Organic trailblazers: tracing the footsteps of Nature's Path.

When he decided to open a natural foods store in 1971, Arran Stephens started heading down a road less traveled. As his small business grew into a larger manufacturing plant, he managed to keep his organic, natural and healthier niche in tact. Now, with an extensive line of organic products,

Stephens finds his less traveled road beaten and worn by an increasing number of food and beverage manufacturers entering the organic, natural and healthier category. But the involvement of new and major players in the crowded category hasn't pushed Stephens off his path. The current healthy boom has him excited about the prospects of new healthier products that will enter the market in the next several years.

[ILLUSTRATION OMITTED]

"I've always felt that wholesome organic foods, if they taste great and are well packaged, will replace products that are less healthy. That's the way we've been designing our products," says Stephens, founder and president of Nature's Path Foods Inc., Richmond, British Columbia, Canada.

[ILLUSTRATION OMITTED]

Nature's Path Foods Inc. is a maker of breakfast cereals, breads, waffles and cereal bars. Two of the company's brands, Nature's Path and EnviroKidz, are together the No.1 selling certified USDA Organic breakfast cereal in U.S. natural foods supermarkets. A line of frozen toaster waffles branded under the LifeStream name rounds out the company's branded universe. Nature's Path has two manufacturing plants with nearly 200 employees and 190,000 square feet of organic manufacturing capability. The plants are located in Delta, British Columbia and Blaine, Wash.

The origin of the company as it exists today stems back to the 1930s when Rupert Stephens, Arran's father, inherited his family's 89-acre farm. Arran Stephens attributes his appreciation for the land, and organic and natural philosophies to his childhood spent on a farm. He's taken his lessons from the farm and injected them into his business. Those lessons and ideals show up in company strategies, goals, new product developments, packaging concepts--nearly every aspect of Nature's Path and its corresponding products.

Stephens and his company leaders admit that Nature's Path is in many ways no different from other companies. Return on investment, profitability, waste-reduction and brand leadership are all important goals. But those conventional business values are overlaid with the notion that industry must choose sustainable, more environmentally responsible processes that will leave the world a better place.

The company stands for a sustainable message and is positioned as such in the marketplace. Consumers associate Nature's Path with responsibility, and in some ways, feel more responsible for using the company's products.

With that positioning, the company has grown from a small natural foods store to a mid-size manufacturer with an annual growth rate of 20 percent.

But even though the company continues to grow, the changing healthier category has the potential to impact Nature's Path's business. Kevin Greenwood, marketing manager, responds simply to questions about the crowded category and major player involvement within it.

"It's no secret that the organic category is growing faster than other segments, and bigger companies are saying 'what can we do to get in on it?' It heightens the awareness for us to get it right, and get it right the first time," he says.

New product development at Nature's Path is key to its success. But its growth over the years has raised the stakes to the point where one or two mistakes could be detrimental to its business.

"I remember the days when you could force new products into the market," says Stephens. "Now we're in a mature market, and new products have to be well researched and thought out. We can't take a fly-by-the-seat-of-our-pants approach anymore because the stakes are a lot higher now."

As a result, Nature's Path develops its healthier new products with as much precision and accuracy as it can muster. Its dedication to the process has yielded just two failed products in the history of the company, according to Stephens.

"We didn't support those products like we should have. I'd say we have about a 90 percent success rate with our products.

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

"We believe in innovation and renovation. We come up with an idea usually based on market reconnaissance, through sales, tradeshows or publications. Once we identify a hole in the market, we get our food scientists going on concepts. We analyze costs, assess what equipment we'll need, and try to determine what the payback will be," he says.

Along with a clear plan in the new product development process comes high standards and goals for the end product.

"We try to be quite strategic in coming out with something that is better than our competition's," says Stephens. "Our goal is be No. 1 or No, 2 in a category. If we can't do that, then I think we should be looking at developing another product."

Lofty standards and expectations keep Nature's Path on its toes when developing and launching new healthier products. But the company also benefits from a brand that's been associated with organic and healthier products for several decades.

"We've been selling organic and natural products for a long time," says Greenwood. "We're well placed to capitalize on consumers' desire for organic and more nutritional products."

As the company has grown and become more experienced in the marketplace, it's been able to more easily and accurately identify opportunities. The company has been able to employ its healthier position to help refine successful new product ideas.

"We look at categories and ask, 'where is the opportunity for us?'" says Greenwood. "There may be no organic version available [in the category], or perhaps it's a sleepy category."

Greenwood uses the example of a new granola bar Nature's Path developed to reinvigorate the category. He says the granola category seemed a bit tired and that an organic version could do well. The product was well received at the recent Natural Products West Expo. In addition, the company launched an organic toaster pastry that consumers are flocking to.

"We took an old concept--a toaster pastry--and took out the white flour and trans fats and reduced the sugar. We went through a long period of R & D for the product, but in the end we took an unhealthy product and made it healthier," says Stephens.

He added that the company will continue to seek opportunities to make traditionally unhealthy products healthier, as well as support totally unique ideas for healthier new products.