Plucked from obscurity
Dec. 1, 2013
by Mari Rydings
Authentic, simple, clean and healthy. These are just a few of the buzzwords that describe why consumer interest in better-for-you foods is growing. And that surge is good news for manufacturers of organic and all-natural baked foods and snacks, many of whom have spent years to build their brands and attract loyal consumers.
Their hard work is paying off. According to Sullivan, Higdon & Sinks’ 2012 FoodThink research study, more than one-third of all consumers seek out these products in grocery stores. The search doesn’t take long because many large grocery stores now feature multi-aisle sections dedicated to organic and all-natural food options.
“Consumers continue to look for healthier options when it comes to choosing food,” said Doug Radi, senior vice-president of sales and marketing for Rudi’s Organic Bakery, Boulder, CO. “There’s a continued, increased awareness people are making between health and diet.”
Keeping it clean and convenient
Clean labels, the ones that list fewer ingredients and familiar ingredients, are in high demand from consumers who increasingly want to know what’s in — or not in — the food they eat.
But the definition of clean label can get a little murky. For a food to make such a claim, every chemically derived or artificial additive must be removed. Typically, this results in a simplified ingredient list, which many people interpret as a healthy product. Yet while clean-label positioning appeals to consumers, such an approach does not inherently mean that a product is healthier than its alternative.
“Some products are cleaner than others,” explained James Sego, president and owner of Los Angeles-based Eco-Heaven, which sells certified-organic and gluten-free instant oatmeal and gluten-free toaster pastries. “Foods that are certified organic are also GMO-free, but that’s not necessarily true of products that carry the all-natural claim. Certified-organic foods must be GMO-free. From an educational perspective, not a lot of consumers realize this.”
Consumers don’t just want baked foods and snacks clean; they want them convenient, thanks to on-the-go lifestyles and the desire for portion control. “Serving size is a big driver in the organic category,” said Peter Meehan, CEO and co-founder of Newman’s Own Organics, Aptos, CA. “Smaller bag sizes and single-serving sizes have done well. People are willing to pay a little more for portion control.”
It’s all about the money
Paying a little more is the name of the game with organic and all-natural products. There’s no denying that these products carry a heftier price tag than traditional foods, but manufacturers believe that as the number of options in these categories increase, the cost difference will decrease.
“Traditionally, the price gap between organic and non-organic is between 20 to 25%, and the gap between all-natural and traditional foods is between 5 to 15%,” noted Steve Sklar, senior vice-president of marketing for Phoenix-based Inventure Foods, which holds the Boulder Canyon Natural Foods brand in its portfolio. “But that gap is getting smaller, at least with the all-natural products.”
Finding the right price point is a balancing act, especially when it comes to adding new consumers to the ranks of healthier eating. If manufacturers push the envelope too far, they run the risk of alienating these potential customers.
“There is a premium,” Mr. Meehan acknowledged. “We try to avoid lofty prices because if you charge too much [for organic], consumers will shift to all-natural. While we have plenty of organic consumers who support what we do, we don’t have the following of the large companies.”
How much people are willing to spend on cleaner labels varies by food category and consumer. Some select organic fruits and vegetables but choose traditional foods for their cookies and snacks. According to the Organic Trade Association (OTA)’s US Families’ Organic Attitudes & Beliefs 2013 tracking study, 81% of US families buy organic products at least some of the time, and of those families, 40% have begun buying organic in the past two years.
Members of this consumer group have a clear understanding of the benefits of clean, healthy eating and how it connects to living a healthy lifestyle. “They understand that ‘certified organic’ carries a number of benefits from what’s in the food to how it’s produced to how it’s better for the environment,” Mr. Radi said. He added that he believes consumers view the difference between organic and all-natural foods as a continuum thus accommodating both entry-level and more committed shoppers.
“The organic consumer may not be buying only organic foods due to price but making trade-offs, specifically committing to organic in staple, high-consumption categories like milk, produce and bread,” Mr. Radi explained. “Then, there are other shoppers who are starting to buy more clean-label and natural foods and dabbling in organics. They want the same healthier foods options but may not be as committed as the family that’s buying mostly organic.”
Cost remains a sticking point for some groups. The OTA study revealed that consumers who do not buy organic products cited price as the primary reason. “We found they are unwilling to pay more because they do not understand the benefits of buying organic,” said Barbara Haumann, senior writer and editor for OTA. “They are likely to believe that organic foods are a marketing ploy to make people pay higher prices.”
An imperfect profile
With more people buying organic and all-natural baked foods and snacks, pinning down the perfect consumer profile isn’t easy. In fact, it can be somewhat of a moving target. Yet as a general rule, people who buy primarily organic foods tend to be more educated and have higher socioeconomic status, characteristics that coincide with — and support — the higher price tags. Additionally, organic buyers are more racially and ethnically diverse.
Conversely, according to the OTA study, shoppers who shun organic foods tend to be older, less educated, less ethnically diverse and the least wealthy consumers.
Still, profiles for organic and all-natural shoppers are evolving, and the market is growing. “All-natural is more mainstream,” Mr. Sklar observed. “People who dipped their toes into organic through fruits and vegetables are now moving to snacks.”
“We are adding to the ranks,” Mr. Meehan added, “but our core customer is a female who is the gatekeeper in the household and in control of what goes onto plates at mealtime. She cares about providing her family with quality foods that taste good, and she spreads the word.”
While all-natural and organic foods have occupied store shelves for decades, many of their biggest fans have not been around quite as long. Younger consumers, often referred to as millennials, are driving much of the growth in these categories. “With younger consumers, there is a baseline assumption that certain foods are going to be all-natural or organic,” Mr. Sklar said. “It has always been a part of their lifestyle, and they are willing to pay a premium for these products. They will continue to drive the trend.”
The social side
Another way younger consumers drive this trend is through social media, and food manufacturers are getting online with these channels to promote organic and all-natural baked goods and snacks. It’s a low-cost, non-traditional marketing strategy that allows companies to reach a larger audience through a variety of outlets, with Facebook, Twitter and Pinterest being the most popular.
Before they commit their dollars, web-savvy consumers spend a lengthy amount of time online researching the products and the companies that produce them as well as discussing them in their social networks. “Information is being shared at lightning rates,” observed Mary Kay O’Connor, vice-president of education at the International Dairy-Deli-Bakery Association, Madison, WI. “In fact, people’s crowdsourcing interests focus on real, fresh and less-processed food, and the proactive wellness movement is a growing phenomenon.”
According to Ms. O’Connor, the digital connection doesn’t stop when consumers enter the store. “In the store, they use smartphone apps and the Internet to make further decisions about their purchases,” she said. “After they purchase and use the products, they Tweet and post comments — good and bad — and offer impressions through digital media to their friends and communities. Just look at the interest of Pinterest and discussion boards such as www.chow.com and
Today, there are organic or all-natural alternatives in almost every food category. With the help of product innovation, education and social media promotion, the trend toward healthier eating is expected to continue its growth spurt to the point that it ceases being a trend and turns into a permanent lifestyle for many consumers.