Organics on the move

As the organic market keeps growing, so do the opportunities for grocers to attract new shoppers

For all those who never believed organic goods would be significant contenders across grocery categories, it’s time to re-evaluate. Not only have organics made their way into the aisles of mainstream retailers, but more and more manufacturers are investing in developing organic products to meet consumer demand.

As a $5.4-billion market in Canada--which has been steadily growing over the last five years—the Canada Organic Trade Association (COTA) reports that two-thirds of shoppers are now choosing to buy organic products on a weekly basis. “Fifty per cent of all organic consumption globally is happening in North America and 80% of organic shoppers are buying from mainstream channels instead of natural or local markets,” says Tia Loftsgard, COTA’s executive director. “That’s a really good sign for all grocers.”

According to the Association’s 2017 report The Canadian Organic Market, Trends and Opportunities, people across the country, regardless of income levels, are buying organic, dispelling the common perception that this market is inaccessible to those with lower incomes. In fact, 39% of shoppers are now buying organics at mass retailers such as Walmart and Costco—and it is families who are most often gravitating to these large-format, low-price venues.

Further pushing the accessibility factor are grocers like Organic Garage, which has created its business model around providing organic and natural products at lower prices. “In the last eight years, I’ve seen a real shift in knowledge base: instead of people asking what quinoa tastes like, they want to know about particular brands and price point,” says Matt Lurie, president of Organic Garage, which will start construction on its fifth store in Toronto later this year. “Now, even the value-minded consumer is starting to transition to this market.”

That said, the perception of elevated cost for organics is still an issue, says Joel Gregoire, associate director, Food & Drink at Mintel. Mintel research reveals that 52% of Canadians identify organic foods or beverages as being pricey and 69% of those who purchase organic/natural foods and beverages say they would buy more if they were less expensive.

“Given that most people agree that organics are safer for you, but price is a challenge, it’s about really conveying the value of these products and the benefits to consumers, especially parents,” explains Gregoire.

Suzanne Gagnon, national director of offer evolution at Sobeys, agrees that grocery customers see organic foods as a safer option—especially when they start having children. “The minute we see children come into a family, that’s where we’re seeing a real shift to organics,” she says, adding that locally produced food is also gaining favour, even when it’s not organic.

Toronto-based Love Child Organics, makers of 100% organic baby cereals, purées, snacks and drinks, is tapping into this growing market share of sustainably minded, health-conscious parents. (The company is launching six new products this fall.) “I really believe there is a mind shift when you become pregnant, even if you’ve only dabbled in organics previously,” says senior brand manager Erin Grosberg. “Consumers are starting to become aware of why organics cost more and are willing to make that investment in the health of their families.”

She suggests grocers play to the shopping habits of time-starved new moms by offering impactful displays through easy-to-reach endcaps, or bundling multiple products for better savings.

Along with new parents, COTA’s research shows both millennials (83%) and baby boomers (56%) are driving the growth of organics. “In that third stage of life, people are looking for ways to improve their health and stay independent longer,” says Patrick Barclay, product category manager at Goodness Me! Natural Food Market, which has nine locations throughout Ontario and carries only organic produce. “That’s why they are gravitating to a cleaner diet with organics.”

Interestingly, across Canada it’s Alberta (74%) and British Columbia (69%) showing the highest per-capita consumption of organics, according to COTA. Doug Newstead, vice-president of food operations and merchandising at Calgary Co-op, attributes this trend, at least in Calgary—where the Co-op has 24 food centres—to a city filled with educated millennials who are especially concerned about eating healthier. “We have a strong agriculturally based economy too ... and with the whole farm-to-table movement, people want to support local ,” he says.

Calgary Co-op has integrated its organic products within its regular aisles based on customer feedback. “We did initially segregate organics, but then our customers told us they wanted to be able to choose these products among the rest,” says Newstead. “They want to see it highlighted as organic on the shelf,
but within regular categories instead of having to look elsewhere.”

So, which organics are consumers buying most? Fruits and vegetables are holding steady at No. 1, according to COTA, followed by meat/poultry and bread/grains.

With a growing snacking culture in Canada, consumers are also on the look-out for healthy snacks—and that’s where some organic manufacturers are finding their niche. At Moose Jaw, Sask.-based Zak Organics, for example, crunchy peas are the main attraction. “Sure, veggies and fruits were the first things people went to for organics, but now they’re realizing they don’t have to cheat on the snack part either,” says company founder Allen Zak. “We started experimenting with things on our farm and realized we could make a healthy snack alternative that tasted good too.” The company recently added a fifth flavour (Mango Habanero) to its crunchy pea line, and will launch a sixth flavour before the end of the year.

Big food players are seeking to grab a bigger slice of the organic market by introducing new items to their lines. Kraft Heinz, for instance, is launching organic versions of its Classico tomato sauce, while General Mills announced plans this past March to convert 34,000 acres of conventional farmland to organic by 2020. Even Red Bull is getting in on the trend with Organics by Red Bull, its new line of all-natural organic sodas launched earlier this year.

For Canadian retailers, there’s a real growth opportunity to lure shoppers who are increasingly gravitating towards organics, believes Elizabeth Kowpak, director of retail marketing at Ontario-based Yorkshire Valley Farms. (The company produces organic poultry products, and is just releasing a new line of pre-packed sliced organic chicken and turkey.) Rather than putting a product on the shelf and hoping consumers will find it, she says it’s about helping them understand what they are paying for, especially if it’s at a premium.

“Anyone who is considering buying organic is already engaged and will take the time to read pamphlets or other information,” explains Kowpak. “Retailers can rely more on their organic partners to educate them and provide point-of-sale information to pass onto their customers.”

This article appeared in Canadian Grocer’s August 2018 issue.

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