STORE PLACEMENT AFFECTS ORGANIC FOOD SALES

MARYELLEN LO BOSCO

Manufacturers of organic and natural foods are very concerned about where their product is merchandised in mainstream grocery stores, since placement has a dramatic effect on sales.

"Right placement and right location" is extremely important, says Martin Whitehead, vice president of Small Planet Foods, Sedro-Woolley, Wash., the parent company for Muir Glen organic tomato products and Cascadian Farm organic foods. Small Planet was purchased by General Mills a few months ago, and is now a wholly owned subsidiary of the cereal giant.

Cascadian Farm generally has its own freezer door in the supermarket, which is sometimes shared with other manufacturers. "We like to be on the main freezer aisle with our entrees and other frozen items," said Whitehead. "Often when there is a store-within-a-store, our items don't turn as well. They do better integrated with the mainstream."

Currently Cascadian Farm is focusing on distribution and the right selection of items for the mainstream. In some markets the company is now using television and radio advertising, along with direct mail and freestanding inserts -- somewhat atypical for an organic company.

Michelle Hoffsten, director of marketing at Muir Glen, is also in favor of integration. "In our categories -- canned tomatoes, pasta sauces, salsas and the like -- we want to be where customers are shopping those categories,"

Hoffsten said. "We see a sizeable increase in turns when we are integrated, and get three to four times more movement than when we are in a natural foods section."

Hoffsten said the best strategy for organic foods, like any food, is right placement, right products, right pricing, and right promotional strategies. But Hoffsten also noted that the "billboarding" effect achieved when organic products are grouped together next to their mainstream counterparts creates an optimal kind of exposure for organic groceries.

"We are taking this strategy out to the marketplace and doing well with it," she said. "Many chains are predisposed to natural sections. We ask them, 'What are your goals for natural/organic products? Do you want to provide visibility or build incremental sales?' We then ask them to test how natural/organic will do in an in-line section, as opposed to a natural foods section."

Another natural foods company that has recently been acquired by a major cereal company -- in this instance, Kellogg's, Battle Creek, Mich. -- is Worthington Foods, Worthington, Ohio. The makers of Morningstar Farms frozen breakfast items, veggie burgers, and other meat amalgams are now expanding their product line with help from Kellogg's. In addition, Kellogg has launched an aggressive advertising and promotional campaign on behalf of the product line, which is aimed at accelerating the growth of the company's vegetarian offerings.

"We are looking to become a leader in the veggie burger category," said Meghan Parkhurst, a company spokeswoman for Kellogg. "One of the reasons Kellogg bought Worthington was because of their great R&D technology." Kellogg can improve Morningstar's distribution and availability, and the synergies between the two companies should boost sales of the soy-based food line.

Not surprisingly, Morningstar products have been absorbed into Kellogg's functional foods division. "We are taking Morningstar mainstream and making it widely available," said Parkhurst. She explained that Morningstar products appeal to nonvegetarians who are trying to cut back on meat consumption and are looking for "great-tasting alternatives."

As far as how these items should be merchandised, Parkhurst says they should be placed in the mainstream frozen food aisle, preferably together. "Consumers prefer that all Morningstar Farm products are shelved together," she said. "Where they are, the category is growing 3% faster."