Even in hard times, organics is hot

Not even the recession could dissuade consumers from shopping organic.

Wander into the Big Carrot, a natural foods store in Toronto, on a Thursday night and you’ll find up to 50 people watching a movie (perhaps The World According to Monsanto) or listening to an expert talk about cancer prevention and overcoming migraines. Shoppers can also sign up for gluten-free baking classes or make an appointment with one of four staff nutritionists. Never before have consumers been so scrupulous of what they eat. And for a growing number, organics is driving their buying decisions, says Maureen Kirkpatrick, standard co-ordinator at the Big Carrot.

Say what you will about organic “hype,” but even the recession has not seemed to squash this category’s appeal with shoppers. According to the Organic Trade Association (OTA), organic sales in the U.S. grew 5.3% in 2009, to $26.6 billion, outpacing sales of comparable conventional food. More telling, perhaps: only 21% of organics consumers cut down on or eliminated organics during the recession, according to a recent report on green living by market research firm Mintel. Another 20% switched to less expensive organic options and 48% bought as much or more organic food than prior to the downturn.

In Canada, more shoppers are giving organics a taste, says Joel Gregoire, food and beverage industry analyst with NPD Group in Toronto. In 2008, 13% of Canadians either ate or drank at least one organic food or beverage in a given week. That rose to 15.5% last year. “We’ve seen relatively consistent growth in this industry since the early part of the decade. There’s no reason to suspect that some growth won’t continue,” he says.

Matthew Holmes, managing director of the OTA in Ottawa, says Canada’s organics industry is growing at around 20% a year. Produce is still the largest category, but soy drinks, dairy, cereal and coffee are seeing huge spikes. Holmes says total organic sales are now around $2 billion a year–a doubling in two years, with 41% of sales coming from conventional grocery stores. With the first national organic week in Canada kicking off October 9, OTA wants to bring organic farmers into retail stores to help connect with consumers and to profile local food.

Last year’s launch of new federal rules under the Organic Product Regulations, as well as the Canada Organic logo that gives products an organic seal of approval, set the stage for greater consumer confidence and further growth in demand, says Holmes. “When we’ve seen other markets such as the U.S. and Europe go through a similar process of regulating there was a major uptick in terms of consumer trust and therefore consumer purchases of organics,” he says.

The organics customer

Alison Dyer is a Newfoundland-based researcher, mother of two young children and co-ordinator of the Atlantic Canadian Organic Regional Network, a new organics association. She diligently reads ingredient labels and devours the latest research on organics. She’ll tell you that conventionally grown strawberries have about 22 pesticides on them. When dollars are tight, she cuts back on packaged or canned organic goods, but still buys fresh produce, flour, coffee, shampoo and cleaners. “I understand the extra cost of producing certified organic food and I am willing to pay if I can get it from local farmers,” says Dyer.

Organics consumers like Dyer are more informed than your average shopper, says Holmes. They spend time making decisions about products, look for certification on labels and want to understand the story behind the product. Organics shoppers are especially interested in family health. According to a recent survey by OTA, it’s the top reason people buy organics. In fact, 35% of respondents cited family health, followed by the environment (33%) and personal health (22%).

Still, it’s becoming tough to segment organics shoppers into one easily defined group. Janice Harada, vice-president of marketing at Hain Celestial, notes that organics customers are everyone from students to baby boomers interested in sustainability and leading a healthy lifestyle. “It’s more of a psychographic. We do see higher income levels, but it’s not as income-driven as you might think. It’s more about their mindset.”

Integrate or standalone?

One question retailers need to ask is whether to put organics products in a special aisle or disperse them within conventional grocery aisles. While hardcore organics consumers prefer a separate section–such as the one at Save-on-Foods in North Vancouver, which has two natural food aisles selling everything from organic oatmeal to chips–stores such as Walmart and Vancouver Island’s Quality Foods put their organics in amongst the ‘regular’ products. Backed up with strong messaging, visuals and information, this tends to expose shoppers to products that may otherwise remain invisible.

Andrew Pelletier, vice-president of corporate affairs and sustainability at Walmart Canada, says integrating organics into the mainstream sections of the store is helping achieve significant growth, particularly in the dry grocery category. He says some of the most popular organic items are lettuce, carrots, cereals, soya, rice beverages, chips and almond-based spreads and beverages.

Don Rees, vice-president and general manager at SunOpta, believes the decision to go with either a store-within-a-store concept or amidst conventional foods depends on the development of a store’s market. A standalone section is good for most stores because organic food is still a small portion of the overall grocery ring. “When you’re trying to attract new consumers, you want to be able to educate them and bring them into an area where they know everything is natural and organic versus a conventional cracker up against an organic cracker in the main cracker section,” he says.

There are tradeoffs to both setups. Retailers tend to get higher traffic down the mainstream aisles. But a special section definitely highlights organics. Sometimes, though, it’s best to highlight the products in a separate display, such as an end aisle, says Harada. It draws people’s attention to a category they might not otherwise have considered.

It helps, of course, if the products in those displays are new and unique. Dror Balshine, president of Sol Cuisine, says Solgurts are the latest addition to his line of vegetarian, organic and kosher products. The dairy-free, probiotic soy yogurts target vegans and the lactose intolerant and have seen sales growth of 50% in the last 12 months. “Probiotics are obviously a very hot area and are still growing exponentially,” he says.

Nature’s Path Organic Foods is targeting the “informed progressive” consumer with its new line of granola bars, which includes maple syrup, crunchy pecans and berry strawberry. Maria Emmer-Aanes, director of marketing and communications at Nature’s Path, says social media and sampling campaigns seem to resonate with its core consumers–mostly well-educated women between 25 and 50 with high incomes, kids at home and who have made a deliberate decision to eat healthier and get active. “You put the product in their mouth and give them a reason to buy it and sales go up,” she says.

4 Merchandising Tips

1. Treat organic products like any other item by promoting them in flyers. Rob McKay, marketing director at Vancouver Island’s Quality Foods, credits his chain’s huge growth in organics to the store’s commitment to promotional pricing, flyer advertising and feature display merchandising.

2. Cross-promote organics where it makes sense. For example, if a customer buys organic milk, attach a coupon for organic cereal, suggests SunOpta’s Don Rees.

3. Offer samples with a focus on new lines and local products.There’s still a perception that organic products don’t taste as good. Some demonstration and sampling should put the stigma to rest. Toronto’s Big Carrot, for instance, offers daily sampling.

4. Use clever in-store signage to differentiate organics. Your best guide here may be Whole Foods. It has signage down to an art form. A sign that reads “More of the good stuff for less than you think” hangs over the rainbow chard, while one that reads “No antibiotics ever” is situated next to the meat.

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