What Do You Mean by Organic?

Organic food is food, either fresh or processed, produced from crops grown without the use of artificial aids, such as fertilizers, pesticides, or antibiotics, according to standards set forth by the USDA (and similar regulatory agencies in other countries). The roughly $12 billion dollar industry, accounting for approximately 2.5% of the US market, is steadily being overtaken by larger food corporations and distributors. "General Mills markets the Cascadian Farms and Muir Glen brands," writes Melanie Warner in a recent New York Times article. "Kraft owns Back to Nature and Boca Foods, which makes soy burgers. Within the last few years, Dean Foods, the dairy giant, has acquired Horizon Organic and White Wave, maker of Silk organic soymilk. Groupe Danone, the French dairy company, owns Stonyfield Farm." And while these organic firms undoubtedly benefit from larger advertising budgets, superior financial controls, and more advanced distribution methods afforded by their respective parent firms, these organic firms, and other independent firms, which together comprise the organic food industry, are grappling with some potentially ugly identity issues.

At the heart lies a brand promise that is rapidly dissipating in the wake of a maturing industry. Consumers, consumer advocates, critics, trade org. reps, industry firms, and non-industry firms are all failing to come up with a consensus of what organic actually is. Given the short supply of organic food (given the formal government requirements needed to be met to use the label), some fresh food producers are mimicking non-organic production methods (e.g. limiting grazing land for cows) in order to meet the high demand. Others-the processed food producers-are importing organic ingredients of questionable merit from countries with lesser or minimal quality control. Beyond the food, issue is the brand promise: the ethos of the industry is that food producers take great care to synchronize their efforts with the ecosystem and good ethics. Tactics such as reducing grazing land are anathema to many organic food consumers.

As a result, consumers in search of truly organic food are forced to reconsider the definition of organic. The murky definition leads many to question the industry's brand promise-not just consumers, but also critics and competitors. They question the validity of the promise given the new production tactics, as not only is the industry's ethos being challenged, but also as the health benefits the food proffers (the core value of the product) are being called into question by health experts. Many of the most vocal consumer critics deeply resent the rapidly expanded product for organic products-or the mainstreaming of the industry.

Thusly the problem firms face is twofold: how to manage the organic brand and continue to increase supply. They could work to import more organic ingredients and crops, though the costs would reduce the margins-and there is still the quality control issue (a ticking time bomb which could irreparably damage the rather fragmented industry), and the muddled marketing message. They could reposition organic food as a luxury item and further hike up the price, but they risk further alienation of their most invested consumers. So perhaps the best suggestion is that firms work to develop their own organic operations in developing countries with large concentrations of rural poor

Given the economic status of these countries, production costs will probably be quite low. Firms could work with government economic officials and NGOs interested in sustainable economic development. Organic firms could create organic farms in countries, like China, for example, and higher large numbers of rural poor. The tax revenue the firm and the newly employed workers would bring would appeal to government officials who might offer the firms incentive to build their operations in those countries, such as negotiating discounts on the necessary land. Alternatively, they could make micro loans and fund a group of future (exclusive) suppliers. Either way, this would allow the industry to ensure quality control, as well as allow them to penetrate new markets and continue to grow. Further, these farms, established under the guidance of experienced organic farmers/producers, would be able to spread the ethos and good productions practices of the industry to these countries, and, hopefully, regain some consumer trust.

Similar products and brands are just as often differentiated by the brand promise as by their product attributes. The core value of organic food is health, yet the associated brand promise differs radically from that, say, of protein powder. Regardless of the promise, the key to success is the simplicity of the brand promise. In trying to solve the seemingly larger supply issue, the industry risks losing share in the overall food market. Whatever the solution, the industry and its producers must ensure that consumers understand what exactly organic means in order to maximize sales, and maintain market share in the overall food market.

Sources

Melanie Warner, What Is Organic? Powerful Players Want a Say, The New York Times