First I read that Wal-Mart, with approximately 3,800 stores in the U.S., plans to double its organic items, with the goal of becoming (drum roll here) the \“mass-market provider of organic food.\” Yes, the company that co-ops and citizen groups have fought hard to keep out of their communities is getting serious about the organic market.
A couple of weeks later, I led a couple of sessions on the organic industry at an Indianapolis seminar and food show. In the audience were a few co-ops and independent natural food stores, but the largest group represented was produce managers and coordinators from the conventional grocery produce industry—all eager to learn how to play the game of organics.
A few weeks later I again had the opportunity to set up a booth on \“What’s Wrong With This Picture-GORP (Good Organic Retailing Practices)\” at the All Things Organic show in Chicago. The booth was set up like a produce department and had 15 things that were incorrect according to GORP or the National Organic Program. Retailers of all sizes tried their hand at figuring out what was wrong in the mock department. But this year representatives from Wal-Mart, Safeway, and Hy-Vee each spent about 25 minutes talking to me about their programs and the state of the organic industry.
Supply and demand
I guess that is what happens when you have these sorts of stats working for you:
- Total organic sales in 2005 were $15 billion, about 2.7 percent of total U.S. retail sales and 42 percent growth over 2003—and it’s not slowing down.
- Produce contributed a whopping 42 percent ($6.3 billion) to overall organic sales.
- These numbers are also supported by the polls, which show that 66 percent of consumers occasionally buy organic and 24 percent regularly buy organic.
This spring and early summer we may have gotten a glimpse of the organic market for the next few years, as prices on vegetables and fruit went through the roof. Some of the prices and availability reflected the long and late rainy season in California that reduced soft fruit crops and delayed vegetable planting. In the southern hemisphere, apples and pears had a short crop as well, which resulted in prices at the end of May that were sky-high. Availability was scarce for many co-ops around the country.
But what was the other cause of this? Simply supply and demand. One distributor I spoke with said that demand was so high he had to order product before it even landed here in the U.S. and that conversations about price or size were few and far between.
So, while having consumers buying more organics is something most of us have wanted for years-I’m sure most of you are not complaining about the growth you have been experiencing the past few years—the down side is that the national or global supply cannot now provide all the produce that it will take to serve the bigger players. This will mean gaps in supply.
The market will shake itself out and settle down again. But we have to continue to differentiate ourselves from our competition. Even with the best buying skills we will never be able to compete on price with Wal-Mart.
What goes around comes around
At the same time, there is another food revolution taking place all over the country: the demand for regional or local products. Yes, as organic has gotten bigger, more and more consumers have been demanding food that is grown closer to home. Is local the next organic? Or is it a return to where we have been before? I would say yes to both!
The last two store openings I worked on-the Neighborhood Co-op in Carbondale, Ill. and the Common Market in Frederick, Md-were both given clear directives by their members to have more local/regionally grown produce in their new departments. People want a trusting relationship with their food, and buying from local producers gives them the opportunity to have one. Many co-ops already have well-developed programs, while others are just getting started. Here are some helpful tips for programs at any stage.
Define what is local. Sit down and look at what is a realistic distance for produce to travel and still be considered local or regional. You may want to offer a couple different designations.
Will it be only organic? For some co-ops the answer is automatic because of the abundance of organic growers in the area. But for others, it’s not so easy. Should you carry local conventional to satisfy your customers? Ask them! If they say “yes,” then learn more about the crops being grown in the area and make some decisions. You may have to choose wisely and be willing to do some homework. Keep noncertified grower information on file. If you do have a grower you would like to work with, but who is using something you would rather not support, give your customers the information and let them choose. You also can refer the grower to ATTRA-Appropriate Technology Transfer for Rural Areas (\“www.attra.ncat.org\”:http://www.attra.ncat.org ) -to see if there are some alternatives the grower can try.
Set up guidelines. Be clear about what you want and need from the grower—everything from delivery times to box and quality standards. One of the areas I commonly work on with retailers and growers is communication and understanding each other’s worlds. Make a list of what you don’t know and ask the growers to do the same. You can start with the one below.
Understand the world of retailing. This includes: pricing, buying (why, how, when), storage, ripeness, size, packing, post-harvest, receiving, time management, promotion materials, in-store farmer days, guidelines and contracts.
Understand the world of farming. This includes: pricing, delivery, costs, post-harvest handling, promotional materials, farm tours, guidelines and contracts.
Know your financials. Don’t be ashamed to make money. For example, do growers know why you as a produce manager need to charge what you do? Most often the answer is no! If you haven’t broken down your dollar, it may be helpful when having price discussions. Ask them to do the same with their financials; you’ll find that many small growers can’t, which makes it even more important that they understand yours.
Get a clear understanding of what is the best price point for you to sell more of their product.
Create clear signage and marketing materials. Take the time to develop good information and signage so that your customers know exactly what farms and practices they are supporting.
Don’t reinvent the wheel. There are plenty of resources that can help keep you on the right path. Here are a few that will provide good information and other valuable links as well.