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The organic market is healthy -- economically healthy that is. According to the Organic Trade Association, Greenfield, MA, almost 30% of the U.S. population already buys organically grown products. Additionally, retail sales of organic products are expected to top $20 billion in the United States by 2005. Sales figures from 2003 are estimated at $12 billion. "Organic is not a fad," says Laurie Demeritt, president and COO of The Hartman Group, Bellevue, WA, a consulting and market-research firm. "Rather, consumers have turned to organic foods as a way of taking care of their health and well being, as well as making a statement about who they are in both social and psychological contexts. The interest in organic has been steadily building over the years, and organic has become a constant in consumers' lives; it has become part of who they are and what they value. One thing is certain, organic is here to stay." Small -- but growingOrganic still represents a relatively small segment of the U.S. food industry. "It is important to remember that many organic users only buy organic on an occasional basis, which helps explain why organic food and beverage represents only 3% to 5% of overall food and beverage retail sales," says Demeritt. Changes in consumer buying patterns, however, do show an encouraging trend. "The number of daily, weekly and monthly users has increased since 2000," Demeritt adds. "Although consumers continue to enter the organic category, (the number of those who have "never" used has decreased), the more profound change in usage is that consumers who were using organics occasionally in 2000 are increasing their frequency of purchase." The fresh-vegetable and -fruit aisle is usually a gateway for organic consumers. "Organic produce is typically an initial pathway for consumers to be introduced to the organic marketplace, so the fact that consumers are now interested in organic 'staples,' such as organic spices, organic flour, organic oils, etc., indicates that they truly believe organic products are better for them, their family and the environment," says Steve French, managing partner, The Natural Marketing Institute (NMI), Harleysville, PA. Indeed, getting consumers to buy more organic food more often is one way the food industry can successfully fuel organic growth. In fact, a nationwide online survey by Whole Foods Market, Austin, TX, in 2002 found that 75% of all consumers say they would likely eat organic foods more often if a larger variety was more readily available. Most likely, consumers will get their wish. "We see many multinational food manufacturers becoming more active in the organic industry because of its growth potential," says French. "Many of the these large manufacturers have recently bought organic food brands. And since these companies typically have the marketing expertise and resources, the consumer is being exposed to more products, more brands and increased availability -- all good for the organic industry." And while the influx of big companies might put the smaller, organic pioneers out of business, hopefully the pie is big enough for everyone to get a healthy slice. "There are opportunities for everybody," says Craig Bair, Ph.D., president, Food Solutions, Inc., Greensboro, NC, a food-industry consulting agency specializing in organics. "The big guys move slowly and won't always capitalize on small niche opportunities. The small guys need to focus on being creative in these niches, which can still provide excellent income and room for growth, and let the big guys cover the wide-range products." Organic legislationFederal regulations, which took effect Oct. 2002 under the Organic Foods Act of 1990, now govern organic products and their labeling. A nationwide standard finally exists for how products billed as "organic" must be grown, processed or raised. While government legislation is often viewed as intrusive -- or simply excess bureaucracy -- many in the food industry welcome organic definitions. "The fact that USDA made the rules gives a lot of credence to the whole organic movement," says Bair. "I love that the government has said: 'Hey, this is a very viable industry and food market segment, and we believe in it, we support it, and we're going to regulate it.' This legislation was also much needed. Nobody really knew what to do prior to the rules. These new labeling restrictions and classifications are something you can sink your teeth into. Plus, there were so many fraudulent things going on in the marketplace before." The current rules and regulations can be found on the National Organic Program (NOP) website at http://www.ams.usda.gov/nop. One component of the legislation, as it relates to product development, is the certification requirement. Certification, whether for agricultural products, ingredients or manufacturers, helps assure quality and prevent fraud. So while anyone can make an organic product, in order to call it "organic" it must comply with certification regulations. It's also a requirement for use of USDA's organic seal on packaging. Certification is granted by an accredited agent; a comprehensive list of USDA-accredited certifying agents can be found on the NOP website. "There are a lot of domestic and international agencies out there, and new ones are being added all the time," says Bair. "Each agency has its own forte and each manufacturer needs to find out which one is going to be best for them." Organic R&DTake a dive into the world of organics, and you quickly realize that organic-product development can't happen in a vacuum. In fact, an R&D department that acts alone will most likely just spin its collectively creative wheels.
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