supermarket
Analysis
Going Organic - The tricks of the Trade
12/12/2007
There is little doubt that the business of green is in a pivotal stage. In the 1960s it was all about small local independent farmers but with time it has become big business - to the point where some are getting sneaky just to get a certified organic designation. It begins with the corruption of certification agencies.
Case in point, Quality Assurance International (QAI) certified Bayliss Ranch body care products as 70% organic based on the "organic" water that constituted the bulk of the products.
Fortunately, there are checks and balances. In the case of Bayliss Ranch, such "watering down" of the word "organic" was harmful enough to the designation to lead the Organic Trade Association (OCA), a group claiming to represent over 500,000 consumers, to file a complaint to the USDA's National Organic Program (NOP).
According to consumer groups on the web it was big business power that also got Anheuser Busch the organic label on its new Wild Hop Lager this year despite using hops grown with chemical fertilizers and sprayed with pesticides. It was billed as "the perfect organic experience," states the Seattle Times.
To be fare to AB, the product was a part of its overall "Long Neck" acquisition strategy, a reaction to a recent 5% loss of beer share in the alcohol industry. AB is up from 20 brands in 1997 to 80 brands in 2007 as a result and now owns Green Valley Brewing along with other niche brewers. It's an attempt to capture the microbrewery loving consumer.
SMGN agrees with Chris Anderson that AB's acquisitions will reflect a continuing trend known as "The Long Tail" theory.
"The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail." Thus states Chris Anderson, editor of Wired Magazine and author of The Long Tail, an article which first became a book and then a blog, and will likely become vernacular.
"As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers." SMGN sees AB's Long Neck acquisitions fitting into Anderson's Long Tail theory quite nicely. The organic beer acquisition is just one part of variety consolidation made possible in an information hungry world combining itself with a distribution enabled economy.
For its own part, organic beer, though still a small portion of total beer sales, has been growing even faster than overall organic-food sales. In 2003 it was $9 million, $19 million by 2005 and up above $26 million in 2006. Estimates are significantly higher for the close of 2007. The pattern is one of acceleration.
New USDA rules proposed in June 2007 allow food manufacturers to use up to 38 listed non-organic ingredients on certified organic labeled products "where organic ingredients are not commercially available."
Where organic ingredients are commercially available food makers have been able to take advantage of the fact that the USDA doesn't enforce the rule directly. Instead, it depends on its certifying agents. There are 96 licensed organizations in the United States and overseas that decide what it means for a product to be unavailable in organic form. Unfortunately for consumers, and perplexing even to certifying organizations, there are no standardized guidelines for enforcing this rule.
There are some great resources for bringing your food products up to organic standards and navigating the regulatory and bureaucratic process, which like it or not, has become an essential ingredient for your business. Over the next several weeks SMGN will be interviewing and featuring businesses that have been transitioning from conventional to organic, or simply seeking organic certification to add to their label and prospective market share.
Jeff Overbeck , Freelance Reporter