Nearly 1,000 devotees of organic farming spent two days in Monterey, CA, in mid-December connecting with each other, educating themselves and learning about new advancements from more than 80 exhibitors. The overarching message was that the production of organic fruits and vegetables is continuing its two-decades long growth spurt.
Keynote speaker John Foraker, CEO of the Once Upon a Farm food manufacturer, is very bullish on the future of organics.
The second annual Organic Grower Summit, which was held at the Monterey Conference Center on Dec. 12 and 13, began its official events with the 2018 OGS CannaBus Tour. As a leading agricultural-producing region, it is no surprise that Monterey County is home to many new cannabis operations now that the production of the plant is legal in California. And since cannabis is not legal on a national level, there are only a few conventional pesticides that can be legally applied to the crop. Moving forward, it is suspected that organic cannabis will dominate the legal marketplace.
As the three-hour tour was under way for a finite number of attendees, a technical grower educational session was held dealing with soil health in the organic environment, while another session discussed the financial elements surrounding organic fruit and vegetable production.
Day two included a plethora of educational sessions, as well as two keynote addresses and a continuation of the trade show, which began a day earlier. Though there has been recent talk that retail organic sales, including those in the produce department, are plateauing, that was not the message delivered at this conference. In fact, the picture painted was of a thriving organic fruit and vegetable industry that is well beyond the niche category and moving into mainstream in every aspect.
Keynote speaker John Foraker, current co-founder and chief executive officer of Once Upon a Farm, an organic food company specializing in the under 12 sector, maintains that the organic industry is well into its development. “We are not at the beginning (of the movement),” he said. “We are probably in the third inning.”
Foraker was long the leader of the Annie’s food label and was responsible for turning that company into a well-known natural and organic food label. Under his tutelage, Annie’s introduced a “totally natural” macaroni and cheese product in 1989 and went organic a decade later. Record growth accompanied the firm along the way. Foraker took it from a $5 million firm to $125 million in sales and then took it public. It was then sold to General Mills for $820 million and today it’s a mainstream brand available on virtually every store shelf in America.
He is planning to do the same thing with Once Upon a Farm, which started with fresh, cold-pressed organic baby food and has added to the line with products being developed for young kids.
Foraker called the organic sector a “value driven industry” and noted that the organic food industry had $5 billion in sales at the beginning of this century and had grown 10-fold to $49.4 billion by 2017. “That’s a 14 percent compounded growth rate,” he said.
What makes Foraker so bullish about the future growth of organics is the inevitable aging of millennials, one of the strongest drivers of the category. The longtime food executive noted that only 25 percent of millennials are now parents but that number will triple over the next 10-15 years. Parents buying for their children has long been a demographic that over-indexes with organic sales. Foraker said a “big wave” of sales is coming. While organic food now represents about 5 percent of the marketplace, the 55-year-old predicted “it will be 20 percent in my lifetime.”
To reach that elevated plateau, he noted that there needs to be a “dramatic increase in supplies.”
He believes “fresh and organic (products) are coming to the center store” and showed a slide of a small refrigerated case that attaches to a typical center store aisle. Once Upon a Farm is utilizing technology to create fresh baby food to supplement shelf-stable products and Foraker believes that process will be successful with other items such as apple sauce. The company is currently offering a fresh apple sauce, which is nothing more than pureed apples, to toddlers. The company is launching these products in the dairy department, simply because the refrigeration is already there, but he is certain refrigerated items will proliferate throughout the supermarket, which is great news for the fresh produce industry.
Another speaker also opined on the value of organics but from a different perspective. Dan Oxenham of Piper Jaffray noted that from an investment standpoint organics are “on trend” and represent the changing shopping habits of millennials. While he didn’t call out firms to invest in, he did say Wall Street is taking notice and there is still a lot of room for growth in the sector. He did say that mergers and acquisitions in the food space are expected to accelerate, and noted the recent purchase of Yucatan Foods by Landec, the owner of Apio Inc. in Guadalupe, CA. He also said that there are some fresh produce brands that have gone public -- such as Calavo Growers -- and their stock prices have done well.
During one of the breakout educational sessions, Brian Lechner of Nielsen noted that retail scan data shows that organic produce sales continue to grow. He said in fresh fruits and vegetables, organics represent about 14 percent of dollar sales and growth in organics is driving growth in the produce category. He also noted that there is organic growth in center store with frozen fruit and baby food. In fact, Lechner said 26 percent of all baby food is organic.
During that same session, Laura Batcha of the Organic Trade Association reported on consumer research commissioned by OTA that also paints a bright picture for organic produce. In a nutshell, because of variety of factors -- including politics and weather calamities -- consumers have a high level of anxiety. History shows that this type of behavior leads to a heightened distrust of institutions and corporations and increased awareness of “safe harbors.” Consumers are looking for what they do trust and the organic value proposition plays well to this mindset. She noted that not only is organics on-trend in the current environment, but on the macro level, it also appears that the trend is here to stay. But she did note that marketers can’t rely on the organic seal alone to sell their products and should tout the other positive characteristics often associated with organics by consumers, including locally grown, transparent, seasonal and ethical.
