Going Organic

Incorporating organic items in the deli can tap into an emerging profit center.

Turkey Sandwich with Kale, Beets and Black Olive Butter

As more people seek to eat cleaner, healthier and more sustainably, the popularity of organic food has continued to skyrocket.

Although the supermarket deli organic segment remains small compared to the conventional deli space, it is growing at a much faster rate, and the pandemic has accelerated that growth in terms of sales.

“Overall, consumers are still trending towards healthier, more natural options, and retailers have allocated more shelf space to these types of items,” says Kyle French, deli brand manager for Applegate Farms, based in Bridgewater Township, NJ.

Both fixed and random weight organic cheeses have continued to gain popularity at delis over the years, with overall volume sales growing by 13% from 2016 to 2020, according to Chicago-based IRI’s March 21, 2021 report, Custom Dairy Farmers of Wisconsin Cheese Database. In that same time frame, fixed weight retail items have consistently represented a majority of sales at 96.7%. Random weight organic cheese sales make up a significantly smaller segment of total sales, accounting for 3.3% of the market share. Though organic options and flavors are expanding, the top three varieties of organic cheeses have consistently been cheddar, string mozzarella and cream cheese since at least 2016.

USDA organics can be difficult for international organic suppliers to obtain.

“Many food suppliers still claim to be organic or [offer products] made with organic raw material, however USDA Certified Organic is the true certifying body,” says Heather Engwall, vice president of marketing at Emmi Roth, based in Fitchburg, WI.

An Evolving Segment

There are a number of organic offerings now available and geared for supermarket delis.

The Applegate Organics product line includes deli meat offerings in organic turkey, ham, chicken and roast beef as well as organic Genoa salami.

“Compared to traditional/conventional products, the shelf life can be shorter, as organic products don’t contain any artificial preservatives,” French says. “However, very tight quality control and anti-microbial processes still make achieving more than three months of shelf life attainable.”

Roth Cheese’s organic product line, Roth Organics, includes its signature Organic Grand Cru Grand Cru; Organic Havarti; Organic Gouda; and Organic Sharp Cheddar.

“Each is made with milk produced by organic dairy farming practices, resulting in a collection of cheeses that are naturally gluten-free, rBST-free, non-GMO and vegetarian friendly,” says Engwall. “While the process of preserving organic milk is different, it results in a very similar product in many ways.”

In addition, the organic lines have the exact same shelf life as the non-organic products.

The George DeLallo Co., Mt. Pleasant, PA, offers a line of packaged organic olives designed for the deli department to include alongside snacking and entertaining items.

“We offer both single varietal olives as well as mixed olive salads,” says Giuliana Pozzuto, DeLallo’s director of marketing.

Elizabeth, NJ-based Atalanta’s portfolio of organic items is varied, such as Mezze Kitchen Falafel; several spreads from Dalmatia, including Rose Hip, Super Berry, Hazelnut, Strawberry, Apricot and Blackberry; Del Destino Organic Quinoa; and several items from De Medici Imports.

“We moved heavily into organic and certified humane products four to five years ago, says Mike Kelly, vice president of national sales and business development for North Country Smokehouse, headquartered in Claremont, NH. “Many more packaged deli product companies have moved into that space.”

He adds that the cost to raise hogs, turkeys, beef, etc. is significantly higher in the organic space due to non GMO feed, which results in more expensive products.

“It’s also more difficult behind the deli counter, since a separate slicer is needed for organic items as these cannot be mixed with commodity or even certified humane products,” Kelly explains. “As a result, there are not many delis slicing organic meat behind the counter.”

Instead, the majority of these deli meats is prepackaged in a dedicated section.

“Yet, consumers are embracing the organic component of meat, especially when it’s local and there is a story about where it comes from and how it’s made,” Kelly says.

North Country Smokehouse offers presliced organic deli meats, including Black Forest and sugar-free ham, bacon, turkey and sausages.

“We’re a one-stop-shop for anything organic,” says North Country Smokehouse CEO Aaron Corbet.

The company’s sugar-free organic meat has been especially popular for those on Keto, Paleo or Whole 30 diets.

“Shelf life isn’t much of an issue as we use HPP (High Pressure Pasteurization) to extend shelf life,” Corbet explains.

Kelly adds that there is no change in shelf life with organic products and commodity items, but rather it’s more about the raw material and the way products are produced.

“I think what you’ve seen over the past few years is the organic category become a consumer expectation versus ‘nice to have’,” says Brandon Gross, vice president of marketing, FOODMatch, based in New York. “Consumers understand what organic means, and they seek it out as a measure of quality.”

He says with FOODMatch items, including Organic Divina olives, antipasti and spreads, shelf life is not an issue.

“The wonderful thing about preserved and pickled ingredients in general is that you optimize the shelf life of a fruit or vegetable that is picked in season and minimally processed to lock in best-in-class taste,” Gross explains.

The Target Audience

According to IRI, organic cheese buyers are often older Millennials and Gen X shoppers, most of whom have a higher income ($70,000-$100,000+) and larger households. These buyers typically have four- to five-person households with children, which often influences purchases of more healthy, organic products. For the most part, these demographics have remained consistent in recent years.

“At Applegate, we target people who believe in making better, healthier choices, whether it’s for the environment, animals, their own health, their families’ health or all of the above,” says French at Applegate Farms. “Our organic products have a price premium compared to conventional items (as do other organic brand offerings) due to the higher cost of sourcing and production, so demographically we trend towards higher income families.”

Kelly at North Country Smokehouse notes the 18-34 age group is very interested in organic products, the story behind them, where the meat comes from and how it’s raised.

“The demographic for these products hasn’t shifted or changed but the number of people in that group has increased significantly,” Kelly says. “They look closely at labels and go to websites, as they want to understand where food comes from.”

These consumers also are influenced by friends and what they’re buying as well as the sustainability aspects.

“The perception is that organic products are heathier, which is motivating consumers to purchase organic products,” says DeLallo’s Pozzuto. “Within the olive category, the organic consumer is still a small subcategory compared to the total consumer group. This is mostly because olives have always been a ‘clean labeled’ product just naturally so by their origin and production method.”

FOODMatch views the organic shopper as a pretty diverse demographic.

“Those who value quality, transparency and nutrition in what they consume are often times organic shoppers,” Gross says. “This can sound broad, but the truth is, organic is not tied to young or old, male or female. It’s more signifying of a lifestyle than a demographic in my view.”

Becoming a Destination

Deli areas could become more of an organic destination by utilizing in-store communication about the products in the coolers.

“This includes incorporating shelf talkers, stands with signs, helpful guides for the customers to understand what they are purchasing,” says Engwall at Emmi Roth. “Another way to show your commitment to organic products is to feature the sources of products in supermarket advertising, social media content and more, signaling to the shopper that carefully-sourced products are available at your store.”

Organic items are best merchandised when they are grouped with the non-organic versions, she says, adding that splitting out organic to be its own set can cause confusion and make them more difficult to find.

Pozzuto at DeLallo recommends merchandising a few organic offerings alongside the other non-organic offerings.

“In the olive category, a couple of the key items in an organic option is all that is necessary,” she says.

Applegate Farms does a fair amount of cross promotion between its different categories.

“It’s possible that someone buys our organic bacon but doesn’t realize that we also have organic deli meat—so offering them some sort of promo incentive not only drives purchase, but it also drives awareness of other organic offerings in our portfolio,” French says.

From a shelving perspective, it can help to have a Natural/Organic section, where everything within that section of the deli category follows roughly the same standards.

“This allows the consumers to easily find these types of products, and the more easily they can find them, the greater the chance that they will begin to understand the differences and what it could mean for their diet and lifestyle,” French says. “When shelves are full of different brands, targeting different types of consumers, with little to no structure, it can create confusion.”

Because these are premium products, it helps to have educated staff members touting the benefits of organic products.

“Differentiating these products from commodity items is key,” says Kelly at North Country Smokehouse. “Supermarkets have done a phenomenal job promoting organics and getting signage out.”

Gross at FOODMatch notes that an organic shopper is likely pretty loyal whenever possible.

“I would always suggest cross merchandising with other complementary organic items,” he says. “Especially now during pandemic-shopping trips, the easier you can curate an experience, the better. Creating an organic bundle of olives, spreads, crackers and charcuterie is a great way to introduce a shopper to the organic highlights of your deli.” DB


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