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.
Even Peapod, the Skokie, Ill.-based home delivery service, has seen major growth in the organic category, said Tony Stallone, vice president of merchandising.
“It’s a big percent of our business,” he said, accounting for nearly 10% of the company’s produce sales.
Izzo encourages retailers to promote organic produce by inviting growers to visit stores, show off their product and talk with consumers.
“Once you start building a relationship with farmer, it makes a big difference,” she said.
“It’s all about the merchandising,” Wishnatzki said.
Supermarkets with large organic displays or that merchandise organic products alongside their conventional counterparts “have really shown a big jump in their sales,” he said.
“It’s the fastest-growing area in the produce department without a doubt,” Wishnatzki said.
Stores focused on marketing organics aggressively have seen substantial gains in every organic commodity, he said, while those with smaller sections have not been as successful in boosting sales.
McMullen wants to grow Kroger’s presence in organic products, he said.
“If you look at the market share opportunities for us, we can easily see how that business could double from where we are today,” he said during the quarterly teleconference.
“We actually have a pretty good plan in place that will get us significantly along the way on getting there in a reasonable period of time.”