Choose Your Categories Wisely

October 10, 2008
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Trend Watch - Organic Outlook: A new report points to “rumblings of slowdowns” in certain organic categories.




A new report from Bellevue, Wash.-based The Hartman Group Inc. - “The Many Faces of Organic 2008” - says signs point to “rumblings of slowdowns in certain categories within the organic market and a plateauing of overall organic sales.”

Many factors are wielding an influence in the leveling off of organic consumption, the report says, including a “renaissance within the culture of food,” which has increased cultural focus on local, artisan and other formerly fringe food categories; as well as categories close to organic such as fair trade, humane and cage-free. Also of note is the likelihood that “conventional culture now is including organic as one of several symbolic distinctions of equal importance subsumed under the moniker of ‘quality,’” the report adds.

PL Buyer spoke with Laurie Demeritt, president and COO of The Hartman Group, to learn more about what the report’s findings might mean for retailers’ private label programs in the organic arena.

 

PL Buyer: What does the plateauing interest in the organics sector overall mean for retailer’s private label programs here?

 

Demeritt: Just to clarify, we are seeing organic usage leveling off; we’re not seeing it decrease or increase. So basically the numbers we saw in ’08 are exactly the same as ’06 [when The Hartman Group released its last major organic report].

That being said, if we just look at it in aggregate, we find that it doesn’t provide a lot of value for our clients because what’s actually happening is some organic categories still have a lot of consumer interest, a lot of relevancy, a lot of room for growth. And for other categories, consumers are just kind of saying, “I don’t really see the value of organic in those categories, and I’m really not interested anymore.”

If we start talking about things like produce, dairy, meat, products for kids, fresh prepared foods - those all still have a lot of enthusiasm, interest and willingness to pay more among consumers. When you start talking about center-store categories that are packaged, processed, not for kids in most cases - those are categories where consumers are really saying, “I’m not that interested.”

 

PL Buyer: So what should retailers be focusing on in terms of private label organic items?

 

Demeritt: Even when you’re talking about packaged goods, if you’re talking about products for kids, specifically, we know that’s a place where consumers are still willing to spend money. And obviously the beauty of private label there is they feel like they’re getting the best value for their dollars.

We also know that a lot of mainstream consumers are not as familiar with the traditional natural and organic brands. So there is obviously a level of trust built there in terms of how the retailer appeals to them or is relevant to them.

If we’re talking about private label in the perishable categories, or even center store if it’s kid-focused, we still think there is some growth there. What we would tell retailers is in a lot of the categories, there might not be much opportunity anymore. It will still appeal to the core organic consumer, and we actually find core consumers increasing the frequency and use of organics, but that’s only 15 percent of the population. Moreover, they are not people who typically shop in grocery stores as often as they do in other channels.

 

PL Buyer: What can retailers do to increase sales of existing private label organics?

 

Demeritt: We know that the narrative or the story behind the product is important. With private label, we would say if you could profile some of the producers - if there’s any way to tell a story about where the product’s from, what it’s about and also profile attributes about it.

You could talk about having a local ingredient in it or sort of a gourmet ingredient in it. Either layering on the attributes or layering on some emotional connection to how it was grown or processed - we know that helps in showing it as a higher-level or higher-quality product.

We know that the periphery consumers who are just getting into the organic market are really motivated by sales, coupons, end cap displays. Certainly there’s value in positioning it as a price-value.

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