Growing Naturally

Information is king. Any marketer involved in promoting natural and organic food and beverages at retail knows that informing the shopper about the what, how and why of these products is paramount. Despite all the recent headlines about obesity, healthy foods, and natural and organic products, the growth of the industry requires consumer education. No matter how concerned consumers are about the environment, the growers, the animals or their own bodies, the bottom line is that they need to fully understand the different farming and processing methods involved -- and the resulting quality and flavor attributes -- before they'll buy products that can cost three times more than their traditionally produced counterparts. The point-of-sale materials used at retail are crucial in helping them make that jump.However, marketers are facing new challenges promoting healthy and organic foods in-store. There are battles over what information to put on a display, and with many organic companies moving into large supermarket chains from small independent stores, there are heightened battles against clean-floor policies and slotting allowances.With the new label requirements mandating food manufacturers to include trans-fat content on package labels, many of these manufacturers are looking closely at their product formulations. Frito-Lay is the first to voluntarily include trans-fat content on its packages, a move it made earlier this year. Kraft Foods, the maker of Oreos, Post cereals and Oscar Mayer meats, announced in June that it would improve its products' nutritional content and adjust its marketing to promote healthier eating. This mandated shift to full disclosure on trans-fats will likely spark many manufacturers to tout the health benefits of their products at retail.Yet there are differing opinions regarding how the information should be displayed, and how much education should be displayed in P-O-P. As the natural and organic market continues to grow and evolve, so will the methods, vehicles and messages utilized in merchandising and display. Laurie Demeritt is president of The Hartman Group, a Bellevue, Wash.-based market research and consulting firm specializing in the health and wellness industry. Her company's research indicates today's consumers are more interested in themselves than in the origins and processes involved in producing food. They also don't want to be lectured. "We strongly believe that in-store displays should not be trying to educate the consumer. They want access to information, but don't want to be told what to do," she says. "The messaging that consumers want to see on in-store displays focuses on general images of health. The vast majority of consumers are buying [these products] because of a perception of 'healthy' that has little to do with environmental concerns. Therefore, they want to see images that represent health -- families picnicking, images of the farmers and growers. These images appeal to both the 'converted' and 'unconverted' consumer."Co-promotions would go a long way toward driving consumer awareness and acceptance of organic and natural products, Demeritt adds. "We believe that co-promotions with non-competing items can be very helpful in expanding the market for all organic and natural products," she says. "In fact, using the strength and loyalty of one brand to help promote another would be a strategy we highly recommend in this category since so many of the brands may be unfamiliar to consumers."Off to a Healthy Start Natural and organic marketers must be doing something right, however, because many Americans are taking the leap. Consumers of all walks of life are eating natural and going organic. Last year, U.S. consumers spent $38.9 billion on natural, organic and functional or fortified food and beverages, according to the Natural Marketing Institute, based in Harleysville, Penn. Add vitamins, minerals, supplements and personal care products to the mix, and the total health and wellness industry generated $59.1 billion in sales in 2002, a 7.3% increase over 2001. "That growth is great, but organics only comprise 2% of U.S. food production," notes Eric Newman, vice president of sales at Organic Valley, the LaFarge, Wis.-based cooperative of 515 organic farmers. "There are still so many consumers who don't know what organic is, or how organic differs from natural products." Thanks to the implementation of the USDA's certified organic labeling program last fall, understanding the difference is much easier. Only products that contain 95% or more organic ingredients can carry the "USDA Organic" label.By definition, organic products are produced under the authority of the Organic Foods Production Act without artificial pesticides, herbicides, growth stimulants and other agricultural chemicals. Farming methods must enhance the ecological balance of the environment and integrate the farming system into the environment. Pro-duction methods must minimize air, soil and water pollution, and handlers must adhere to strict standards to preserve the organic integrity. Organic products are regulated by the USDA and the FDA, and generated $8.1 billion in sales in 2002, up 17% from the prior year, according to NMI data. Natural foods are minimally processed, are free of artificial flavors, colors, preservatives and additives, and they are not federally regulated. Natural foods accounted for $10.4 billion in sales last year. Functional and fortified food and beverages are those that are said to provide some physical or physiological benefit, such as improved joint flexibility, energy or alertness, thanks to natural ingredients such as caffeine and gingko biloba. Sales of these products grew 11% in 2002 to reach $20.4 billion. Who buys these products? One might assume that the consumer of natural, organic and/or fortified/functional products is more educated than the typical shopper, and possibly more affluent. For many of these products, that's indeed the case. But conjuring up a profile of the typical consumer is not easy. "When people ask me who my target consumer is, I tell them whoever goes into natural food stores," quips Tim O'Donnell, vice president, sales and marketing at Lundberg Family Farms in Richvale, Calif., which produces organic rice-based snacks, chips, mixes, milk and cereals. "It's the hippies, and also the seniors whose doctors are telling them to eat healthier. It's the new mothers concerned about additives and pesticides, and the environmentalists. Male, female, rich, poor, highly educated or not, our consumers are driven by health, environmental, political or food quality concerns," he says, noting that the profile is more psychographic than demographic.One thing that is known is that women are the largest purchasers of organic foods, and organic shoppers tend to be younger than traditional shoppers, according to the Food Marketing Institute's Shopping for Health 2002 study. Health concerns seem to be a lead motivator. More than half of consumers surveyed by FMI who bought organic foods -- 61% -- said they did so because they felt organics were healthier. Going MainstreamNatural food stores ranging from the corner health food retailer to chains such as Whole Foods and Wild Oats are a huge channel for natural and organic products, but mainstream grocery is now the primary source for these products, according to recent data. A full 72% of organic shoppers surveyed by FMI reportedly purchased product at their local supermarket. The growth of organic, natural and functional/fortified products is not attracting only consumers. Major food manufacturers also are getting into the market, primarily through acquisition. Dean Foods, Kraft and Kellogg made headlines in the past few years by buying up organic and natural companies. Dean now owns 13% of Horizon Organic, Kraft acquired the Boca brand family in 1999 and Kellogg bought Morningstar Farms the same year and Kashi natural cereals in 2000. Others have opted to create their own lines. Tyson launched its Nature's Farm organic poultry line into test markets in June 2000. The positive results prompted the company to open a new facility dedicated to organic production in Virginia this spring to distribute along the East Coast. Heinz debuted a green-topped bottle for its organic ketchup in summer 2002, and snack giant Frito-Lay's Natural line rolled out this spring, bringing consumers organic versions of Tostitos, Cheetos and Lay's Potato Chips.Fighting the CrowdsFaced with a diverse customer base hungry for information, as well as increasing channels of distribution and growing competition from companies of all sizes, marketers of organic, natural and fortified/functional products certainly have their work cut out for them. But then, it's never been an easy sell. "Thirteen or 14 years ago, we created a shipper display for our gourmet rice blends," says Lundberg Farms' O'Donnell. "That was the beginning of our P-O-P display effort. In those days, the natural food retailers were mostly independent and eager to provide information to their shoppers, which we've always done with brochures on our displays." Supermarkets, he adds, were not particularly interested in the products, let alone the display pieces. Today, supermarkets are interested, but the emergence of clean-store policies and the tradition of slotting allowances, coupled with the increasing number of organic products, has made getting P-O-P into mainstream food stores incredibly challenging."In grocery stores, they want to charge you for the display space," O'Donnell says, adding the entry of major food companies into the category has upped the ante. "Some supermarkets even have policies barring the distribution of informational brochures. In natural food stores, it's just much more competitive be-cause there are so many more products. When we first did our displays, there were a handful of products. Now, there are thousands. And many natural food stores have gone to clean-store policies." Supermarket retailers also are exploring different formats for presenting organic and natural products. Some, like Rochester, N.Y.-based Wegmans Food Markets Inc., created a store-within-a-store, complete with knowledgeable staff and information kiosks. Other retailers place natural and organic products in-line with traditional items. To stand out in either situation, Lundberg Farms now offers cuttable corrugated cases and header cards, as well as corrugated stands that hold prepacked trays carrying three to four cases of its risotto, brown rice, entrees, pasta, rice cereal, rice pudding or rice blends. Displays bear the "Purity you can taste" tagline, as well as graphics of the product or people involved in producing it. A Custom Approach "The role of P-O-P definitely differs by channel and by retailer," says Gwen Scherer, director of marketing at Horizon Organic, Boulder, Colo. "Natural food stores are more interested in insuring their own branding, and the look of their stores needs to be reflected in the materials, so we do a lot of collaborative signage and displays."Horizon Organic's in-house design team creates a suite of materials for each product that includes items that can be adapted to the needs of natural food retailers and placed in supermarkets and warehouse club stores. "Our goal is to help educate the consumer on the benefits of organics and why they should buy Horizon Organic," Scherer explains. "We partner with all our retailers to get information into the stores and do product demos. Then we do everything from floor clings and on-the-shelf pieces to coupon boxes and more traditional items like danglers, static-clings and shelf strips."Horizon Organic produces dairy items including yogurt, cheese, sour cream, cottage cheese, cream cheese, eggs, juices, pudding and fruit gels, so most of its materials must be compatible with the dairy case or cooler. Its single-serve milk is packaged in an aseptic container, so it can be merchandised warm. "We have banners and printed cases for the single-serve milk so the retailer can do an endcap or on-the-floor display," says Scherer. The company is now working with retailers in the natural foods and mainstream grocery channels on display programs for its latest product, the first and only organic infant formula on the market. Driving the BrandWhile many of these longstanding brands are well known by die-hard natural and organic consumers, brand awareness among the general population is fairly low. Dairy is among the fastest-growing organic categories, yet MarketResearch.com reports that one in three consumers surveyed is aware of Stonyfield Farm, the leading organic yogurt brand, and 24% recognize the Organic Valley name. To drive brand awareness as it educates shoppers about organic products, Organic Valley creates colorful, heavily branded display materials. The co-op produces and markets 130 food products. As the brand moves into the supermarket channel, touting its brand name is crucial. "Especially in supermarkets where our products are integrated into the regular category merchandising areas, it's really important to gain presence and get our name out there," says Newman. Organic Valley materials such as shelf tags, shelf talkers and danglers all carry the brand's logo along with messages such as "Support Farm Families" and "From California Pastures." "We have to quickly explain what organic is and demonstrate that the products are produced locally by family farms," Newman explains. "We have to justify the [higher] price by explaining all that in a millisecond." The company also partners with retailers including Wegmans and Meijer to display informational brochures at special kiosks or on pockets attached to shelves by clips.Organic Valley also can customize a series of humorous posters explaining organic farming with the retailer's name. Designed for placement above or near the dairy case, the series of three posters features a meditating chicken, hot-tubbing cows and a drug-free hog. They stress the ethical treatment of domesticated farm animals. "The marketplace is getting very competitive, which is why we're focusing on the consumer and the brand with high color graphics and unique pieces that the retailer will look at and say, 'Yes, that will look good,' and the consumer will look at, read and remember," says Newman. Major League PlayersAs the big food manufacturers step into the category, they bring with them the strength of their distribution systems and relationships with mainstream retailers that enable them to quickly gain shelf space. Nonetheless, their products still need to be merchandised in a way that stands out and explains their unique qualities to consumers. "We really want Elements to exist as a separate brand from the Snapple products, but we realize that we're able to get the major display activity for Elements because we have the Snapple name behind us," says Page Bowler, promotions manager for Elements, a brand owned by Snapple Beverage Group of White Plains, N.Y. Launched in 1999, each Elements Juice Drink includes caffeine and other "energizing ingredients" such as ginseng and guarana. Elements is making a lot of noise this summer and fall with an under-the-cap program giving away 10 Honda Elements, coupled with 62 local events coordinated with specific retailers that also involve the car as a prize. With the tagline "Get in Your Element," pole toppers, banners and other collateral feature the brand's new aluminum bottle package and highlight the under-the-cap instant-win program. An 'interactive' cold box decal features a cap design; when consumers 'spin' the cap it reveals the Honda Element and information on the instant-win opportunity. The P-O-P is flexible. The pole topper, for example, converts to a counter card. Custom P-O-P is also available. Frito-Lay created rack display units for the launch of its Natural line of snacks, which is distributed to large-format supermarkets and merchandised in natural and organic product sections, according to company spokesperson Charles Nicolas. Wrap-around units that are shoppable from all sides, as well as endcap racks, are available. They feature the line's signature green color and "Feel Good" tagline. A gondola awning with green and white stripes was created for in-line placement."The Natural line is also usually placed on an endcap display in the organic/natural food section of the supermarket," Nicolas adds. "Well over half of supermarkets have a natural food section, and the Natural line fits in perfectly for prominent placement in most cases."

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