Growing Organic Sales

Gone are the days when only a handful of Birkenstock-clad customers sought out organic foods. Today, there are some 89 million people in the U.S. who buy organic foods all the time, sometimes or occasionally, according to the Good Organic Retail Practices 2022 Guide, by the Washington, D.C.-headquartered Organic Trade Association (OTA). These shoppers tend to be young, with nearly half (45%) under age 40 as well as from higher income households, with college degrees and children living at home. 

Similarly, long gone are the days when organic foods were only found in natural food supermarkets or relegated to a couple of SKUs in the grocery’s health food aisle. Nowadays, major supermarket chains such as Walmart, Target, Costco, Kroger and Safeway have all added organic foods to the offerings, thus making these items more available and spurring greater purchases, based on the January 2022-released report, United State Organic Food Market Retains Robust Growth Amid the Pandemic: Projected to Grow at a CAGR of 8.7% during 2021-2027, by New Delhi, India-headquartered BlueWeave Consulting. 

“We continue to see an uptick in organic deli sales, as consumers returned to offices, schools and public life in a general sense. Many stores’ deli sections rely on the foot traffic of office workers. Specifically, the deli category grew by 4.5% in 2021 – about double the rate of the overall organic food market (2.2%),” says Angela Jagiello, the OTA’s director of education and insights. 

WHERE TO START, WHAT TO STOCK

Foods that are U.S. Department of Agriculture (USDA) certified organic are grown and processed according to specific federal guidelines. These products can be labeled with the USDA Organic Seal, to let customers know they are indeed and legally organic.

Organic sales surpassed $63 billion in 2021 for the first time, with food sales representing over 90% of this, or $57.5 billion, according to the OTA’s U.S. Organic Industry Survey 2022.

Small, but with the potential to grow, sales of organic deli products represent around 1% of total deli sales, according to Nielsen total U.S. data for the 52 weeks ending Aug. 28, 2022, as provided by New York-headquartered Nielsen. 

However, the top five organic deli categories and their percent of total organic deli sales are: Dip/Spreads (26.5%; up 18.5%), Lunchmeat (19%; flat at +1%), Cheese (17.8%; down 6.5%), Prepared Foods (16.5%; flat at -0.7%) and Cooked Meat (12.3%; up 25%). 

In comparison, these categories rank differently when looking at total deli sales, both conventional and organic products overall. For example, Prepared Foods are the leader (36.5%; up 19.9%), followed by Lunchmeat (17.1%; up 7.9%), Cooked Meat (14%; up 10.4%); Cheese (13.8%; up 3.1%); and Dips/Spreads (7%; up 6.9%).

DIPS/SPREADS: The most popular organic hommus products for Cedar’s Mediterranean Foods, Inc., are traditional flavors such as Original, Roasted Red Pepper and Garlic, says Aimee Tsakirellis, executive vice president of marketing for the Ward Hill, MA-headquartered company. “We are seeing a rise in demand for trending new flavors like Everything Hommus and Lemon Hommus.”

As consumers become more educated about the food they are consuming, they will continue to drive demand for organic and better option foods, Tsakirellis adds. “The only downfall to this is price. We see so many prices inflated in our country today. By offering value-added sizes of organic flavors, brands can help maintain their organic customers.”

LUNCHMEAT: Organic turkey lunch meat items are best-sellers for Applegate Farms LLC. “Turkey is a staple in the lunch meat category and carries a health halo of sorts due to its high protein to calorie/fat ratio and the fact that it’s so versatile as a sandwich meat. Combine that with an organic certification, and you have what is overall one of the best meat options you can consume, and consumers recognize that, especially when it comes to packing lunches for their children,” says Kyle French, deli brand manager for the Bridgewater Township, NJ-headquartered company. 

The company’s turkey lunchmeat products include 6-ounce pre-sliced packages of organic Oven Roasted, Herb and Smoked turkey breast. 

“Turkey is number one,” agrees Elias Demakes, vice president of sales and marketing for Demakes Enterprises, Inc., in Lynn, MA, which sells under its Waterhills Naturals & Organics brand and makes private-label organic deli meats for large retailers such as Kroger, Aldi and Wakefern. “We sell twice as much turkey as ham, twice as much ham as roast beef, and roast beef and chicken are about equal. We can sell nationwide, with a 100-day shelf life on these lunchmeats by using HPP (high-pressure processing).”

Demakes adds, “Ninety-nine percent of our organic lunchmeat is sold in 7-ounce packaging. We’ve recently been asked about organic meats for the bulk deli, but for that, a retailer must do enough volume to warrant a dedicated slicer so that the organic product doesn’t co-mingle with the conventional.”

Applegate has recently introduced its Organic Genoa Salami Bites. This is the company’s traditional Organic Genoa Salami but sliced into bite-sized pieces and in a resealable bag, according to French. “We wanted to marry up a few different things—the demand for organic, the desire for high protein, the continued trend towards snacking and convenience, and, most importantly, delicious, craveable food. So far, this item has been well-received.”

CHEESE: Organic cheese category volume sales are down, whereas conventional cheeses continue to perform well, likely signaling a slowdown of the high growth the organic cheese category has seen over the past few years, says Brittany Fladeboe, branded product manager for Roth Cheese in Fitchburg, WI. That said, “Our Organic cheeses have seen positive trends, with an over 22% increase in volume sales compared to two years ago. Most retailers carrying our organic cheeses have seen volume increases, some as high as 144% over the previous two years.”

Organic Gouda is Roth’s top seller, with a 24.2% uptick in volume compared to two years ago. Organic Sharp Cheddar volume is also up 31.1% as is Roth’s organic original Havarti, with a growth of 12.2% compared to 2020, according to IRI data as shared by the company.

PREPARED FOODS: There’s long been a high demand for organic selections in the prepared foods department at New Leaf Community Markets, a five-store chain based in Santa Cruz, CA. “One of our signature housemade dishes available year-round is the Coastal Kale Salad with organic ingredients including fresh kale, red onions and toasted seed mix in a housemade lemon amino dressing,” says Kathleen Krantz, foodservice and bakery director.

Krantz adds, “Our salad bars are stocked with organic ingredients that are prepped in our kitchens throughout the day, with fresh pre-packed salads, sides and entrees available in our case for a meal on the go. We also offer fresh-made soups—both hot for enjoying right away or pre-packed cold for heating up after a shopping trip, and our made-to-order sandwich program has always offered all-natural deli meats, rBST-free cheeses and organic produce.”

With many different ingredients, being 100% organic becomes much more challenging in prepared foods, according to Anne-Marie Roerink, principal at 210 Analytics, LLC, in San Antonio, TX. “That said, I have noticed that companies that are doing well in claims, including organic, in produce, and meat, tend to carry these claims forward into their deli operations, as well. I do believe organic can be a differentiator for deli departments, in particular, prepared foods, simply because of the alignment between the organic shopper and the deli prepared food super user. Just like in the rest of the store, success is about being proportionate to demand.”

One way to lessen the challenge for the deli in sourcing every ingredient in organic for prepared foods is to sell items like manufacturer-made salads and soups.

“Our best-selling organic deli product is our Simply Fresh Organic Caesar Salad with Grilled Chicken. It’s a classic recipe with a twist that offers two portions of premium antibiotic-free grilled white-meat chicken with organic romaine lettuce, aged Parmesan cheese, tomatoes and cheese garlic croutons. It’s finished with our house-made organic creamy garlic Caesar dressing,” says Tal Shoshan, CEO of FiveStar Gourmet, headquartered in Ontario, CA. “We are consistently formulating culinary innovations specifically for the deli/prepared section. A great example is our Simply Fresh Organic Blueberry, Walnut & Feta Salad with Grilled Chicken. The punch of tartness from the dried blueberries and feta’s creaminess combined with an organic mango vinaigrette topped with crunchy walnuts makes this delicious salad one to enjoy on a crisp fall day.”

Familiar favorite soups like Organic Chicken Noodle and Organic Tomato Bisque as well as contemporary flavors such as Organic Ancient Grain Minestrone, Organic Coconut Lentil and Organic Kale and Sweet Potato are part of a 10-item line of organic soups from Blount Foods.  

“We suggest as a rule of thumb offering 20% of soups as organic. For example, if you have 10 soups out, offer two that are organic. These not only tick the boxes for the organic shopper but also those looking for something healthier, vegetarian and low fat,” says Bob Sewall, executive vice president of sales and marketing for the Fall River, MA-based soup manufacturer.

OTHER ITEMS: Organic selections, such as our Divina-brand olives, peppers and more, continue to drive much of the pre-packaged deli assortment, says Brandon Gross, vice president of marketing, specialty and natural foods for FoodMatch, Inc. in New York. 

Company products include jarred Kalamata, Castelvetrano, Green and Greek Mix olives and roasted red peppers.

“For stores that request organic, we have a line of packaged olive items that are certified organic and ready for sale in the deli as an additional offering,” says Giuliana Pozzuto, marketing director for George DeLallo Co., in Mt. Pleasant, PA. This includes Kalamata, Greek Green and Greek medley olives in plastic containers.

TRIED & TRUE SELLING TACTICS

Organic foods are often more expensive than their conventional counterparts. Reasons include economy of scale, production costs, lower yields and differences in post-harvest handling and distribution. This ‘organic premium’ is narrowing due to grower efficiencies and growing consumer demand, but in tough economic times, this extra cost may present challenges.

“In the past, economic downturns have caused shoppers to be more thoughtful in their grocery purchases. That said, values-driven shoppers, including those who choose organic, tend to stay with organic despite constrained budgets,” says OTA’s Jagiello.

Display, cross merchandising and promotional tactics can help maintain and grow organic sales in the deli.

As for the display, the discussion about integrating organics next to similar conventional counterpart products versus having separate conventional and organic sets is ongoing, according to 210 Analytics’ Roerink. “The camp in favor of integrating sets believes that the greater visibility to the organic choice will help grow penetration and trial. The camp that believes they should be separated believes that organic shoppers do not want their offering interwoven with conventional items for potential contamination. Realistically, there is no right or wrong answer to this and most retailers follow the strategy that is set by the produce department or perhaps center store. If retailers choose to integrate there, they tend to integrate into the deli, as well. Given that the organic set for deli tends to be very narrow, even in organic specialty stores, for most stores this is somewhat of a non-issue.”

Either way, the OTA’s Good Organic Retail Practices 2022 Guide suggests that signage, or clearly pointing out organic products on the shelf or a display, is a best practice.

Cross merchandising is effective to boost organic basket size. “Our Organic Coastal Kale Salad pairs great with our house-roasted natural and organic rotisserie chickens for a quick and easy weeknight meal,” says New Leaf Community Markets’ Krantz.

Likewise, adds FiveStar Gourmet Foods’ Shoshan, “Our Simply Fresh Organic Salads are often best merchandised with other complementary items such as beverages or desserts to provide a complete meal.”

As for promotion, Cedar’s Mediterranean Foods run a quarterly LTO (limited time offer) program at Whole Foods Market, says Tsakirellis. “Every quarter we rotate in a new flavor. This past year we have had Topped Organic Sicilian Lemon Hommus, Topped Organic Grecian Golden Hour Hommus and currently have Organic Pumpkin Hommus. All these flavors have had a great response by consumers.”

Lastly, adds Roth Cheese’s Fladeboe, “We’re purchasing keywords for organic cheese products on grocery e-commerce platforms and advertising our products to drive purchase.”