Organics: No private matter

At the turn of the 21st century, David Van Meter launched a business called Organic Private Label, LLC to address U.S. retailers' growing interest in private label programs.

"I had over 25 years of conventional grocery experience, primarily in private label, and I saw a need to help small organic food manufacturers work directly with conventional grocery store entities and their master brokers," notes Van Meter, whose company is based in Centennial, Colorado. According to Van Meter, nowadays "everyone is at some stage in the process" of looking at private label.

Not surprisingly, retailers like Whole Foods and Wild Oats already offer private label lines. Among the more conventional grocers, however, Kroger has gone national with its Naturally Preferred label of premium-quality natural and organic products. The line, which includes 140 items, encompasses such categories as baby food, pastas, cereal, snacks, milk, and soy items.

Lunds and Byerly's stores in the Twin Cities area of Minnesota sell Living Wise private label organic fair trade coffee, and the company is looking to do more, according to Bea James, whole health manager for Lunds and Byerly's Living Wise Program.

Meanwhile Topco Associates, LLC, a leading member-owned cooperative, offers a line of organics and natural foods called Full Circle, which can currently be found on the shelves of independents and regional chains, among them Lowes Foods in the Southeast U.S. and Haggen Foods in the Northwest U.S.

Canadian supermarket chain Loblaws features a private label line called President's Choice Organics, which features more than 150 products, including fresh produce.

A big challenge for grocers that want to establish store-brand organics is that many organic suppliers aren't vertically integrated, meaning they don't grow their food ingredients and don't have their own production plants, observes Van Meter. "They may own a recipe or a label, but they don't make it themselves. Most conventional grocers that want private label products under their name are going to look for vertically integrated companies, to get the best cost." Thus, organic contract packers are now stepping up to learn how to be vendors themselves.

Another important factor relating to organic private label is that, first and foremost, product quality must be maintained regardless of cost savings.

Matt Grove, e.v.p. of sales and business development at Chicago-based Dakota Beef Co., notes that his company is definitely interested in doing private label organic beef. But, he adds, "We have to be careful about who we do business with. We want retailers that are known for high-end natural and organic products, and have the knowledge to market effectively."