A growing number of shoppers are choosing organic food and beverage products at the grocery, opening up a profitable opportunity for companies looking to venture into the organic market.
According to a study by the Organic Trade Association (OTA), U.S. families are purchasing organic products at higher rates than ever, with 81 percent reporting that they purchase organic items at least sometimes. The growing popularity of organic foods and beverages has spurred many companies to develop their own organic lines. For instance, Target Corp. has rolled out a new organic and natural store brand called Simply Balanced, which the store says is a direct response to an increase in organic purchases.
The organic movement seems to stem from continued consumer focus on more natural and locally grown products. “The ‘buy local, buy natural’ trend is still very important, since locally grown foods are usually tastier, grown with fewer chemicals and have traveled much fewer food miles than those shipped from long distances,” says Carolyn Lane, Vice President of Operations for Freekeh Foods, Inc. and Nature’s Organic Grist, LLC.
Marketing a food product as “natural” or “local” may be as simple as creating a new label, but producing an organic food or beverage requires much more effort on the part of the manufacturer. Organic food businesses follow significantly different production processes, including ensuring that no chemical fertilizers, herbicides, fungicides or pesticides are used either in the finished product or in any ingredients used during the production process.
For producers who grow fresh fruits and vegetables, additional steps must be taken in place of the prohibited fertilizers and pesticides. “Land stewardship and soil building is very important, and each organic farm must have a plan to maintain soil and water health,” Lane says. “Each farm’s organic system plan must implement crop rotations to prevent depletion of soil nutrients and prevent weed and insect problems.”
Genetically modified seeds are strictly prohibited in organic production, so organic fields need buffer zones to prevent contamination of genetically modified organisms (GMOs) from nearby traditional fields. Organic meat and poultry operations have their own restrictions, including prohibited use of antibiotics, growth hormones and GMO feeds.
Various organic certifications have been developed to help ensure manufacturers meet all requirements for their products to be marketed as organic. Lane says that the organic industry requested regulation from the USDA in order to “prevent the word ‘organic’ from becoming watered down and having no real credibility.”
The USDA defines “organic” as a “labeling term that indicates that the food or other agricultural product has been produced through approved methods that integrate cultural, biological and mechanical practices that foster cycling of resources, promote ecological balance, and conserve biodiversity.”
To enforce its organic regulations, the USDA created the National Organic Program (NOP) and has appointed 84 third-party agencies which are accredited by the USDA to certify products as organic. Certifying agencies such as Quality Assurance International (QAI) are designed to verify that organic integrity is maintained throughout the entire food chain. QAI certifies products at the following levels:
- Post harvest
- Private label
Lane says that organic regulations have “great value in giving our consumers peace of mind. If a product has the USDA-NOP organic seal on it, they can be sure that great diligence has been taken in the production of the product so that it is truly organic.”
Many food manufacturers go beyond the USDA organic requirements to help their customers make healthy, safe choices. In addition to its products being certified organic, Freekeh Foods and Nature’s Organic Grist use kosher-certified grains, and freekeh is verified to be free of GMOs by the Non-GMO Project.
Adhering to strict regulations is an inherent challenge in the organic industry. In addition to traditional food safety requirements followed by the entire food and beverage industry, organic producers must take special care when cleaning all handling equipment — especially when companies produce both organic and non-organic products. Organic products must be segregated throughout the entire production process, including warehousing, to prevent comingling with non-organic products. Identifying ingredients to use during product formulation can also prove difficult, as manufacturers must ensure that no non-organic ingredients are present in items designed to be organic.
Extensive documentation is also required at every step of the production process, Lane says, in order to verify “full traceability from ‘seed to plate.’” Annual farm inspections are conducted to examine organic crop production methods, handling and storage records. Organic processing plants are also inspected yearly, and companies are expected to document their compliance with organic regulations.
After a business has invested in organic certification and developed the appropriate production and documentation processes, the company faces the challenge of convincing shoppers to buy its product. According to a March 2013 Harris Poll, some Americans still remain hesitant to purchase organic items. More than half of those surveyed (59 percent) say they believe organic companies label food or other products as organic as an excuse to charge a premium price, without providing added product value.
According to the Harris Poll, 55 percent of consumers who do purchase organic foods and beverages say they do so because they believe organic products are healthier than non-organic, despite research that indicates little nutritional difference between organic and non-organic products. Forty-one percent of those surveyed say that “organic food tastes better and/or fresher than non-organic.”
Given the results of such surveys, organic companies will need to emphasize the “healthfulness” and “freshness” of their products to convince consumers that organic products are worth the higher price tag.
Planning for the Future
What does the future of the organic movement look like? QAI has released what it calls its “10-year prophecy for the organic industry.” Using its database of organic statistics and information, the company says it plans “to help the industry plan for a more organic future.”
QAI’s predictions include stricter organic regulations, as well as a “fusion” between organic and food safety programs. The company says it sees multiple audit programs — such as food safety, kosher, gluten-free and organic — being bundled into one audit and inspection program.
While traceability measures are already being integrated into organic programs, QAI sees a higher level of transparency from farm-to-fork. Tools such as quick response (QR) codes and other Web-based programs will become more commonplace throughout the organic industry, the company says.
Perhaps most importantly, QAI predicts less confusion when it comes to the term “organic.” According to the company, organic associations such as the NOP and OTA will join with retailers to increase organic literacy among consumers. Educating consumers on the meaning of “organic,” and the difference between “organic” and terms like “natural” will help consumers make more informed purchasing decisions.
Lane says that the organic market is sure to continue growing as shoppers become more knowledgeable. “As consumers become better educated about the value of healthy food grown without the use of chemical fertilizers, pesticides, food additives, GMOs and the plethora of toxins that are so prevalent in today’s food system, they are looking for safe and nutritious alternatives.”
If QAI’s and Lane’s predictions are correct, there is still plenty of room for growth in the organic industry. Food companies looking to embrace organic food and beverages will help consumers meet their need for healthy, safe and environmentally conscious products.