WHEN IT COMES to giving consumers what they want, offering a product line sporting the "USDA Organic" label is a pretty good start.
In 2007, 7.3% of Americans purchased organic-labeled products, up from 6.5% in 2006 and 2.7% in 2001, according to Mediamark Research & Intelligence, a consumer research firm in New York. Much of this growth is tied to an increased awareness of the health benefits of eating organic products. Wider availability of organic items in "regular" grocery stores is also helping to boost sales.
"There's no question that there is a cadre of individuals that care about electing healthier food options," says William Baker, a marketing professor at San Diego State University. "People are simply more concerned about their health," he says.
While an increasingly health-conscious public will likely continue to be a bright spot for health food purveyors, the high cost of organic products may be a hindrance. For example, organic produce, crops and animal products that don't contain pesticides, artificial fertilizers, antibiotics and growth hormones can cost double the price of nonorganic raw materials. Tack on a slowing economy and reluctance among some consumers to purchase more expensive goods, and owners of organic businesses may face lower returns.
At this point, figure out which type of certification is right for your business. Goods that use the "100 percent organic" label, for example, can only contain organically produced ingredients, while "organic" products may contain up to 5% of nonorganic materials. Processed foods pulling at least 70% of its materials from organic sources can use the "made with organic ingredients" label.
Really small manufactures or producers that sell less than $5,000 of organic products a year are exempt from the certification process. While such businesses can't use the "USDA Organic" seal, they can label their products as "Organic" as long as they follow the certification standards. Additionally, retail operations including grocery stores and restaurants don't have to be certified.
Getting Certified
For Stephen Moore, the founder of Helen's Foods, a frozen foods manufacturer in Irvine, Calif., the decision to go organic was clear long before he started producing products for the U.S. market in 2007. His reasoning: It's easier and cheaper to start up a facility using the USDA's organic standards rather than doing so down the road. Plus, he says, the demand is there.
In addition to consumers, Moore says, "store buyers from retail chains are looking for the organic label." He adds that having the organic label is often requisite for getting placed in certain stores. "Unless you're Kashi, it's very difficult to get on store shelves," says Moore.
For businesses like Helen's Foods, the certification process starts with an organic products manufacturing plan. It must lay out, among other things, what type of production methods you'll be using and what types of substances will be involved. For instance, only certain cleaning chemicals, which leave as little residue as possible on processing surfaces, may be used.
Additionally, if your facility manufactures nonorganic products, in the plan you'll need to include how you'll avoid commingling those products with those that are organic. Moore says that the process was, for him, a matter of shelving. "You always have to store organic ingredients above nonorganic stuff to avoid cross contamination," he says.
The plan should also incorporate procedures for keeping track of organic ingredients. Certification auditors, who are dispatched to organic processing facilities annually, will be checking to see that the organic raw materials you've purchased match up with the materials you've used. For example, says Moore, "they want to know how many soy beans we've gotten in and how many we've used in production." Then, he says, they add them up. Any sizable mismatches can result in the removal of those products from store shelves as well as hefty fines.
-- this post is updated in 2008-7-1 11:02:52. |