This week's expo at convention center reflects growing demand for natural foodstuffs

One-time niche foods going mainstream

October 06, 2006|By Andrea K. Walker | Andrea K. Walker,Sun reporter

The natural and organic products industry was for years a niche market that conjured up stereotypical images of longhaired hippies eating granola and holding up peace signs.

Few traditional grocery stores carried the products and it was safe to say that most of the country's dinner tables didn't include organic food samplings.

But as the industry holds its annual Natural Products Expo East trade show in Baltimore this week, the organic and natural products that once were found only in health stores and co-ops are taking up more space on major retailers' shelves.

Giants like Wal-Mart Stores Inc. and Target Corp. expanded their offerings recently, taking notice of consumers' growing demand for the products. The increased competition has also helped to lower prices for a grocery segment that typically cost more than traditional foods.

"More of the conventional grocery stores have watched the success of these products," said Matt Schueller, senior vice president of marketing for Enzymatic Therapy, a Wisconsin dietary supplement and herbal medicine retailer.

"This is no longer a fad," Schueller said. "This is a long-term consumer trend. This is really important to everyone's business."

About 20,000 people are expected to attend the expo, which began Wednesday and runs through tomorrow at the Baltimore Convention Center.

Attendance is gearing up to be the largest ever for the two-decade-old event. The expo will include workshops on topics such as natural alternatives to antibiotics, an herb tour at the Cylburn Arboretum and cooking expos. A trade show will introduce people to thousands of natural and organic products from organic smoothies to dietary supplements.

Organic foods come from animals that aren't given antibiotics or growth hormones. Organic vegetables are produced without using conventional pesticides or fertilizers made with synthetic ingredients or sewage sludge.

Natural foods are those that aren't man-made and don't have preservatives added. For example, a natural peanut butter is made only from ground peanuts.

Even the most traditional of retailers are stepping up their "green" offerings. Wal-Mart said this spring that it was doubling its organic food selection. The world's largest retailer also has introduced a line of baby clothes and bedding made from organic materials. It has become the largest single purchaser of 100 percent organic cotton products in the world.

Target introduced a new line from its Archer Farms gourmet and organic brand last week that includes such items as whole-grain pizzas, pastas, dairy products, fruit strips and juices.

Safeway Inc. has its own brand of organic foods. Giant Food started selling a private-label brand of organic foods under the Nature's Promise name two years ago and has expanded from 25 items to more than 200.

Peapod, Giant's online grocery arm, was selling out of Nature's Promise products so quickly it recently partnered with a second organic food company, Wild Oats Markets Inc., to keep up with the demand.

"It's doing so well that we can't get the products in fast enough," said Tony Stallone, vice president of fresh markets at Peapod.

Sales of natural and organic products increased 9.1 percent to $51 billion last year, according to the Natural Foods Merchandiser market overview, an annual survey of natural product sales. U.S. sales of organic foods jumped from $3.6 billion in 1997 to $13.8 billion last year, according to the Nutrition Business Journal and the Organic Trade Association.

The increased interest can be attributed to a variety of factors, including changes in federal regulations and more concern among consumers about health and obesity. Prices for organic and natural products - which typically are higher than their conventional counterparts - also have dropped thanks to increased competition.

The U.S. Department of Agriculture issued new standards for what qualified as organic in 2002 and many believe that has helped propel sales. Before those changes, state governments along with consumer and trade groups set a hodgepodge of standards.

The new regulations gave more validation to natural and organic foods, those in the industry said. Investors and financial institutions began investing in an industry started largely by entrepreneurs, co-ops and mom-and-pop businesses.

Whole Foods Markets Inc. was one of the first to bring organic and natural foods to the average shopper, selling the products in a traditional grocery store format. The Austin, Texas, company, which opened its first store in 1980, has grown to become the 26th-largest U.S. supermarket chain.

"Some of the negative mystique about natural foods has been addressed," said Sarah Kenney, marketing director for the Mid-Atlantic region of Whole Foods Markets. "That they're expensive and don't taste good. That they're basically punishment all around. It has kind of redefined what health food really is."

For traditional grocery stores, an industry with slim profit margins, organic and natural foods offer one of the few areas of growth.

Growth for most products at Peapod has been flat, but sales of organic foods have more than doubled during the past 18 months, Stallone said.

"We saw it as a growing category and we saw what consumer trends were," said Jamie Miller, a spokesman for Giant. "I think a lot of consumers perceive organic and natural foods to be healthier products."

Lykinda Price, an accountant from Baltimore, said she and her family started eating organic foods about two years ago.

"I feel like it's healthier," said Price, 34. "I feel like I have more energy and my skin is clearer when I eat it."

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