Natural vs Organic

8/2/2019 Natural vs Organic

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s~ Natural and Or anic FoodsExecutive SummarySurging i n t e r e s t in natural an d organic foods has transformed a small mar- Tdtese f'oods are a keyket niche into a double-digit growth sector with s a l e s estimated a t $1 2 . 6 component in the majorb i l l i o n i n 2001 . These foods are a : k e Y c. o r n p a n e r 1 t in the major consumer consumer trend knowntrend isslown as whole heath solutions -- d i e t s that proinote health and as whole heath solutionswall-being, prevent disease, help cure i l l n e s s e s and protect the environ- -iets thatpromotement Retailers, suppliers an d producers-oth natural an d mainstream health and well-being,-re meeting t h i s demand with new foods and organic a l t e r - n a t i v e s to prevent disease, helpconventional p roducts . Cure illnesses andThe 2002 implementation of the National Organics Program holds protect the environment the industry to s t r i c t standards in the production an d s a l e of organic foods .Despite the higher entrance hurdles t o t h i s market segment, the increasedconsumer demand and o r g a n i c ' ' s bottom-line appeal a r e convincing morer e t a i l e r s t o add organic . f o o d s t o t h e i r inix . For the same reasons, food sup-p l i e r s and producers are adding o r g a r i i c l i n e extensions or converting t ~ ~

e,organic entirely.

mm 1 . Are natural and organic foods the same?No , although organic foods are natural by d e f i n i t i o n , The term . "natural"Uapplies broadly to foods t h a t are mininaa11y processed and r e e of syntheticpreservatives ; a r t i f i c i a l sweeteners, c o l o r s , f l a v o r s an d other a r t i f i c i a l addi-~i v e s ; grow hormones ; a n t i b i o t i c s ; -hydrogenated o i l s ; s t i a b i l i z e r s ; andemulsifiers . Most foods labeled natural are no t suhjeet to government con-t r o l s beyond he regulations and heath codes that apply to a l l foods . Except i c n s include meat a r i d poultry . The Food Safety and -Inspection Service(FSTS) of the U. S . Department of griculture (USDA) requires these to bef r e e of r t i f i c i a l colors . , f l a v o r s , sweeteners, preservatives and ingredientst h a t do no t occur naturally in the food . Natural meat and poultry must beminimally processed i n a method h a t does no t funciarientally a l t e r the rawproduct . In addition, the l a b e l should explain the us e of the term n a t u r a l ,e . g . , no r t i f i c i a l ingredients .

"0 ganid' r e f e r s no t only t o the food i t s e l f . but also t o how t wasproduced . Foods labeled organic must be c e r t i f i e d t i n d e r die National Or- "Organic refers notonly to the food tselr, ,ganic Program (NOP), which took e f f e c t October 21, 2002 . They must b~ but ls o to how t wasgrown and processed using organic farming methods t h a t recycle resources produced Foods labeledan d promote biod:ve . s i t y --- two k ey elements of environmentally s u s t a i n - organic must 6e certified' able agriculture . Crops must be growzi without using synthetic pesticides, under the Nationalbioengineered genes, petroleum-based f e r t i l i z e r s and sewage sludge-based Organic rogrrtin .f e r t i l i z e r s . Organic livestock must have access to the outdoors and begiven no antibiotics or growth hormaries . Organic foods may ot be r r a d i -ated . Question S of t h i s backgrounder d e t a i l s t h e c e r t i f i c a t i o n process .Food Marketing I n s t i t u t e ( F f V ( I } conducts ' p r a g r a r r i s i n research_ F , d u c a f i i o n , industry r e l a t i o n s and ublic a f f a i r s on be-

. haif of i ts 2,300 ;ierriber corr~panics -- food retailers and whok .~afers-n ihe United States and around the woridd,F i V i i ' s U . S , nnembers operate appecAnatel_/ ?6,000 r e t a i l tooti sto . r e s w i t f ' i a con7r ;nari annual sales vo'urne of $340b i l l i o n-hree-quarters of a i l food r e t a i l siare sa!os in the United States . FIVtls ; - e k a i ' inembership s composed olarge multi-stare chains, r,yionn? fim1s ard independent sulrjerr?arkets . i ts in~crrrationad n~ernbcrsh; p intlLides 400COT: ` ! p a ^ t t i f ~ ' S f i ' O t 7 ) 6 t ` ) countries .

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Natural andOrganicFoods

2 . Why he current consumer interest?The growing demand for foods t h a t are healthful, t a s t y and enviramnen- The growing demandt a l l y friendly are the principal drivers of rganic food sales . Six in 10 U. S . ~ ' o ~ ^ foods P h a t a reshoppers (60 p ercent) believe t h a t organic foods are better for t h e i r health, he a lt hf u l , tasty andaccording to Shopping or Health 2003, a report by F f v d l and Preventior environmentallymagazine Many believe that pure, p e s t i c i d e - f r e e , a l l - n a t u r a l foods c a n friendly are th eserve as preventive medicine against the health risks a nd help cure i l l - principal drivers ofnesses .

Because organic production methods emphasize th e u se of renewable organicfood sates .resources and th e conservation of o i l and water, organic foods also appealt o environmental co ncerns . They a re c s p e c - l a l l y appealing to opponents ofbioengineered foods, which they believe pose r i s k s to health and th e dnvi-ronment .

Also contributing t o th e increased i n t e r e s t axe the federal rules c l a r i -fying which foods can be deemed organic . Before th e NOP was f i n a l i z e d ,th e term organic was defined by disparate s t a t e , regional and private c u , r t i -f i e r standards, generating canfiision making t d i f f i c u l t to assess just how USDArganic a ny one item was The newUSDA rganic s t i c k e r , shown t r i g h t ,i s designed to make t easy fo r consumers t o i d e n t i f y organic foods, a n d - i t sintroduction received widespread media attention. Use of th e sticker i svoluntary ; companies t h a t c h oose not to u se the sticker incorporate th eterm "organic" i n lab els arid other merchandising materials .

F i n a l l y , demand s growing fo r more flavored foods . Althotigh t a s t ei s subjective, many consumers a nd chefs believe t h a t organic productst a s t e better .3 . How arge is the market for nat ur a l and organic foods?U. S . r e t a i l s a l e s of natural and organic foods and beverages reached $20 . 5b i l l i o n in 2003 with organics accounting fo r $9 . 4 b i l l i o n or 46 percent, ac-cording to the 2004 Health and V V e f i n e s s Trends Report by th e NaturalMarketing I n s t i t u t e . The report projects t h a t th e organic segment w i l l crossth e 50 percent milestone over th e nexi f i v e _ y e a r s , i n c r e a s i r i g to $15 b i l l i o nin s a l e s by 2007 . The annual growth r a t e w i l l remain i n dou b le d i g i t s overthat span, according to th e r e p o r t , a lt ho ugh th e r a t e will decl ine from 16percent i n 2003 t o 10 percent . Conventional f o o d, drug and mass mer-chandise r e t a i l e r s ac c o unt mare than three-quarters of natural food s a l e s ,according to the Nat ur a l Foods Merchandiser June 2003 Annual MarkctOverview and SPIN's lVatural I'rou, c t s Marketplace Report, 2003,

Half of U. S . shoppers (50 percent) b o u g h t organic foods an th e l a s t Hal f'of'~J .s shopperssix months, according t o Shopping or Health 2003 . Packaged Facts, a bought orgczyxiefood. s inmarket research f i r m , says t h a t prod u ce accounted fa r 42 percent of U. S . the dust si x montlts,organic food s a l e s , followed by packaged groceries (1 5 percent), dairy ( I 1 -Ml and Preventionpercent), b u l k and frozen foods ( 8 p e r c e p i t each), say-bailed products ( 6 magazine, Shopping forpercent), beverages (5 percent), meat ( 3 percent) and snacks and candy (2 Health 20030percent) .

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Natural and Organic Foods

4 . How idespread are natural and organic foodstoday?They are now available in s e v en out of 10 r e t a i l food s t o r e s , according to Organic products areshoppers surveyed in F I o ~ I I ' s Tre~ac~ i n the United States : Consumer t t i - available in nearlytudes and the Supermarket, 2003 . USDA's Economic Research Service '0,000 rtaturalfoaeds(ER5) eports t h a t organic products are available in nearly 20,000 natural stores nationwide andfoods stares nationwide and in 73 percent of a l l conventional grocery in 73 percent , f'aZlstores . conventional groceryThe mainstreaming of o r g a t l i c food has a t t r a c t e d mainstream brand stores .manufacturers . At he same time, today's organic startups tend t o b e Ynoresophisticated than their predecessors . Many arc circumventing new-business challenges by hiring seasoned industry exe cutives, using main-

_ stream distribution contracts and c r a f t i n g s t r a t e g i c business plans that i n -corporate organic foods .

Farmers are devoting more acreage to organic products . Organiccropland and pasture increased by i 4 percent between 1997 a r i d 2001,bringing the t o t a l to 235 million acres in 48 s t a t e s , according t o ERS .Various studies have shown t h a t o r , - - a n i c farming systems ca n be moreprofitable than chemical-intensive ones . The reasons include higher yieldsi n d r i e r areas or periods, lower c o s t s , higher revenues du e to crap mix andhigher p r o f i t s due t o price premiums.bout 5 percent of e t t u c e , 4 percentof a r r o t s , 3 percent of apples, 2 percent of dry peas and l e n t i l s , 1 percentof a t s , dr y beans, tomatoes, grape s and i t r u s , 0 . 3 percent of soybeans and0 . 2 percent of corn in th e United 5tate . s were grown under c e r t i f i e d organic

, farming syste ms in 2041 .The U. S . t r a i l s other countries in the percentage of cropland used t o

grow organic foods . ERS says the following countries have the highest' percentage of organically managed farmland : Switzerland (9 . 0 percent),Austria ( 8 . 6 percent), I t a l y (C . 8 percent), Sweden 5 . 2 percent), the CzechRepublic ( 3 . 9 percent) and the UK 3 . 3 percent) .5. Are natural and organic foods healthier or safer than con-

ventional foods?Not ecessarily . USDA akes no claims t h a t organic food i s safer or morenutritious than conventionally produced food, and indeed many organicfoods-. g . , milk, b u t t e r , ice cream, meat-re l i k e l y t o match t h e i rconventional counterparts f o r f a t and c a l o r i e s ,

Th er e a r e , howev er, specific health reasons t h a t motivate shoppers t o To reduce at andbuy natural or o r g a n i c , foods . For instance, people with food a l l e r g i e s , cholesterol in their diets,chemical a l l e r g i e s or intolerance to preservatives ca n substitute organic consuiners can replacefoods, personal care products and clothing . To reduce f a t and cholesterol i z I r y a e a t with productst h e i r d i e t s , consumers ca n replace meat ith products made from organic made rain organic soy,soy, wheat or vegetables . wheat or v eg etables .Buyers of organic baby foods may want to avoid the pesticide r e s i -dues in conventional baby foods . A 002 study by the National I n s t i t u t e ofEnvironmental Health Sciences found that children who at organic foodsare exposed o "significantly lower" levels of Organophosphorus (OP) pes-t i c i d e s than those who at conventional foods ("Organophosphorris P e s t i -cide Exposure of Urban and Su burban Pre-School Children With Organic

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NaturalandrganicFoocisand Conventional Diets," Oct, 31, Environrraental Health Perspectivesj .OP esticides were used in the study because they are commonly used onthe crops t h a t ar e processed into baby foods and u i c e s ,

Some organic foods also have significantly higher levels of cancer-fighting antioxidants, according to a study of corn, strawberries andmarionberries, which was published i n Feb 26, 2003, in the Journal qfAg--riculture andFood Chemistiy, a peer-reviewed publication of the Ameri-can Chemical Society ( " B i t t e r or Harsh Phenalics Guard the Plant AgainstThese Pests") .

Some f f i c i a l s say, however, t h a t organic foods may at times ' b e l e s s Certified organic growerssafe than conventional foods . In October 2002, USDA's undersecretary for follow trict guidelinesforfood safety warned t h a t organic foods' lack of reservatives makes them safP and hygienicfoodvulnerable t o bacteria and parasites . The following month the h i s t i t u l t e of production . As it h allFood Technologies issued a release s t a t i n g that o r g a n ' r c s "have the poten- foodprodpqcers, they must

, t i a l for greater pathogen contamination . " Also in 2002, records from thp comply with local, stateU.S . Food and Drug Aciministration an d Health Canada revealed that or- ayzd,f'eeleYal healthganic and l l - n a t u r a l products are eight times more i k e l y t o be recalled for standards safety problems, including bacterial c c ~ n t a t n i t i a t - i o n , and isla'oelin~; . -rganic TradeOrganic products ar e as safe as conventional ones, according t o the Association` Organic Trade Association . "Certified organic growers follow s t r i c t guide-lines for safe and hygienic food production . As with a l l food producers,they must comply with l o c a l , s t a t e an d federal health standards . Pasteuriza-t i o n , selected us e of chlorine and other food safety practices are allowedand followed in organic production .

"Organic growers not only are iaispected by t h i r d party, independentc e r t i f i e r s in order to quality for organic c e r t i f i c a t i o n , but they also f o l l a t i r , ,s t r i c t guidelines for safe and hygienic 1 - a o d production . "6 . What types of consumers buy organic and natural foods?Other than those with the health concerns l i s t e d above, most buyers are not 3 1 o s t buyers are notradically d i f f e r e n t from those of conventional foods . Shopping for tiealih radically differentfrom2003 found they tend t o be younger : 72 percent of generation X and Y those ofconventionalshoppers buy or ar e l i k e l y t o buy organic foods ; along with 59 percent of ' foods They tend to bebaby boomers . Mature shoppers are ! h e l e a s t interested with nearly half younger, better educated( 4 i i percent) opting not buy organic foods . Organic food buyers also tend and have highert o be better educated (61 percent have bad at l e a s t some ollege, compared incomes.with 54 percent for nonorgamic shoppers) and t o have higher incomes (35percent make more than $50,000, compared with 30 percent) . They spendan average o 1 ' $100.90 per week on groceries, compared t o $87 .80 f o rnono:ganic shoppers . Geographically, organic shoppers tend to be raoreprevalent in the Midwest aid West .7 . Why on't more consumers buy organic and natural

foods?Limited availability remains a harrier go some, although t h i s appears t o b - - Limited availabilitydiminishing.rice i s another . ERS c i t e s various studies finding organic remains a barrier to some,price premiums t h a t range from 35-53 percent for baby food, 72 percent although this appears to

. ~ . for frozen broccoli, 94 percent for spring wheat and 177 percent for soy- be diminishing .beans . With more mass production, organic products will increasingly be

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Natural and rganic Foods

priced t o compete with conventional brands,Other barriers include organic foods' shorter shelf l i f e (ftesh foods

and foods without preservatives ;end t o deteriorate quickly) and safetyconcerns . Question 5 of h i s baakgrourider addresses th e safety issue .8 . How does the certification process work?The Organic Foods Production Act of l990 required th e USDA o develop All organicproductionnational standards for organically p roduce d products . Thai resulted i n th e and handling operat ionsNOF ertification process, which took f f e c t October 21, 2002 . Al l organic must be ertified by thirdproduction and handling operations must be c e r t i f i e d by third-party o r - pay-47 organizations thatganizatiovs t h a t have been accredited by he USDA The labeling require- have been a c c r e d i t e d b 3 1nlents are as follows : the ITSDA ." Products labeled "100 percent organic" must contain only organi-

cally produced aterials .Products labeled "organic" must contain a t l e a s t 95 percent organicingredients . Products i n t h i s or th e f i r s t category may but art no t r e -quired to ) display th e USDA r ganic seal shown an page 2 .Products that contain between ?0 a r i d 95 percent organic ingredientsmay us e th e phrase "made it h organic ingredients" on he label andmay i s t up to three ofthe organic ingredients ( e . g . , carrots) or foodgroups e . g . , vegetables) on the principal display area .

Products with l e s s than 70 percent organic ingredients may not usethe term organic other than to identify specific organic ingredients .Producers whose gross agricultural income fro m organic sales i s

$5,000 or l e s s are exempt from ertification . Complete information aboutthe National Organic Program, includ ing regulations and p enalt ; e s , i savailable a t http ://www.ams .usda .gov/'nop/ .9 . How do the certification requirements affect food retailers?Food e t a i l e r s that s e l l or process organic foods ar e not required to under go Food etailers that sellth e c e r t i f i c a t i o n process, although they may choose t o obtain c e r t i f i c a t i o n orpracess organic,fooclsfor marketin g or other business reasons . However, they ar e subject to n t i , - are not required omerous egulatory requirements under th e NOP, including prohibitions on undergo the certification" Knowingly selling or libeling a product as organic unless i t meets p roce ss, although th eyNOP requirements . Violators ar e subject t o penalties of up t o may choose o o btain$10,000 per violation . ( R e t a i l l e r y ar e not subject t o penalties if t h i s certification forpro duct i s l a t e r fo un d t o be mislabeled, unless they knew t was is - marketing or otherlabeled . ) business reasons " Allowing unpzckagad organic products t o contact unpackalged

conventional products .Allowing organic products to c o n t a c t - prohibited substances, e . g , ,residual synthetic fungicides, preservatives or fumigants i np a c ka ging materials or s t o r a g e , containers .

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---Naturalnd Organic FoodsThese and other aspects of th e NOF re spelled ou t in greater d e t a i l i 1 iFMI's summary : The USDA Xataonal Or g a n i c Program Requireme nt s forFood etailers and istribution Centers . This s utmnar i i s available a t th eFlvii Web s i t e (hetp://www. f ' n i i .org/,gr/CauntryJof40rigin .htm/) . Furtherinformation, includ ing frequently a sked questions about the NOP, s a v a i l -able at th e USDAWeb i t e ( h t t p : / / w w - s n - .ams .usda . g o v / n o p , ' ) .' ! 0 . Flaw else a re food retailers responding o the growth oforganic and atural foods?Retailer market ing strategies for natural a n d organic foods include in-store Retai ler marketingadvertising, cooki n g demonstrations a n d h a v i n g knowle d ge ab le employees strategies for naturalon i t e . Retailers offer personalized programs s u c h as invitin9 c u s t a n i e i s to andorganicfbodse-mail diet-related questions t o th e s t a r e ' s resident specialist . Such ervices include h'a-storec a n especially help c o n v e n t i o n a l food r e t a i l e r s whose customers nLay be ad,rertising, cookingapprehensive about trying unfamiliar foods . Also, by advertising on e or demonstrationsandtwo organic items e a c h week, stores s o n d th e message h a t they are serious having knowledgeableabout organ ics . Other s t r a t e g i e s and eatures include : employees on ite .Flexibility-r g a n i c foo d s are a t the mercy of Mother Nature s o

retailers a re willing t o accept organic produce that comes n variouss i z e s , s ha p es or colors . Orga nic shoppers tend to be less c o n c e r n e dabout a p p e a r a n c e as l o n g as th e i i em i s fresh .

" Conventional Counterparts -- Shoppers ar e more l i k e l y to try anorgan ic item if e t a i l e r s carry i t s oonventional counterpart ..Narrow Focus-ather than carrying a few organ ic products ine a c h of several categories, r e t a i l e r s specialize i n targeted categoriess u c h as organ ic salads .Added Value-tores feature v a l ue -a d de d organ ic items such a s Stores feature v a l u e -salad k i t s , p r e - p a c k e d vegetables and packaged salads t o a t t r a c t both added organic itemsc on v en ti on a l and org a n i c s hop p ers . such a s salad i t s , pre-Promotional Pri c es --- By u s i n g promot io ns to price organ ics th e packed e get ab le s andsame as c on v en ti on a l foods, r e t L i l e r s can alleviate perceptions ! h a t packaged a l a d s toorgan ics ar e to o ex p en s i v e and i n d u c e c u s tomers t o t r y or g a n i c s attract bothwhen hey are in s ea s on and available . conventional and

organic shoppers 11 . What's ahead f or n a t u r a l and organic foods?Orga nic will continue to take a growi n g share of the natural-organics sec-tor as demand i s e s and mare c om p a n i e s convert t h e i r products from atu-r a l to organic . Natural and organic foods will a p p ea r in more v e n u e s .Besides c o n v e n t i o n a l r e t a i l e r s developing organ ic p rog ra ms , s t a t e s andmunicipalities, a l on g with conserva tion organizations and others, will c o n -tinue t o foster the development of o c a l farmers markets that s e l l d i r e c t l y toconsumers . Restaurants, college cafet ; : r i a s a r i d other foodservice providerswill also incorporate natural and organic foods i n t o t h e i r menus . Yale Uni-versity and University of California, Berkeley, are among the i n s t i t u t i o n sof igher education that are moving i n . t h i s direction .

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Natural vs Organic

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