A Healthy Future for Organic Foods


How will superstores affect the organic products marketplace? According to a 2006 survey by the Hartman Group Inc. (Bellevue, WA) that compares the 2001 and 2006 organics markets, two of the strongest barriers to consumer purchases of organic products are price and accessibility.


Two of the nation’s most successful superstores announced plans this summer to expand their organic food offerings. Both Wal-Mart (Bentonville, AR) and Target (Minneapolis) have set their sights on the $16 billion organic food market, which comprised 2.5% of all retail food sales in 2005, according to the Organic Trade Association (Greenfield, MA).

In July, Wal-Mart launched a new ad campaign to promote its organic foods with the slogan: “What will you bring to the table?” Wal-Mart now sells a diverse collection of organic products, including pasta, coffee, tea, peanut butter, bread, produce, and milk, alongside conventional items. In September, Target also waded into the fray, unveiling a certified-organic line of private-label foods under its Archer Farms brand name.

How will superstores affect the organic products marketplace? According to a 2006 survey by the Hartman Group Inc. (Bellevue, WA) that compares the 2001 and 2006 organics markets, two of the strongest barriers to consumer purchases of organic products are price and accessibility.

Mass-market retailers could “democratize” the market by offering low-cost items at numerous locations, predicts Laurie Demeritt, president and COO of the Hartman Group. However, specialty stores like Whole Foods Market (Austin, TX) and Trader Joe’s (Monrovia, CA) could continue to offer authentic organic brands as well as new product categories that appeal to organic consumers. The likely result: continued growth for all industries involved with organic products.

“There are places in the country where fewer people are able to access organics, and those people will now be able to buy them,” Demeritt says. “At the same time, we know there is absolutely still a place for other retailers. With the industry growing, there are a lot of opportunities, both from the manufacturing viewpoint and the retailer viewpoint.”


Forget what you think you know about the typical organic consumer. The stereotype that most organic consumers are Birkenstock-wearing hippies or middle-aged white women is no longer-and may never have been-accurate. In fact, Asian-Americans, Latinos, and African-Americans are more likely to be regular or occasional organic consumers than other groups, according to the Hartman Group survey. Besides, today’s organic consumers tend to share a set of beliefs about food and are united by those ideas more than anything else. “It used to be pretty easy to identify consumers by demographics, but now it’s more about a life-style and values system,” Demeritt says.

The Hartman Group divides the world of organic consumers into three segments: core consumers, who represent about 21% of the market; midlevel consumers, who make up about 66% of the market; and peripheral consumers, who account for just 13% of the market. Core consumers, the most knowledgeable segment, typically have used organics the longest and have made organic products an important part of their life-style. Midlevel consumers are somewhat less knowledgeable about organics and often want more information. Consumers on the periphery know little about organics but try them occasionally. Ironically, nonusers tend to be more knowledgeable about organic products than peripheral consumers.

Commerce and Social Responsibility: A Balancing Act



Many consumers consider fair trade to be an important aspect of organics. According to the International Fair Trade Association (Culemborg, The Netherlands), fair trade is a movement that seeks to promote stable agricultural development and protect vulnerable agricultural producers in the developing world by ensuring fair prices and working conditions. Much like organic producers, fair trade producers use independent, third-party certification agencies to verify that their ingredients meet strict standards. Thus, companies that source organic ingredients from the developing world may opt to undergo two different kinds of certification for their products.

For instance, Danisco (New Century, KS), which supplies both conventional and organic vanilla, announced in September that TransFair USA (Oakland, CA) will certify its new line of fair trade vanilla products. Danisco sources its vanilla from several growing regions around the world and extracts ingredients in facilities in the United States, the UK, and France.

“Danisco is a technology-driven company, committed to sustainability and fair trade,” says Krishna Bala, PhD, technical director of vanilla at Danisco. “By directly transferring our knowledge to the farmers and processors in developing countries, we improve the value and consistency of their production in the world market. This direct and personal involvement allows us to provide the highest quality and flexibility to our customers.”


Organic shoppers assign a variety of meanings to the term organic. According to the Hartman Group survey, most consumers associate the term with the absence of potentially harmful ingredients, such as pesticides, hormones, or genetically modified organisms (GMOs). For instance, 83% of consumers think the term implies the absence of pesticides, 67% think it means the absence of hormones, and 62% think it reflects the absence of GMOs. A minority of consumers, particularly among the core segment, also believe that organic products taste better and are better for their communities and the environment.

The growth of organic product sales may be tied both to an increasing number of consumers who occasionally purchase organic products as well as a rise in the number of core consumers who make routine purchases. “It’s not necessarily that there are a lot of people who buy organics frequently, but rather that there is a large group that buy organics occasionally,” Demeritt explains. “The idea from a few years ago that there is just a small group of consumers that are crazy about organics isn’t correct. There are a lot of people involved in relatively small ways.”


While consumers generally see the term organic as a symbol for the absence of harmful ingredients, manufacturers usually see it as an operational or legal definition of the process used to create a product. How a manufacturer conveys information about a product’s organic character to consumers is important.

For instance, a manufacturer may decide to emphasize the fact that its product is certified organic by an accredited agency or grown under strict agricultural conditions. But most consumers don’t really understand how organic certification works and are more interested in the back story behind the product. “Consumers like narratives,” Demeritt notes, adding that manufacturers often are better at providing scientific or rational descriptions of products than telling stories. “Consumers are looking for an emotional perspective that resonates.”

Demeritt offers the example of a shopper who is intent on buying organic strawberries for her children because she is worried about pesticides. That shopper may be willing to pay much more for organic fruit if she is convinced that her family is being poisoned by conventional fruit.

Concepts like conservation, animal welfare, sustainable agriculture, and fair trade also have a strong emotional appeal for some core and midlevel consumers. For instance, about 56% of core and 32% of midlevel consumers feel that organic products require better treatment of farm animals than conventional products. Many successful manufacturers have opted to stress their involvement with these concepts in addition to organic certification.

Two of the top organic brands in terms of consumer name recognition-Ben & Jerry’s (South Burlington, VT) and Celestial Seasonings (Boulder, CO)-emphasize values that appeal to core consumers in their sales campaigns. Marketing materials for Ben & Jerry’s highlight the company’s use of fair trade ingredients, cage-free eggs, and biodegradable containers. “Since Ben and I started the business, we’ve used ethical values to guide our business decisions, such as sourcing ingredients,” Ben & Jerry’s cofounder Jerry Greenfield said in October. Similarly, Celestial Seasonings notes that it uses recycled paperboard in its packaging as part of its commitment to producing “the most environmentally responsible product possible.”

Sophisticated Consumers Seeking More Organic Flavors



A key reason for the success of organic products is the use of certified-organic spices, flavors, and seasonings. According to the market research firm Packaged Facts (New York City), the overall flavor and spice market could reach $3 billion by the end of 2006.

While much of the demand in 2005 was driven by consumer interest in Asian, Spanish, and Latin flavors, shoppers in 2006 are exploring the tastes of the Middle East and Africa.

“Consumer demand for ethnic flavors is on the rise,” explains Lawrence Buckholz, PhD, vice president of flavor development and technology at Mastertaste Inc. (Teterboro, NJ), which supplies certified-organic essential oils and freeze-dried powders. “Every week, consumers are looking for a new taste sensation, and the more complex, the better.”

Buckholz adds that tastes are becoming more sophisticated. “Consumers are looking for a more culinary experience with their everyday foods,” he says. “They want tastes that are bold, with depth and interest.”

Aside from enabling manufacturers to create products eligible to bear the U.S. Department of Agriculture’s (Washington, DC) organic seal, organic flavors also help manufacturers create clean labels, which are particularly appealing to discriminating consumers. Many organics shoppers will shun products made with ingredients they can’t pronounce or recognize.

“Clean labels are becoming more and more important with the obesity epidemic and rise of cancer,” Buckholz says, adding that media coverage of food safety issues has caused consumers to focus more on their health. “People are aware of what they put in their stomach.”



The organic food market has been one of the world’s fastest-growing retail sectors, with sales of some items hitting double-digit growth; yet consumers consistently say they believe organic foods are too expensive. In fact, about 70% of consumers say high prices sometimes keep them from buying organics, according to the Hartman Group survey. Despite the perception that organics cost too much, many consumers are willing to pay a premium once they decide to make a purchase. Among consumers who bought organic products within the last three months, more than half were willing to pay 30% more for certain items, particularly fresh produce, meat, dairy, and baby food, according to the survey. In addition, many core and midlevel consumers even said they would wait and travel to another store instead of purchasing a conventional item if the organic item they were looking for was out of stock.


Will the presence of superstores like Wal-Mart drive away organic consumers who are concerned about the quality and authenticity of organic products? In the Hartman Group study, consumers generally were of two minds regarding major corporate ownership of organic brands, with some saying that it didn’t matter as long as the products remained the same, and others surmising that the products might end up costing less. Some core organic consumers, however, said major corporate ownership could cause them to buy fewer products.

Although distrust of large corporations exists among some core organic shoppers, that sentiment is unlikely to have a major impact on overall demand. For instance, Unilever’s (Rotterdam, The Netherlands) 2000 acquisition of Ben & Jerry’s did not stop consumers from enjoying organic ice cream.

In short, the kinds of consumers who are likely to shop at specialty retailers and health-food stores probably will continue to shop at those stores, while other consumers who are less familiar with organics may be encouraged to try the products after seeing them at their local grocery or mass retailer. Specialty retailers will continue to lead the way in offering newer and higher-quality items desired by dedicated organic consumers. Furthermore, superstores should help lower the prices of some items and make them more accessible to the public, which could create greater demand overall. By knocking down the barriers of price and accessibility, superstores are likely to make organics even more popular than they are now.



For more information about the Hartman Group report, Organic 2006: Consumer Attitudes & Behavior Five Years Later and into the Future, visit www.hartman-group.com or call 425/452-0818.


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