Conveniently Organic

While the term organic often stirs images in our minds of gardenfresh fruits and vegetables, pasture-raised meats or fresh dairy products, the organic food and beverage industry has expanded exponentially since the implementation of the National Organic Program (NOP) in 2002, creating a wide range of organic foods and beverages in categories typically associated with conventional products.

U.S. organic food sales have grown four-fold in eight years, from $3.6 billion in 1997 to $13.8 billion in 2005, according to the 2006 Manufacturers Survey conducted by the Organic Trade Association (OTA), Greenfield, MA. The OTA survey shows that organic packaged and prepared foods grew 19.4% in 2005 from the previous year, representing a $1.7 billion market, or 13% of the total organic food market. And organic food annual growth rates have been hovering in the 15% to 21% range for years.

Fueling this growth is the fact that more and more consumers are turning to organic versions of the traditional foods they buy, including convenience and prepared foods, because they feel organic foods satisfy an important need, such as the avoidance of growth hormones, antibiotics or pesticides, or the core belief in the ethics and benefits of organic agriculture. If a person goes to a grocery store at the last minute to find dinner, and if they can leave with something organic, it just makes them feel a little bit better about what theyre eating that evening, says Laurie Demeritt, president and COO, The Hartman Group, Bellevue, WA. Being organic just adds another halo that gives a different dimension to the product, and makes them feel theyre making a good choice.

Changing organic consumers 

A whole lot of people are experimenting with organic these days, with 73% of consumers incorporating at least some organic products into their diet, according to The Hartman Groups 2006 study on consumer attitudes and behaviors toward organic foods. Whats driving this experimentation? According to Demeritt, consumers are becoming more articulate and more informed about their reasons for buying organic. Parents are talking to other parents. Bloggers and moms groups are sharing information about food, food processing and other interests. And when parents hear something through their social networks that resonates with their values, they tend to change their purchase behaviors.

Demeritt points to childrens packaged goods as an example of one area where many parents feel underserved, based on how increasingly intense they feel about what they serve their children. Theres been a huge opportunity in childrens packaged foods for quite awhile to create organic versions of products in traditional key categories like snacks, on-the-go foods and frozen foods. Until recently, we havent seen a lot of entrants into childrens packaged foods that are doing a great job capitalizing on that, she says. If manufacturers really understood why consumers are entering organic, and what theyre using it for, I think we would see more entries into the organic childrens food space.

New-product developers can gain an edge by understanding the transformative change that has been underway the past few years with regard to peoples grocery-buying habits. Demeritt says there is no longer a line between being an organic consumer and not being an organic consumer. Users of organic products fit all education levels, income levels and backgrounds. Many are driven to purchase organic because of issues personally important to them such as perception of better health and food safety for their families.

Todays organic dabblers may start with one product that is important to them and slowly add organic foods to their grocery mix over time. Most tend to add organics in a continuum, rather than stopping at any point. This new behavior bodes well for developers who align their thinking and product development with changing consumer concerns and interests. The number of consumers who use organic occasionally is growing, and on top of that were also finding that those folks who have been in the category for awhile are increasing both their frequency of usage and also exploring new product categories, including packaged goods and center-of-store items, said Demeritt.

With ongoing experimentation and steady growth, there are substantial opportunities for the development of new, convenient organic foods and beverages, but with one caveatthese new food products need to make sense in the mind of the consumer. An organic high-fat, high-salt snack? Forget about it. Convenience foods may save time and preparation effort, but they often come with a bum rap among organic circles. Many manufacturers misunderstand the organic consumer and think they can compete by simply making organic analogues of their conventional products. Mainstream organic consumers right now are primarily looking toward perishable items. Theres still a disconnect with some consumers and the idea of packaged organic foods, offers Demeritt, who recommends manufacturers talk to consumers to learn what drives their purchase behavior. Manufacturers should spend more time determining which of their product lines are important to consumers in terms of organic and what product characteristics are important in their minds. She points out that many consumers tend to sacrifice other purchase desires so they can afford the products they truly care about. Connecting with those cares and concerns is key to creating a successful convenience product.

In todays competitive climate, organic is starting to be seen by consumers as just another attribute, a prerequisite to a perceived better-quality food, but by no means the end-all decision driver, according to Demeritt. Taste, mouthfeel, appearance characteristics, convenience, packaging and ingredient declaration are as important in organic convenience foods as they are in conventional. As with conventional foods, an organic product has to taste good and provide a satisfying eating experience or it doesnt stand a chance.

Food processors are faced with several challenges in creating appealing and satisfying organic convenience foods, including ingredient- sourcing issues, and sometimes formulation limitations and processing constraints. The good news, according to Bill Fenske, vice president of R&D, SunOpta Grains and Food Group, Hope, MN, is that theres often no difference between organic and conventional formulation and processing. Developers may just need to be a little more creative.

Sourcing finite raw materials 

Supply continues to be an issue with organic raw materials, which is a function of limited organic acreage and strong demand by multiple manufacturers for the same small amount of raw materials. Limited acreage is a timeworn issue, but as the demand for organic foods continues and as farmers see new market opportunities, more acreage is converted to organic farming. Farmers must weather a lag of three years conversion time before the crop grown on their land can bear the label organic, a major investment on the part of the grower and a main contributor to the slowly growing acreage. Even so, more farmers are diving in and making the commitment. And that means more supply in the near future. Fenske points to organic milk as an example. Organic milk used to be hard to find, he says, but now farmers are starting to catch up.

In fact, one manufacturer, Stonyfield Farm, Londonderry, NH, will buy 48% more organic milk in 2007 than in 2006. Thanks to careful planning with our partner Organic Valley/ CROPP, a Wisconsin dairy cooperative of 966 organic dairy farmers across the U.S., we will have enough organic milk to meet the growth in consumer demand in 2007, support new product launches, and position ourselves for long-term growth, says Gary Hirshberg, president and CEO. The company cites higher farmer pay prices for organic milk, an unsustainably low pay price for milk to non-organic farmers, and growing consumer demand as several factors behind the increase in milk supply.

Organic farmers also face other challenges. Pollen from genetically modified organisms can contaminate organic crops, notes Prescott Bergh, sales and marketing, Ciranda Inc., Hudson, WI. Though rare, it does happen. Such contamination makes a limited supply even smaller, pinching supply and raising prices.

Demand for certified organic products has increased dramatically in the last five years, says Irv Dorn, sales manager, Van Drunen Farms, Momence, IL. Processors want an increasing volume and wider range of organic ingredients with a consistently equivalent or higher quality than conventional goods, available all year round.

To achieve that, processors have to realize the differences in purchasing organic raw materials compared to conventional materials. Unlike the rest of the purchasing universe where higher volume equals greater discounts, within the organic segment sometimes the opposite can be true, offers Rob Kirby, president, Nexcel Natural Ingredients, Springfield, IL. Sometimes, increased demand can restrict supply to the point where the next available pound simply costs more to manufacture. This is hard for many to understand, because its counter to their experience curve.

One option is to source ingredients from global suppliers. In many instances, organic supplies can be found, but sources may be far from the processors back door, says Dorn. This equates to higher prices for raw material and freight. And it can also play counter to the notion of local procurement and sustainability, a concept that is often found in tandem with organics.

SunOpta has improved control over its supply chain by being involved right at the farm. We have agronomists on staff to work with our contracted farmers to help improve their organic farming practices, and also assist in selecting the best crop varieties for their areas and soil types, says Fenske. Staying close to the farm level also helps us in ingredient traceability. Our experience clearly shows the closer the processor can get to the source and understand that source, the better off they will be. Were starting to see this same method being adopted by a lot of large processor buyers.

And it doesnt stop there, according to Kirby. The best way to broach this is to partner with an organic ingredient vendor in the purest sense of the word, he says. That way, both parties can openly discuss their needs and concerns. Leveraging multiple vendors against one another just doesnt work here like it does in traditional business models.

Formulation issues 

Product designers who understand the requirements set forth by the USDAs NOP will avoid a lot of headaches during the development process. Established in 2002, the NOP set strict national uniform standards for what qualifies as organic, from crop and livestock production to ingredient handling and labeling. Organic is a regulated term, and any product that claims organic status must be certified organic by an accredited certifying agent.

With organic handling and production, the NOP lays out strict rules on which substances are specifically allowed or prohibited. Known as the National List, the document identifies allowable synthetic and nonsynthetic substances for organic crop production, organic livestock production and organic processed products. The NOP allows for substances to be petitioned for review by those who would like to see additions to the list, so developers and processors will benefit by checking the list regularly to stay current. (For full details, visit www.ams.usda.gov/NOP/NOP/standards/ListReg.html.) 

According to Bergh, developers need to know whether they want to achieve a 100% organic, organic or made with organic designation for their product and what price point theyre trying to attain. Understanding these goals helps an ingredient supplier work closely with the developer to find just the right ingredient at the right price, so the developer can secure the organic seal they desire.

Demeritt says having the NOP organic seal on a product does resonate with consumers. Theyre starting to recognize the seal, and theyre starting to seek it out, she says. They say they dont necessarily understand all that goes into the organic production process, but they feel they dont have to know, that someone else is doing the due diligence for them. Since they dont feel they have to worry, they can make a decision based on other things like taste and price.

Understanding the NOP regulations and the value of the organic seal just begins to scratch the surface of the process. As with conventional products, technical development involves looking at several criteria, such as ingredient functionality, coloring, flavor characteristics and contribution to a consumer-friendly label. These important decisions have to be weighed against the reality of supply constraints. For example, says Kirby, if organic soybean oil is preferred over organic canola oil because it offers a better price point, but organic soybean oil is unavailable in the quantities the customer is seeking, the customer may want to consider canola oil and alter the label to provide for both options. Organic developers may just need to be a little more flexible than their conventional- product colleagues.

In developing organic convenience products, developers need to identify and use a different set of tools to achieve the same ends as they would with conventional products. Certain types of conventional ingredients are processed using methods or materials that are not allowed under organic standards in the organic world, says Bergh. One example is monodiglycerides to control the melting curve in fats. Its just not available for organic products.

Another example is the conventional range of products that control oxidation. Traditional chemicals, such as BHT, BHA and TBHQ, are off limits. Often, a combination of natural antioxidants, such as vitamin E and rosemary extract, can be used at marginally more cost than conventional counterparts to achieve similar results. Another remedy could be packaging. Some of SunOptas oxidation-vulnerable products, like soy-nuts and oil roasted sunflower kernels, are put in packaging with excellent oxygen impermeability characteristics after air is vacuumed out and the packaging is given a nitrogen flush. This naturally extends the shelf life without using prohibited additives or processes. On a cost per package basis, these types of solutions add fractions of a penny to a final consumer cost and are just as effective, says Fenske.

Other measures may be needed to ensure storage life of organic products. Bergh suggests moving a product from a dry shelf to a refrigerated or frozen environment to slow down the oxygen rate. I could also see possibly introducing an inert gas into packaging to exclude oxygen and slow the oxidation process, he adds. Developers often are concerned about consistency issues such as flavor, functionality and color. Without pesticides and other controls, organic raw materials can sometimes vary in their consistency, although this issue is decreasing with improved farming practices. I dont think organics are any more variable than in the conventional food industry in terms of product consistency, says Bergh. As volumes have increased, everyone along the supply chain has stepped up.

One way to ensure consistency is to know your vendors well, and to understand their farms and practices. With any new vendor, one should monitor shipped lots more closely than usual and not always go by what the certificate of analysis says until you are satisfied with their quality, says Fenske.

One area that has improved dramatically over the years is the proliferation of organic flavors. Practically any flavor can now be found in an organic variety, due to the responsiveness of flavor companies worldwide.

However, with rising demand for organic flavors comes increasing challenges. The importance of developing strategic relationships with dependable organic farmers and suppliers is paramount to succeeding in the organic industry, says Tammy Piatt, account executive, Mastertaste, Teterboro, NJ. Organic ingredients are being grown all over the world, but not all growers are certified to the NOP. In many cases supply hasnt kept up with demand, while in others, if the demand is not steady, farmers may abandon the crop. We are required to adhere to the strict NOP guidelines and be conscious of the ingredients and processes being used to develop organic flavors. Certain processing aids cannot be used, and for all work done involving an organic ingredient, participants at every stage are required to be NOP certified in order to maintain organic certification. If this is not maintained, the certification is compromised. It is imperative that we stay on top of the changes to the NOP, as something that may have been certified one year may not be the next.

Ingredient companies are creating new organic ingredients every day to open doors to new-product development. Even a few years ago, it was difficult to find ingredients like organic enzymes, organic modified starches or organic whey. Now these ingredients are readily available. When farmers or ingredient suppliers see an ingredient need, they seem to be quick to respond and find a way to provide it, says Fenske.

Bergh agrees: As a company, we look to fill the voids while staying within the requirements of all the organic rules. Weve created ingredients like organic tapioca syrup as an alternative to corn syrup, and an organic palm kernel stearin to substitute for cocoa butter in bar coatings and confectionery coatings. If processors cant find an ingredient, they should check with their suppliers to see if its possible to create it.

While new organic ingredients are coming on the market all the time, developers should consider that just because a product can be made organic, doesnt mean consumers will be interested in it. One example is high-fructose corn syrup (HFCS). Would people buy organic convenience foods with HFCS on the ingredient declaration? Or would a better option be sucrose made from organic cane or tapioca syrup? These sorts of choices come back to understanding the organic consumer and the types of ingredients they desire in their organic products.

Its important to not get hung up on the organic aspect alone. To consumers, organic is just another attribute, says Demeritt. They may have an intensity around organic, because it is really important to them, but in some ways its just another ranch flavor to them, or something like low sodiumjust another attribute theyre laying on that gives the product a quality distinction.

Processing considerations

Designing an organic product vs. a conventional product for a specific process is not all that different, according to Fenske. For the most part, there is a wide selection of organic or organic-compliant ingredients that can achieve the same ends as conventional ingredients.

Lets take a look at an organic ready-to-eat (RTE) pudding, for example. Developers would typically use a modified starch in their pudding blend, because it would hold up to the process better than other alternatives. If they opt to use an organic substitute for the modified starch, they have to ask how their formulation will be affected during processing and adapt their formulation to accommodate the use of other functional ingredients. Todays organic ingredient selection helps processors better meet their formulation goals.

Conventional manufacturers who would like to enter the organic arena can be faced with quite a daunting task in going through the certification process, the handling procedures for organic material, the standard operating procedures and all the paperwork involved. They may ask themselves if organic certification is worth it at their plant, especially for manufacturing a new organic product with unknown volumes and unknown consumer acceptance.

There are a lot of questions that require a great deal of time, effort and money for a mainstream manufacturing plant to deal with not knowing what the upside is going to be for them, says Kirby. One option for them is organic contract manufacturing. Such an arrangement allows a mainstream food company to test the market to determine if volumes are there to move the product inside at some point, or if its better to leverage a brand theyve developed and treat it as a niche product and allow a contract manufacturer to continue to manufacture it for them.

Contract manufacturing might also make sense in cases where the protocols of a manufacturing plant dont allow for a certain process to occur or dont allow for a packaging material, such as glass bottles, to be in the plant. Working with an organic co-packer can resolve these issues and get the product into smooth production.

OTA is a common resource for manufacturers looking for information on organic raw material suppliers, ingredient suppliers, co-packers and services to support new product development. (See www.theorganicpages.comfor more information.)

Next-generation products

Interestingly, individuals who buy the most organic products and have the most-intense interest in organics are starting to look beyond organic and more at what they consider to be local products. Local used to mean the farmer down the road or the baker next door, and for many it still does. 

But a new definition has emerged, according to Demeritt. Core organic consumers are now interpreting local to mean locale, with an emphasis on purchasing a product that comes from a certain place or is grown a certain way. Adventurous consumers are fascinated in the flavor and quality distinctions they believe they can only get from a food that comes from a certain place in the world, such as Parmesan cheese from Parma, Italy.

The stories around where and how a product was grown are increasingly appealing to consumers and offer an aspect of the meaning they seek in their food choices. Retailers like Trader Joes have picked up on this, and often include some background information for the product on its packaging or in its mailer. For example, its frozen, microwavable organic jasmine rice is described prominently on packaging as grown in the valleys of Northern Thailand where there are abundant farms with fertile soil and natural rain water.

Such trends serve as useful guideposts for future development. What is the role of genuine authentic narratives in organic product packaging? What aspects about your organic product in particular will consumers respond to and act upon? What will turn them off?

The ingredients used, the raw ingredient source and the method of processing all will likely become more transparent and more important to consumers over time. And manufacturers can better understand consumers by taking part in the information sharing taking place within todays social networks.

Demeritt sums it up: You need to have the organic seal, but then you still have to do the good branding, storytellinggiving them authentic narratives about where the product comes fromto really help your product stand out.

Eric Borchardt is a seven-year veteran of the conventional and organic food-ingredient industry and owner of Fit Marketing Communications in Stoughton, WI, which specializes in strategic marketing planning, trade-show strategy and public relations. He can be reached at [email protected].

Silver Is the New Green

Demand for organic foods and natural products is anticipated to grow an average of 11% annually until 2025, according to the 2006 Manufacturing Survey by the Organic Trade Association (OTA), Greenfield, MA.

How these products are packaged is a critical issue. In addition to protecting food quality and flavor, packaging must also appeal to consumers. As a result, brand owners are attentive to language and graphic elements that communicate the natural or organic nature of the product, relying on easy-to-use package structures made from environmentally friendly materials.

Metal packaging is an excellent oxygen barrier, offering processed organic foods like soups, sauces and ready-to-eat (RTE) meals considerable protection from exposure to light, air and humidity, which helps ensure product freshness and flavor. Metal packaging can also deliver a potential shelf life of up to 18 months for most products, which is an important benefit for organic foods that do not contain artificial preservatives. Metal is also highly effective at protecting vitamins and nutrients.

Materials used by leading metal packaging suppliers to manufacture closures, food cans and ends are engineered to meet the strict requirements of the Organic Foods Production Act of 1990 (7 U.S.C. 6501), while also delivering aesthetic appeal. Advances in shaping and decoration offer brand owners an opportunity to create a modern, distinctive look that significantly enhances shelf appeal, Convenience features like easy-open and peelable ends make food cans attractive options for consumers on-the-go lifestyles. One closure consists of a unique hybrid of a metal disk and a plastic band that offers easy opening and dual tamper evidence plus superior barrier performance, good abuse resistance and brand differentiation on the retail shelf. The open-ability and safety of this closure makes it a great option for organic food products packaged in glass or plastic containers, including sauces, jams, jellies and nuts. It can serve as an excellent alternative to the traditional metal vacuum closure used on glass jars.

Metal packaging also offers some significant environmental advantages. Steel and aluminum, the metals used in cans and closures, can be recycled infinitely with no degradation in quality. While suppliers or users of other materials promote recycling, there is a limit to the number of times such recycled materials can be transformed into a new package that is suitable for use with food or beverage products. For brand owners marketing organic products, this is an important point to leverage with their consumer base.

Daniel Abramowicz, Executive Vice President, Technology and Regulatory Affairs, Crown Holdings, Inc., and President, Crown Packaging Technology, Inc., Philadelphia.