Organic produce makes gains at retail - The Packer

Organic produce makes gains at retail

01/14/2014 03:05:00 PM
Tom Burfield

The organic produce category has come a long way at retail, said Dina Izzo, founder of Bludog Organic Produce Services, a Ben Lomond, Calif.-based organic produce marketing consulting firm.

“Many years ago, there was a little table (with organic produce) in the back,” she said. “Those days are long gone.”

Because of consumer demand, produce departments have grown substantially, and organic produce now is prominently featured.

Even the Ben Lomond market in Izzo’s hometown has a major organic presence because the produce manager listened to his customers, she said.

“My local grocery store does a beautiful job and has a very lovely organic produce section and does particularly well with it,” Izzo said.

Organic and natural foods make up the “sixth- or seventh-largest department” at Cincinnati-based the Kroger Co., but it’s the fastest growing department on a percentage basis and occasionally on a dollar basis, Rodney McMullen, president and chief operating officer, said in a third-quarter conference call to investors.

That’s why the company wants to expand the program through store brands like Simple Truth, which are found in the produce department and throughout the store.

Organic “definitely is a growing category,” said Gary Wishnatzki, president and chief executive officer of Wish Farms, Plant City, Fla.

“Stores are moving more product,” he said.

Pricing can have a big effect on organic sales, said Matt Seeley, vice president of marketing for The Nunes Co. Inc., Salinas, Calif.

Nunes sees better yields as it becomes more experienced with its organic program, and that helps drive down costs, he said.

“But we can’t control what retailers sell for,” Seeley said.

Retailers who maintain a 10% to 30% price differential will help grow the category, he said.

But if retailers ask for, say, $2 more for organic celery than for conventional, “you’re going to stop organic sales dead,” he said.

Peter Oill, organic sales manager for Oxnard, Calif.-based Boskovich Farms, has a suggestion for retailers who really want to promote the organic category. When prices of organic and conventional items are comparable, just carry the organic version and promote it as such.

“It gets more visibility,” he said.

Retailers have their own ideas about whether organics should be integrated with conventional produce or merchandised in their own section, he said.

If organics are integrated, be sure to clearly identify product as organic, and if they’re in a separate section, put that section in the front of the produce department, not hidden in the back, he suggested.

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A. Mac  |  January, 14, 2014 at 05:45 PM

Good news. Glad to see the continued growth!

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