Clearing the organic hurdle
By driving volume and streamlining production, Just Desserts also plans to close the price gap — perhaps one of the biggest barriers between organic and conventional baked goods. That’s especially true for inviting value-conscious consumers to buy organic foods and increasing the frequency of purchases by millennials. This group has embraced organic more than other demographic and rejuvenated the $20 billion food category over the past few years. “People really value organic, but they just don’t value it as much as it costs for most products,” Mr. Mendes observed.
Currently, Just Desserts’ organic treats on average sell for an 18% premium to conventional goods, but it’s striving to slash the gap to the low double-digits or even a high single digit. That’s a more modest premium that many consumers are more willing to pay to trade up to organic, according to the company’s research.
Most of the premium comes from the higher costs, limited availability and shorter shelf life of organic ingredients — all which impact yield. “We’ve gotten into the heart of ‘why is organic so expensive and what can we do about it?’ ” Mr. Mendes said.
Managing the sourcing and the use of organic ingredients becomes vital. “We can’t do much about the cost of organic eggs, but that’s only part of why organic foods are so expensive,” he explained. “If you buy more organic eggs than you need, due to the short shelf life you have to use them in your ‘natural’ products, and that’s going to drive up the costs as well.”
Just Desserts products, which have up to a 14-day shelf life after thawing, can be found at specialty and natural food chains where many organic-minded consumers already shop, noted Stacy Chan, director of sales. Geographically, she added, core markets for these consumers remain along the West and East Coasts as well as in such pockets as Chicago, Denver and Austin, TX. The Just Desserts line can also be found at a growing number of national chains and even some international retailers.
By breaking down the barriers, Mr. Mendes observed, Just Desserts has also begun to successfully penetrate a hugely underserved organic market with enormous potential, namely, mainstream supermarkets that currently offer a limited amount of organic baked goods.
In addition to expanding its customers’ clean label and organic offerings in the in-store bakery, the company strives to help them provide a convenient one-stop shop for consumers who are intrigued by organic but only visit more conventional grocers. “When people are making choices where they are buying their baked goods, they don’t usually associate a clean-label offering with a traditional supermarket,” Mr. Mendes pointed out.
Read on to continue the tour.