Organic breakfast sandwich
Consumers are looking beyond the fresh department to the packaged and prepared foods aisles for organic offerings.

CHICAGO — Nearly 5% of all food sold in the United States in 2015 was organic, according to the Organic Trade Association (O.T.A.), Washington. Most of that is from perimeter departments in retail stores.

“Farm-fresh foods — produce and dairy — are driving the market,” said Laura Batcha, O.T.A.’s executive director and chief executive officer. “Together they account for more than half of total organic food sales.”

It is easy for shoppers to make the connection between agricultural practices used in the field and fresh, perishable foods. However, as consumers increasingly crave convenience and flavor adventure, they are looking beyond these departments to the packaged and prepared foods aisles for organic offerings. Marketers are responding as quickly as possible.

The challenge is sourcing ingredients. The U.S. Department of Agriculture (U.S.D.A.) requires certified organic products to have at least 95% organic ingredients in order to sport the official organic seal. There is an approved National List of allowed non-organically produced agricultural-based ingredients for use in organic-certified foods. A number of essential ingredients for many packaged foods are not on that list.

Herbs and spices, for example, are not. This means foods certified organic only may contain organically certified herbs and spices, which are in a limited supply.

Organic mainstream ingredients, such as the wheat for pasta, chicken for soup and oil for vinaigrette, are also in limited supply. Manufacturers are hopeful that investments in domestic and overseas organic farming will increase supply of organic food ingredients for innovative product development.

Despite double-digit growth in consumer demand for organic foods every year since the 1990s, organic acreage has not kept up, according to the U.S.D.A. Less than 1% of U.S. farmland is certified organic. While farmers increasingly seek to recognize the benefits of certification, converting fields from conventional farming methods to organic takes at least three years and is no small feat. During the three-year transition, farmers use organic practices but are not paid organic prices.

“Building an organic supply chain is a challenge given the restriction on organic acreage and the learnings required for perfecting agricultural production in an organic system,” said Joelle Mosso, product line manager-natural and organic, Olam Spices and Vegetable Ingredients, Fresno, Calif. “For suppliers to the industry, there is always a level of uncertainty on the volume that the market can support for any given organic ingredient.”

Felipe Aguilar, director of supply chain, Sensient Natural Ingredients, Turlock, Calif., said, “Ingredient suppliers face highly fragmented organic supply chains that prove difficult to demonstrate traceability, maintain reliable inventories and provide consistency in product quality. Food manufacturers who use organic ingredients need to ensure they focus on communicating their anticipated needs well in advance. Remember, most crops produce only once every 12 months, thus limiting flexibility and ability to supply in short notice.”

For many food manufacturers, the motto is, “if you supply it, we will use it.” But it’s not just supply. A consistent and sufficient supply must also be considered.

“There are several factors that make sourcing organic ingredients challenging,” said Ilana Orlofsky, marketing coordinator, Imbibe, Niles, Ill. “First and foremost, there simply might not be a crop available in the quantity that brands demand. In addition, crops vary season to season and year to year. Taste profiles may differ, which makes it harder to create a standardized, uniform product.”

Determined marketers are willing to take that chance to meet the organic consumer’s needs. For example, demand for fresh organic salads inspired Ready Pac Foods Inc., Irwindale, Calif., to develop a line of chef-inspired organic chopped salad kits. The company goes to great efforts to source everything organic. In the Kickin’ Southwest variety, this includes romaine, green and red cabbage, carrots, tortilla strips, Monterey Jack cheese and Southwest ranch dressing.

Blount organic soups
Blount Fine Foods introduced refrigerated organic soups that require a multifaceted supply chain.

Blount Fine Foods, Fall River, Mass., introduced refrigerated organic soups that require a multifaceted supply chain due to the complexity of the recipes. This includes a chicken noodle soup packed with vegetables and penne pasta in a savory herbed chicken broth. There’s also chili made with an assortment of beans and vegetables in a savory vegetable stock with traditional chili spices.

“As the popularity of prepared foods grows rapidly at retail, we have seen the call for organics grow from a rumble to a roar,” said Bob Sewall, executive vice-president of sales and marketing at Blount.

Mizkan America Inc., Mount Prospect, Ill., recently rolled out a line of Bertolli branded organic marinara and pasta sauces. All varieties are made from California-grown organic tomatoes and rely on additional organic ingredients, including olive oil, aged Italian cheeses, and herbs and spices.

When there’s uncertain supply, some marketers prefer to formulate products labeled “made with organic ingredients.” That’s how Clif Bar & Co., Emeryville, Calif., started, with some products still labeled that way because of supply.

“When I started at Clif in 2004, our products were ‘made with organic ingredients,’ because many of the ingredients we required were not available with organic certification,” said Kevin Cleary, chief executive officer. “Or, if they did exist, they were not available in the quantity we needed on a year-round basis.”

Mr. Cleary believes that any manufacturer who wants to be in the organic space needs to invest in organic farming.

“It is paramount to provide farmers transitioning to organic with long-term contracts,” he said. “We want organic figs and recently entered into a 10-year contract with a fig farmer in California. Once the farm gets through the three-year organic transition period, they know they have Clif as a customer.”

Certified transitional organic Kashi products
The Kellogg Co.'s Kashi brand was central to the creation of the certified-transitional program.

The Kashi Co., Solana Beach, Calif., a business of the Kellogg Co., Battle Creek, Mich., is supporting wheat farmers during their transitional period to organic and communicating these efforts to consumers. Kashi now offers dark cocoa karma shredded wheat biscuit cereal and chewy nut butter bars (in four flavors) made using transitional wheat.

The company created its transitional farms initiative in 2016. During a farmer’s three-year conversion process, the company is buying some of the transitional grains, which are certified to ensure they are grown using sustainable practices that avoid genetically modified seed and synthetic pesticides or fertilizers. The goal is to convert more acreage every year, which is why Kashi’s certified-transitional products always will be made with transitional grains.

Kashi’s first-ever purchase of certified transitional ingredients was hard red winter wheat for the cereal. It came from 860 acres of transitional farmland, which after one year has more than quadrupled in acreage. The bars build on this momentum by showcasing other transitional ingredients, including almonds, dates and sorghum.

“As a farmer, I think of the decision to switch to organic as an equation — with dozens of variables that must be considered — such as the projected price of organic products, consumer demand, changing environmental conditions and more,” said Richard Gemperle, president, Edelweiss Nut Co., Turlock, Calif., who supplies almonds to Kashi. “For me, certified transitional changed the equation in favor of making the transition to organic, giving me a way to reap immediate economic benefits.”

David Denholm, chief executive officer of Kashi, said, “As demand for organics continues to grow, we hope this success will encourage other brands to explore certified transitional sourcing.”

Ingredients in transition

Ingredient suppliers recognize that raw material demand has outgrown the supply. Many are working with farmers to change this.

“The idea to address the situation is to have that connection with the producers, and grow, on the organic side, acres domestically,” said Brad Hover, c.e.o., Healthy Food Ingredients (H.F.I.), Kansas City. “We are able to offer supply assurance —we have tight, yet diversified, supply chains that provide a steady stream. Through the transitional organic effort we have been able to offer producers a premium during that three-year phasing for certified organic.”

H.F.I. started its transitional organic program about a year and a half ago. The company considers itself a bridge.

“Our job is taking grower equity and effort and deliver it to consumers in an optimized, safe supply chain,” Mr. Hover said.

Brad Hennrich, president of H.F.I., explained how the program came to fruition.

“Kashi requested our assistance in putting the program together,” he said. “Since it is a whole new certification, they needed to make sure we covered and had representation from all aspects of the supply chain as well as the certifying bodies who would provide validation to the program.

“For the most part, it’s a product grown organically, but has not gone through the three-year certification process,” Mr. Hennrich said. “That by itself adds complications. The product has to be kept separate from organic as well; there has to be a different process for transportation."

Organic flour
Ardent Mills has increased its efforts to help U.S. wheat growers double organic wheat acres by 2019.

Organic grains and flour are not new, but meeting growing demand is a challenge, agreed Shrene White, director of specialty, risk management, Ardent Mills, Denver. To assist, Ardent Mills has increased its efforts to help U.S. wheat growers double organic wheat acres by 2019. Since December 2015, the company’s producer program has expanded to seven states and a Canadian province while adding more organic-certified milling and packaging locations along with storage.

“Since 2015, we’ve added organic durum, organic cracked wheat and organic spelt to our product mix, which also includes organic whole wheat flour, organic bread wheat flour, organic all-purpose wheat flour, organic pastry flour and a complement of grain mixes and blends,” Ms. White said.

Batory Foods, Des Plaines, Ill., recently added a number of organic grains to its product portfolio. This includes amaranth, buckwheat, garbanzo, millet, quinoa and sorghum, as well as sprouted flours and grains.

“It is challenging because while everyone would like to have these options, they do come at a much higher cost than their conventional counterparts and are much more limited in supply in comparison to the conventional options,” said Matt Hernal, senior product manager.

Interest in organic fibers

Organic fiber ingredients are also in demand. Recognizing this need, companies such as Mayer Brothers, West Seneca, N.Y., fruit juice and fruit and vegetable fiber manufacturers, began selling organic apple fiber and organic blueberry fiber last year.

“The demand is so heavy that we are pre-contracted for every pound of product that goes through our production line,” said Russell Carlson, president, S.A. Carlson Inc., Yakima, Wash., the sales office for Mayer Brothers’ fiber ingredients. “Lead time for new customers on either of these items, if we can increase our production, is about three months.”

Carolina Innovative Food Ingredients, Nashville, N.C., markets organic sweet potatoes ingredients, including juice concentrates and dehydrated flour and granules. These ingredients enable product developers to add the health and functional attributes of sweet potatoes to many applications.

“We work proactively with our growing partners to ensure that they produce enough organic sweet potatoes to meet our needs,” said John Kimber, chief operating officer. “Because of the amount of pre-planning needed, the earlier manufacturers are able to predict what their future demand for organic ingredients might be, the better.”

Demand for fats and oils

In fats and oils, Bunge North America, St. Louis, recently introduced organic expeller-pressed soybean oil. Drawing on artisan methods, this oil is delicately extracted through physical pressing, which is gentler on the earth than conventional extraction methods. The company sources organic soybeans from a family of farms in the northeastern United States.

“The oil is refined using citric acid from fermented corn sugar, a renewable resource that gently purifies the oil to enhance its culinary performance,” said Mark Stavro, senior director of marketing.

In December, Cargill, Minneapolis, added organic de-oiled canola lecithin to its ingredient lineup. Because its dispersibility, functionality, taste and color are comparable to soy and sunflower lecithin, it may be used as a one-to-one replacement, said Pam Stauffer, global marketing programs manager.

The demand for produce-type industrial ingredients continues to surge. Supply is challenged by growers who prefer the payment received for whole product destined for retail.

Olam works with its growers to offer a range of organic tomato and other vegetable ingredients.

Organic Sensient farmer
Sensient launched its organic program with onion, chili pepper and paprika.

“This year we are focusing on our San Joaquin Valley organic tomato line,” Ms. Mosso said. “In addition, Olam is building the supply chain for U.S. grown and processed dried organic parsley, organic spinach powder and organic kale powder. These products are in the initial phases of development and will roll out in the later part of 2017.”

A key differentiator for Olam is its international presence and expertise in spices from around the world. This provides the company access to an extensive portfolio of ingredients.

“Starting this year, our U.S. customers can obtain organic chili pepper, ginger and turmeric, which we source from our facilities in India,” Ms. Mosso said.

Sensient launched its organic program with onion, chili pepper and paprika. The company recently added California-grown roasted chili pepper, smoked paprika, smoked onion and soon-to-be launched toasted onion seasonings.

FutureCeuticals, Momence, Ill., offers a novel organic energy product that delivers a boost of standardized, natural caffeine combined with the polyphenol-rich nutrition of whole coffee fruit. The company partnered with organic Arabica coffee growers and pioneered an eco-friendly process that preserves the whole fruit of the coffee plant.