Two decades ago, getting mainstream consumers to buy her French Meadow Bakery organic breads was more than just a hard sell for Minneapolis entrepreneur Lynn Gordon. Outside of her core co-op clientele, Gordon often found it difficult to even give product away.
"When I would try to demo the breads in other stores, people were often hesitant to try them¯many of them didn't even know what organic meant," says the former macrobiotics teacherturned-president and C.E.O.
Since then, sales of Gordon's French Meadow breads have increased annually by at least 15 percent and some years, including 2004, as high as 20 to 25 percent. French Meadow is not alone in its booming natural and organic baking business. According to the Organic Trade Association (OTA), Greenfield, Mass., sales of organic food in the United States grew by about 20 percent during 2003 to reach a total of $10.8 billion. Breads and grain-based products represent about 9 percent of total organic sales.
More than just a fluke, last year's rise in organic food sales follows a pattern of growth that has ranged between 17 percent and 21 percent each year since 1997, resulting in a tripling of organic food sales, agrees Packaged Facts, a New York City-based market research firm. For perspective, total food sales in the United States have grown in the range of only 2 percent to 4 percent per year.
Continued growth expected
OTA reports that the number of consumers using organic products daily grew from 8 percent in 2000 to 11 percent in 2003. Consumers reporting weekly use grew from 9 percent to 10 percent, and those reporting monthly use grew from 5 percent to 10 percent. Packaged Facts forecasts that by 2009 sales of organic foods will reach $32.3 billion.
For organic food producers, such as Country Choice Naturals of Eden Prairie, Minn, those numbers have translated into a healthy boost for their bottom line. Last year, the oatmeal and cookie company's revenues increased by 27 percent, says Dan Hazen, Country Choice Naturals vice president of sales.
Both Hazen and Gordon believe that prominent display of the USDA's "Certified Organic" seal on their product packaging has had a significant impact on sales. Both companies have sported the seal since the USDA introduced it, along with its organic guidelines, in 2002. Only products made from at least 95 percent organic ingredients can use the seal.
In a report recently published by the Food Marketing Institute (FMI) in Washington, D.C., nearly 27 percent of the general population and 45 percent of organic users stated that awareness of the seal has increased their interest in purchasing organic products.
USDA guidelines say that products made from at least 70 percent organic ingredients may use the description "organic" on the front panels of their packages; products made with less than that may list their organic ingredients on side or back panels. Liz Lovely, a cookie company based in Waitsfield, Vt., uses a host of organic ingredients, including flour, sugar and vanilla extract in its products. But, the company has been hard-pressed to find a 100 percent organic Fair Trade chocolate that fits its "Certified Vegan" requirements.
Prominent USDA Organic seals are increasingly recognized by consumers.
"Our products are all-natural and hand-crafted using as many organic ingredients as are available to us and can be justified in the product price," explains Elizabeth Holtz, who cofounded and operates the company with her husband Dan. "The good news is that we're growing, which will allow us to buy ingredients in greater volume to lower our overall costs, so we can move closer to our 100 percent organic goal."
Bakeries meeting demand
Currently, Liz Lovely produces 1,800 cookies per day (suggested retail for a two-cookie package is around $3.99), which are distributed to about 200 retailers on the East Coast. Although the company suspended production for five months last year to make the move from a 300-sq.-ft. facility in suburban Philadelphia to a 1,600-sq.-ft. bakery in Vermont, the demand for its chocolate-adorned Cowboy, Cowgirl and peanut butter cookies has kept the sales momentum going.
At Stone House Bread in Leland, Mich., a recently completed customer survey confirmed Founder and Owner Robert Pisor's conviction to "move more quickly toward 100 percent organic."
"About half our customers told us that the organic seal was important to them," says Pisor.
Pisor says he has always used organic flours, well water and sea salt to make his breads. He recently located a source for organic tart cherries for his signature cherry walnut bread and is still searching for olives, cheese and walnuts that meet the same standards.
In the meantime, he points out, the nine-year-old Stone House Bread's annual revenues have reached nearly $1 million, about 75 percent of which comes from wholesale accounts. Pisor uses shelf signs, informational bags and TV advertising to educate consumers about the healthful, natural ingredients in his products.
Consumers seek healthful foods
Tom Ivory, owner and operator of Baker Street Breads in Philadelphia, also attributes a good part of his company's double-digit wholesale sales growth during the last three years to customer appreciation of and demand for foods made with natural ingredients. He projects 2005 revenues to reach nearly $2 million; 75 percent of sales are expected to come from wholesale.
"Since we opened 12 years ago, we have seen the number of customers who ask us about our ingredients grow as the public becomes increasingly educated and concerned about the quality of the foods they are putting into their bodies," Ivory says.
FMI's Shopping for Health 2004 survey reveals that this concern goes beyond natural food fanatics into mainstream America. Many are even looking to certain foods to help keep them healthy or to manage existing medical conditions.
For example, 42 percent of shoppers reported that they purchased foods claiming to reduce their risk of developing heart disease, and 26 percent had purchased foods claiming to reduce the risk of cancer.
Among French Meadow Bakery's top sellers are four organic loaves the company describes as "functional breads."
Introduced in 1999, French Meadow's "Women's Bread" promotes ingredients that are believed to naturally alleviate some of the symptoms of menopause, while promoting bone strength and heart health. The "Men's Bread" package lists health benefits that range from cholesterol control to prostate protection.
As consumer interest in food ingredients builds, French Meadow's "functional breads" continue strong sales.
Organic cane sugar, expeller-pressed oils and egg replacer are among the ingredients that uphold Liz Lovely's vegan status.
Jockeying for position
Until recently, anyone who wantedto find a variety of organic and natural products had to go to specialty stores or co-ops. However, OTA reports that today about 44 percent of organic food purchases were made at supermarkets and grocery stores, club stores, such as Costco, and mass merchandisers, such as Super Target and Wal-Mart.
Gordon explains that organic and natural foods are now "on the cusp" of the mainstream. While these products are being included in many stores, they often continue to be segregated from the traditional bakery aisles.
"Natural foods sections of most stores don't have enough staff to handle the short shelf life of preservative-free products like ours," Liz Lovely's Holtz notes.
Many grocery retailers feature natural-foods in limited "store within a store" set-ups and are often tucked away in a corner. The challenge for natural and organic baking companies is to get their products positioned with traditional baked products, so that consumers have the opportunity to find them more easily and compare them with more familiar brands.
Despite their less desirable store positions, bakery products with health benefits are often sought out by consumers after the items are recommended by a physician, endocrinologist, nutritionist, book author or other health professional.
"They find us," Gordon says.