WHEN IT COMES to giving consumers what they want, offering a product line sporting the “USDA Organic” label is a pretty good start.
In 2007, 7.3% of Americans purchased organic-labeled products, up from 6.5% in 2006 and 2.7% in 2001, according to Mediamark Research & Intelligence, a consumer research firm in New York. Much of this growth is tied to an increased awareness of the health benefits of eating organic products. Wider availability of organic items in “regular” grocery stores is also helping to boost sales.
“There’s no question that there is a cadre of individuals that care about electing healthier food options,” says William Baker, a marketing professor at San Diego State University. “People are simply more concerned about their health,” he says.
While an increasingly health-conscious public will likely continue to be a bright spot for health food purveyors, the high cost of organic products may be a hindrance. For example, organic produce, crops and animal products that don’t contain pesticides, artificial fertilizers, antibiotics and growth hormones can cost double the price of nonorganic raw materials. Tack on a slowing economy and reluctance among some consumers to purchase more expensive goods, and owners of organic businesses may face lower returns.
That said, “if you can get organic products that are more price-competitive and more flavor-competitive, there’s no question [businesses] will benefit,” says Baker. Here are the basics for riding the organic bandwagon:
Your first stop for going organic should be the Department of Agriculture’s web site . There, business owners can learn more about the entire certification process, which is overseen by the National Organic Program.
At this point, figure out which type of certification is right for your business. Goods that use the “100 percent organic” label, for example, can only contain organically produced ingredients, while “organic” products may contain up to 5% of nonorganic materials. Processed foods pulling at least 70% of its materials from organic sources can use the “made with organic ingredients” label.
Really small manufactures or producers that sell less than $5,000 of organic products a year are exempt from the certification process. While such businesses can’t use the “USDA Organic” seal, they can label their products as “Organic” as long as they follow the certification standards. Additionally, retail operations including grocery stores and restaurants don’t have to be certified.
For Stephen Moore, the founder of Helen’s Foods , a frozen foods manufacturer in Irvine, Calif., the decision to go organic was clear long before he started producing products for the U.S. market in 2007. His reasoning: It’s easier and cheaper to start up a facility using the USDA’s organic standards rather than doing so down the road. Plus, he says, the demand is there.
In addition to consumers, Moore says, “store buyers from retail chains are looking for the organic label.” He adds that having the organic label is often requisite for getting placed in certain stores. “Unless you’re Kashi, it’s very difficult to get on store shelves,” says Moore.