The Failure of Organics: Part 1

In a study conducted by The Shelton Group, a research firm, the failure of the organics movement is exposed.

It seems American consumers have reversed "natural" and "organic" in value. "Natural" is perceived as the indicator of an eco-friendly product and not "organic."

The Great Recession has slowed the adoption of "green" and the high cost of organic foods has put a damper on their initial popularity. Chains like Wal-Mart who had promised to sell a broad range of organic products have quietly dropped many of them to focus instead on their Private Label business. Organic dairy farms are switching to conventional or at least no longer going through the expense, regulations and record-keeping required by the strictly-regulated organic business.

The study confirms what those of us in the food business already know: shoppers remain interested in reducing the environmental impact of their food choices, whether with reusable grocery bags, recyclable materials or less use of greenhouse gas producing vehicles, air conditioning, etc. But the study shows consumers are deeply sceptical about marketing hooey, what's call "greenwashing." The Shelton Group asked 1,006 US consumers how they know if a product is green, and the top response was:

"Don’t know/not sure" (22%)

followed by:

"Says so on the package/label" (20%)

Despite well-defined certification standards, organic products have failed to win consumers' confidence and trust: 31% said "100 percent natural" is the most desirable eco-friendly product label claim, compared to 14% picking "100 percent organic." And in spite of the strict regulations limiting what farmers, processors, and grocers can do and sell under the "organic" banner, shoppers think of the organic category as more unregulated than "natural." The deep, sad irony here is that "natural" is virtually meaningless: there are no standards or government regulations for its use on products. Anything can be labeled "natural" without any evidence or standards to back it up.

And don't think this fact has been lost on the food industry. "Natural" has soared in popularity among marketers, and is the leading label claim on new launches according to research by Mintel. Last year globally 23% of all new products carried the "natural" claim. As if to underscore the message, Horizon, America's largest organic milk brand, is launching a "natural" (not organic) yogurt aimed at toddlers, and single-serve milk targeted to children. The products are produced conventionally, though the company is insisting they are "naturally produced without added growth hormones, artificial colors, flavors or preservatives and no high fructose corn syrup."

Yet unlike with organics, the cows can be fed with foodstuffs treated with pesticides, herbicides and other artificial additives.

Perhaps the organics movement suffered from the same bloated mentality of other bubble economies? I recall conversations with small organic brands about using licensing to leverage their market share. None of them would even consider building any other brand than their own. Now the bubble may have burst, and the run-up to mainstream organic acceptance may have lost its momentum.

Tomorrow I will look at how the organic regulations have undermined consumer trust and what we can do to change that.
Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)