SAFEWAY TREND IS ORGANIC CERTIFIED

DENNIS BLANK

SAN DIEGO -- Major supermarket chains are showing a strong interest in organic certification after Safeway chose to get three of its six flour mills certified by Quality Assurance International here.

For the past six months, Safeway has been heavily marketing its own certified organic "Select" bread brands in its 1,535 Safeway stores and 324 Von stores. Consumers have been enticed by shelf-talkers and in-store promotions for the organic wheat, whole wheat, seed, grain and multigrain breads.

"We understand the response has been very good," said Ellen Holten, director of marketing for QAI.

While Safeway would not talk to SN about its entry into the organic market, industry sources say it is very likely that Safeway will introduce more of its own branded organic products in the near future.

Other chains are checking out organic standards and what it takes to be certified, according to Joe Smillie, senior vice president for QAI. "This is a great marketing opportunity for retailers," he said. "It will establish a confidence in the minds of consumers who are serious about organics, and it will close the gap on the perception that natural foods stores care more about their customers.

"I think this is a quick way for supermarkets to get the allegiance of people who are serious about organics," Smillie said. "Most Americans want one-stop shopping."

Also fueling more supermarket interest is a new study from the Organic Trade Association, Greenfield, Mass., which says that retail sales of organic products will continue to grow by 20% a year and total sales will reach $9.3 billion by this year's end. Most organic shoppers, the survey said, buy "healthy and natural" products at supermarkets, drug stores and mass merchandise outlets and the rest do their buying at health food stores.

"There is a lot more interest from retail stores and also from distributors since we have been providing our Good Organic Retail Training Manual," said Katherine DiMatteo, executive director of the OTA. "I think supermarkets would be very wise to consider going through the entire process of certification."

Some independent natural food stores have sought certification voluntarily.

"Consumers who are interested in purchasing organic products are very interested in the audit trail," DiMatteo said. "They will be disappointed if they find out their stores either do not have well-trained employees or don't understand the law."

The fact that Safeway elected on its own to seek organic certification is a good marketing trend, one analyst said. "They will pull a lot of traffic in certain neighborhoods," said George Thompson with Prudential Securities, New York. "It will probably be very profitable for them and goes along with self-manufacturing."

The mills are run by an independent contractor and are located in Clackamas, Ore., Richmond, Calif., and Denver.

The new federal regulations implementing the Organic Foods Production Act exclude retailers from organic certification. However, if they choose to become a processor and distributor of products, they will be required to get organic certification.

There are 59 agencies in the United States that certify farms and manufacturing plants, and most are nonprofit organizations run by farmers.