FRESH SUMMIT 2006

SAN DIEGO - A panel of retailers and grower/shippers here at Produce Marketing Association's Fresh Summit convention and expo reviewed what's happening in the organics arena and shared sales advice gleaned from experience.With 75% of consumers saying they buy organic - up from 55% in 2000 - and sales projected to be 10% of total produce sales by the year 2020, organics provide big potential, panelists

SAN DIEGO - A panel of retailers and grower/shippers here at Produce Marketing Association's Fresh Summit convention and expo reviewed what's happening in the organics arena and shared sales advice gleaned from experience.

With 75% of consumers saying they buy organic - up from 55% in 2000 - and sales projected to be 10% of total produce sales by the year 2020, organics provide big potential, panelists agreed.

Those figures, supplied by The Hartman Group, Bellevue, Wash., could even be conservative considering growers are expanding their organic acreage and the consumer media are putting organics on consumers' radar.

"I increasingly see mainstream magazines, like Redbook and Woman's Day, running articles on organics or at least mentioning them in articles on better health, and better lifestyles," said consultant Mark Mulcahy, Organic Options, Glen Ellen, Calif.

"It's clear, too, that when people think of organics they first think of fresh produce."

Mulcahy's fellow panelists were Mike O'Brien, vice president of produce, Schnuck Markets, St. Louis, Mo.; Donald Harris, vice president, produce & floral, Wild Oats Markets, Boulder, Colo.; Michael Hollister, vice president, sales & marketing, Driscoll's Strawberry Associates, Watsonville, Calif.; and Shawn LaPean, director of Cal Dining, Berkeley, Calif. Ron Carkoski, president and chief executive officer, Four Seasons Produce, Ephrata, Pa., was moderator.

Quality, variety, flavor, and matching marketing and merchandising to the demographics of the market area were called keys to successful sales.

Schnucks' O'Brien particularly zeroed in on the necessary demographics/psychographics match-up, and on integrated merchandising.

"It's very important to match up the variety and volume you carry with the demographics. You need the right variety for the right customers," he said.

"Young people are very interested in organics. It's not all income level. It's a culture also. Most of our organic successes have been in stores near universities."

Mulcahy underscored that with additional figures from The Hartman Group.

"What struck me most about their recent research was that they found 31% of frequent buyers of organics have an annual income under $15,000 a year," Mulcahy said.

The appeal of organics to youth was underscored by LaPean, who runs an all-certified-organic food service operation at the University of California at Berkeley.

"I'm serving 3+ million meals a year. We're a good organic buyer," he said.

LaPean may have a captive audience of environmentally concerned young people, but for a mainstream retailer like Schnuck, organic marketing can be a juggling act.

"We have the bulk of our customers wanting conventional produce," said O'Brien. "We also have customers who drive away from us to buy their organics just because they think we won't have enough variety. So we focus on the variety and quality of both our organic and conventional items."

O'Brien pointed out that some customers just see no advantage in organic. They don't want to pay a 10% to 20% premium when they don't think organic is important, he said. That's not to say they can't be won over.

"I have proof that we sell more with integration. You have to expose all your customers to organics. My customers for conventional won't walk over to a separate organic section." But they can be enticed if they see an organic item next to the conventional item, he said.

To that point, one panelist pointed out that there are windows of time in which the price gap narrows appreciably, depending on the product and the time of year.

While Mulcahy agreed integration brings in new organic customers, he said he believes it's important to create a segregated section when just starting out with organics. "You need to feature it to attract attention in the beginning, to make a statement."

Harris at natural food chain Wild Oats has a different scenario when it comes to customers.

With 70% of his produce sales being organic, Harris is free of some of the challenges mainstream retailers meet with.

"We're fortunate that our customers have a good perception of what it is we're doing and they expect to pay a premium price for organics. But they do want value for their money."

Part of that value, from a Wild Oats' customer's perspective, is information and education.

"They want to learn about organics and organic growing. The consumer doesn't have much connection to farming these days, and they want to hear about it," Harris said.

"There's a big opportunity to provide informative point-of-sale materials and getting associates talking about products to customers."

Harris stressed that while his customers have a different perspective on organics, they - like all consumers these days - expect good flavor, and that's where grower/shippers can help out in a big way.

"Taste is what brings people back. We look for [suppliers] like Driscoll because they have cultivated flavor as well as growing a large variety of consistently high quality berries," he said, referring to the strawberry grower/shipper as an example.