumers feel good about the produce they are buying.
“It allowed shoppers to see the farm where their fruit came from and the face responsible for growing it. It helped them put a face to it,” she says. “It works to promote the category because the shopper’s alliance is with Whole Foods, not the grower.”
Lindsey Roberts, marketing and communications director for Lakeside Organic Gardens, agrees. “As people want to know more about where their food comes from,” she says, “it is going to become more important for grocery stores to feature produce brands, instead of just bulk product. Consumers want to connect with the company.”
Lakeside is working with retailers to promote its story and images of its farms and in stores. “It grabs the customers’ attention and helps connect them with the commodity and the farmers—and, of course, encourages them to buy,” she adds.