Organic Gains

Good-for-you produce continues its growth spurt.

If you've considered expanding your organic produce assortment, ask yourself: What have I got to gain?

The answer may lie in a recent Thomson Reuters-NPR Health Poll, which found that more Americans (58 percent) prefer organic to non-organic foods. That percentage is even higher among younger and more educated Americans: Sixty-three percent of those surveyed under the age of 35 prefer organic, while 64 percent of college-educated respondents said they choose organic over conventional.

Results of the survey, an independently funded telephone poll, represent responses from 3,008 Americans interviewed in May 2011. The key factors driving organic food purchases among the 58 percent of respondents who said they prefer organic is a desire to support local farms (36 percent) and avoid toxins in their food (34 percent).

These survey results are consistent with the newest data from the Organic Trade Association (OTA) based in Brattleboro, Vt., which found that the organic food industry grew by 7.7 percent in 2010, as compared with total U.S. food sales, which grew by less than 1 percent last year.

Leading this growth are organic fruits and vegetables, which represent 40 percent of total organic food value and 12 percent of all U.S. fruit and vegetable sales, according to the OTA. Organic fruit and vegetables sales climbed to nearly $10.6 billion last year, representing an 11.8 percent gain over 2009. The OTA forecasts more growth on the horizon, predicting organic fruit and vegetable sales will increase by 14 percent in 2011 and 15 percent in 2012.

Raising the Roof on Organic

When it comes to purchasing organic produce, many Americans say their favorite purveyors are farmers' markets. The Thomson Reuters survey revealed that 43 percent of respondents prefer to purchase organic fruits and vegetables from a farmers' market, followed by 32 percent who say they like to shop supermarkets for organic fare.

Sunflower Farmers Market, a 36-store grocery chain based in Phoenix and Boulder, Colo., is poised to capitalize on the current trends with its organic and naturally focused stores designed to impart a farmers' market feel. "Organic continues to be our fastest-growing category, even though we're fairly mature in it. We've seen double-digit increases in organic for the last several years, and we expect that growth to continue," says Mike Krage, director of produce and floral for the entire Sunflower chain.

Mexico Declares Commitment to Food Safety

As the latest statistics show, many Americans buy organic because they wish to avoid toxins in their food. A Thomson Reuters-NPR Health Poll found that while 34 percent sought to avoid chemicals in their food by eating organic, only 13 percent said they prefer organic because it tastes better.

Food safety is the crux of the organic trend, as well as the focus of a new campaign by Mexico Supreme Quality (MSQ), a program launched by Mexico's Ministry of Agriculture and Ministry of Economy to bring U.S. food buyers, importers and wholesalers south of the border for free tours of the country's farms and food-processing facilities.

The tours, which focus on food safety-certified farms and processors rather than organic businesses, are being offered in response to the FDA's new Food Safety Modernization Act and "Pathway to Global Safety and Quality" report. MSQ and its partners aim to show U.S. buyers that Mexico is a source of safe and healthy products.

Some 32 percent of all fruit and 66 percent of all vegetables imported into the United States come from Mexico. In 2009, the United States purchased more than 76 percent of the food exported from Mexico.

U.S. food professionals interested in the free tours can contact Fernando Fernandez of MSQ at [email protected].

Krage attributes a number of factors to Sunflower's success in organic food, chief among them the chain's emphasis on organic and natural products at affordable prices.

Another ingredient driving its thriving organic business, according to Krage, is Sunflower's merchandising strategy for organic produce and other products. "We don't commingle our organics with conventional produce," he explains. "We have tables on the sales floor entirely devoted to organic produce. It makes a better merchandising statement about how many SKUs we have to offer, and it sets us apart with our core customers who only want organic."

In terms of affordability, Krage makes the point that some of Sunflower's organic fruits and vegetables are priced at or below its competitors' prices for conventional products. "People are watching their food spending, and we give them a strong reason to shop our stores because of our pricing on organics," notes Krage.

By Krage's estimation, depending on seasonality, 15 percent to 20 percent of Sunflower's produce selection is organic. The stores typically carry 600 SKUs in the produce department, and about 110 to 125 of those SKUs are organic. That represents a substantial commitment when one considers that produce accounts for 20 percent to 25 percent of the square footage of each Sunflower Market.

"I believe that we've built ourselves as an organic and natural destination," asserts Krage, adding, "The organic customer is part of our core base and very influential in our go-to-market strategy and product assortment."

We All Scream 'Organic'

In its 2011 Organic Industry Survey, the OTA notes that the growth forecast for organic "continues to look bright." The organization goes on to say that "[f]ruits and vegetables are expected to continue to lead the march, especially as mass grocers continue to expand their organic produce sections and big-box stores incorporate produce sections."

While traditional supermarkets and mass merchandisers are no strangers to organic produce, it seems many chains, from Walmart to Kroger, have upped the ante of late, making substantial investments in their organic futures.

Walmart, which made its initial U.S. foray into organic foods back in 2006, is now ambitiously going after the organic market worldwide. Last year was a banner year for Walmart International, which surpassed its $100 billion net sales mark thanks in part to its organic holdings. If its newest store renovations are any indication, one of the nation's largest grocery retailers, Cincinnati-based Kroger, is raising the stakes on its organic and natural offerings. According to The Terre Haute Star Tribune, Kroger invested $4.6 million in renovating its Fort Harrison Road store in Terre Haute, Ind., which features an extensive organic and natural food selection.

Dual Income: Organic and Local

"Local" has exploded into our food vernacular lately with such force, it seemed "organic" might lose some of its buzz-worthiness. Not so, says Krage of Sunflower. "When you go through the buying hierarchy with our customers, organic is their top choice, and the next best alternative to organic is local," he notes.

Organic may be the average Sunflower customer's first pick, but local is hardly sloppy seconds. "Local is very compatible to our organic customer in that they share a lot of the same passions, like sustainable products made closer to home and a desire to support the local community," explains Krage. "These are attributes that resonate with organic customers as well."

Samantha Cabaluna, communications director for Earthbound Farm, a San Juan Bautista, Calif.-based supplier of organic greens and more, agrees. "I think the interest in local stems from the same place as the interest in organic, which is a desire for better-quality food," she says. "Ultimately, I don't think [the interest in local] hurts us in organic."

A number of retailers are taking a strategic double-down approach by ramping up marketing efforts on both the organic and local fronts simultaneously. Big Y Foods Inc., one of the largest independently owned supermarket chains in New England, made a big push with "native" foods this summer. The Springfield, Mass.based chain promoted the arrival of weekly harvests from "native farms" throughout its 58 stores. Offerings ran the gamut from organic collards to local summer squash, which were all identified by the farm from which they came.

The Fresh Grocer, a supermarket chain in the greater Philadelphia area, has launched an innovative program to bring more local and organic produce to its seven stores. This summer, the chain became the first full-service supermarket to team with The Common Market, a Philadelphia-based wholesale distributor of local foods.

Locally grown produce from farms in The Common Market's consortium first entered Fresh Grocer stores in June, and are merchandised as farmers' markets within the produce departments in high-traffic areas of each store. Informational signage tells the story of each farm in an effort to build personal connections between farmers and customers.

Tatiana Garcia-Granados, cofounder and executive director of The Common Market, describes her business model as a distributor focused on local, sustainably farmed produce. The business represents some 100 farms.

Just three years old, The Common Market is on track to reap $1 million in sales this year. "That's 100 percent growth each year," Garcia-Granados notes.