The organic effect

Organic produce and brands continue to steal and win shopper dollars.

In February, the USDA approved the first genetically modified apple varieties for the U.S. marketplace. Engineered not to brown when sliced, the two Arctic apples from Okanagan Specialty Fruits were met with less than a warm reception.

Although according to the numbers—organic and non-GMO produce still make up a small percentage of produce sales in the marketplace—the segments’ constant and quick growth carries a lot of weight with consumers.

The growth in demand for organic produce seems unstoppable to many industry observers. Well-Pict Berries has experienced growth annually over the past four or five years for its organic berries. Prior to the economic decline in 2008 it was growing very fast, says Jim Grabowski, director of marketing for the Watsonville, Calif.-based grower, adding that it was affected by the recession for a few years but has been growing steadily ever since.

Growers and retailers alike see a positive correlation between organic demand and education or awareness surrounding the supply chain. Consumers are more interested in understanding the “who,” “where” and “how” behind the foods on their plate, say observers. It is that interest that sways many people to purchase organic.

One result of this interest has been growth in the creation of fruit and vegetable brands designed to connect with shoppers. Branded produce is a natural progression of consumer branding in the grocery world, says Rod Braga, president and CEO of Braga Fresh Family Farms, based in Soledad, Calif. “The need to share that information, have brand appeal and a connection with consumers is becoming more prominent in all areas of the produce section. Packaging and bands with hang tags with brand identity are more present, giving consumers a visual connection with produce brands that appeal to them.”

Braga Fresh Family Farms has seen very fast growth with its Josie’s Organics brand, a woman-targeted brand of produce built on the Braga family tradition of farming. The feel-good story and values behind the brand is designed to appeal to consumers. One element specifically is the brand’s focus on sustainability. “Sustainability is a cornerstone of the brand; everything we do is centered on growing produce and conducting business in a sustainable manner,” says Braga.

The brand is on-trend. Many in the industry agree that sustainability is a major driver for organic produce. Sustainable growing practices have become commonplace, say observers, with more and more growers and marketers building the brands on such methods. It offers shoppers who prioritize environmentally friendly and sustainable growing practices an option in line with their values.

Grabowski says that awareness of sustainability and organics seem to be joined at the hip. “The public is increasingly interested in how we can grow safe and healthy products and be kind to the earth as well. Organic product is seen as one way of achieving those goals,” he adds.

Sustainability interests and organic definitely sway towards younger demographics. Millennials in particular are recognized for spending more on products that are in line with their values. They are also less loyal; if one retailer does not offer what they want, they will happily go find another.

“We are seeing more retailers mandating an audit or review of sustainability efforts by their suppliers for both organic and conventional produce,” says Bruce Turner, national sales representative for Oneonta Starr Ranch Growers, based in Wenatchee, Wash. “Retailers such as Whole Foods, Walmart, Costco and others are forcing a greater awareness and development of sustainability in their supplier base.

“Sustainability is a key aspect of organic production, but the drive to direct more conventional fruit in this direction is interesting,” he adds. “We don’t see a huge impact on growth in organic as a direct result, but it will certainly make it easier to convert some conventional production to organic in the future.”

Land conversion is one of the major—perhaps only—obstacles for organic. The three-year process in making land suitable for organic is difficult and time consuming and puts a lag on generating a profit.

Some believe sustainability is still second to health and wellness. Ralph Schwartz, vice president of sales, marketing and innovations for Potandon Produce, says people are less focused on sustainability than they used to be. “Sustainable agriculture has become more mainstream across the entire produce spectrum,” he notes.

The Idaho Falls, Idaho-based grower recently launched an organic line of potatoes—red, yellows and russets—under the Potandon Produce Organic brand. Previously it sold organic product through its customers’ and shippers’ labels, experiencing growth for the last five years.

“We kept hearing the need from our customers for a consistent labeling strategy, and the idea of establishing a Potandon Produce Organic brand had been something I always had in the back of my mind,” says Schwartz.

Creating branding has become easier for companies as organic product becomes more regularly available. By offering a year-round supply, retailers can purchase from a single shipper instead of having to use multiple shippers to keep the shelves full, say observers. Companies like Oneonta Starr Ranch Growers have been able to incorporate high-graphic display bins, pouch bags, poly bags and other display materials in their organic branding efforts.

Branded materials also offer more opportunities for education and industry relationships. Josie’s Organics, for instance, works with food and lifestyle personality Chadwick Boyd to educate consumers about whole vegetable cooking.

“Through our recipes and tips, we encourage consumers to use the whole vegetable—from roots to leaves—rather than just parts, in the kitchen,” says Braga. “In our recipes, we use the product, honoring the whole vegetable that our Josie’s Organics farmers diligently raised—and taking sustainability to the greatest level yet.”

A GMO a day?

The USDA’s approval of genetically modified apples has caused a stir in the industry, to say the least. Two varieties of Artic apples from Okanagan Specialty Fruits—Arctic Golden and Arctic Granny—are engineered to resist browning when sliced.

No sooner than it was announced, anti-GMO advocates, representatives of the nutrition community and even conventional apple growers themselves demonstrated their opposition.

“There has been a lot of resistance from conventional apple growers and marketers who are concerned that consumers will get confused or give up on apples when they learn there is a genetically modified apple on the market,” says Addie Pobst, organic integrity and logistics lead for the organic apple-grower Viva Tierra, based in Sedro-Woolley, Wash. “Their response says a lot about the marketplace and the actual perception of genetic engineering among U.S. consumers.”

While it will be a number of years until the apples make it onto store shelves, the apples have been in field trials for more than a decade, according to officials at Okanagan, who add that they may be the “most tested apples on the planet.”

While the entry of GMO apples into the marketplace does not directly impact the organic segment, many are expecting it will result in an uptick in sales. “It is quite possible that as more consumers are made aware of how pervasive GMOs are in our food supply, we will see more casual and converting consumers increasing the demand for organic produce,” says Bruce Turner, national sales representative for Oneonta Starr Ranch Growers, based in Wenatchee, Wash.