More than whats missing

In the 30-plus years since Austin, Texas-based natural foods pioneer Whole Foods Market opened its first store, consumer perception of natural and organic food and beverage products has changed quite a bit. Such products are no longer the somewhat quirky obsession of Birkenstock-wearing readers of Mother Earth News, but are instead the go-to items for many health-minded mainstream American shoppers.

\"There are countless studies revealing that consumers are making more label-conscious purchases as of late, and that the everyday consumer is in search of more health-conscious foods,\" says Emily Buckley, sales and marketing manager for La Pasta Inc., Silver Spring, Md. \"I believe the average consumer – [who] may be slightly less-educated on the subject – associates all-natural and organic with eating right.\"

Consumer interest now extends well beyond produce, adds Ritika Bowry, CEO of Ritikas Global Grains, Lexington, Mass.

\"There is greater awareness because of media attention, First Lady Michelle Obamas initiatives and more mainstream grocery retailers including these choices in their store brand offerings,\" she says.

Organic food and beverage items represent a subset of the natural products space and are defined and regulated under the USDAs National Organic Program. Although FDA does not define or regulate the term \"natural\" when it comes to food and beverage products, the agency notes that it \"has not objected to the use of the term if the food does not contain added color, artificial flavors or synthetic substances.\"

Definition of natural evolving
Still, the understood definition of natural, at least in consumers eyes, is evolving from just the absence of these ingredients to much more. The 2013 MamboTrack Annual Natural and Organic Product Survey, conducted online by the Market LOHAS division of Market Dynamics and laz pr, both based in Massachusetts, revealed that todays natural and organic shoppers are moving beyond \"Whats in it?\" to \"Where did it come from?\"

\"Eco-shoppers have moved beyond ingredient lists and are now focused on tracing the source of their food supply from non-GMO to locally/regionally produced and Fair Trade,\" says Karen Herther, co-founder of Market LOHAS and leader of the MamboTrack research. \"Sustainable meat/poultry and seafood [are] gaining interest due to third-party certifications and heightened media coverage.\"

Jeff Schwartz, national sales manager, private label retail for West Liberty, Iowa-based West Liberty Foods, stresses that the absence of artificial preservatives, flavors and colors is still critical to consumers of natural products, but he agrees that todays consumers also value many other attributes. On the packaged lunchmeat side, for example, claims such as \"no antibiotics,\" \"no hormones,\" \"humanely raised,\" \"no MSG,\" \"gluten-free\" and even \"casein-free\" are growing in importance.

Genetically modified organisms (GMOs) also are a growing consumer concern, thanks, in part, to widespread media attention.

\"Though FDA has not ruled whether a food can be labeled natural if it contains GMOs, some consumers object to the ingredients use,\" says Suley Muratoglu, vice president, marketing and product management for Tetra Pak, Vernon Hills, Ill. \"The strong demand in the ingredient market for conventional non-GMO inputs, as reported this past May in The New York Times, also reflects consumers concerns and purchase patterns.\"

He notes that in 2013, Whole Foods Market publically committed to labeling all food and beverages in its stores as to GMO status by 2018.

\"Whatever the science, if consumers are concerned, food and beverage manufacturers should take note,\" Muratoglu adds.

All-natural or organic?
So which products appeal more to todays consumers: organic or all-natural?

For her part, Buckley believes many consumers prefer to go organic instead of just all-natural.

And organic items continue to grow at a 10 to 14 percent annual rate, notes Michael Lines, vice president, sales and marketing for Markham, Ontario-based Shandiz Natural Foods.

\"People are finally recognizing that all-natural is very a subjective and vague term that is not monitored by the FDA,\" Buckley says. \"However, organic is very expensive, and I am saying this from a food manufacturing standpoint.\"

Higher manufacturing costs translate into higher prices at the shelf, so many other consumers are content with choosing all-natural instead, she admits.

When it comes down to it, consumers really just want to eat more healthfully, Schwartz says, noting that Cincinnati-based Kroger doesnt call out the word \"natural\" anywhere on its natural lunchmeat package.

\"To me, natural has been watered down so much that just simply having a natural callout is not what it used to be,\" he says.

Think beyond the store perimeter
Today, retailers have an opportunity to expand – or continue to expand – store brand natural and organic product development from traditional areas such as produce, dairy and meat and poultry to center store.

\"There will continue to be more opportunity to consider center store categories and to educate consumers that they can find natural and organic items in cans and boxes, not just in the fresh departments,\" Bowry explains. \"In the grains category, consumers are trying new grains and combinations that add nutrition and flavor to the tried-and-true rice products. Quinoa continues to grow in popularity, and chia seeds have emerged as one of the hottest new ingredients,\" she says, noting that her company offers several options tied to both of these ingredients.

Mike Hackbarth, vice president, private label with the Fremont Co., Fremont, Ohio, says an all-natural claim can add value to center store staples such as ketchup, too. Stevia is one natural ingredient thats in high demand here. He notes that Fremont offers for private labeling an all-natural ketchup sweetened with stevia that has 25 percent less sugar and 25 percent fewer calories than \"regular\" ketchup.

Even on the fresh side, retailers have opportunities to improve labels for traditional products that could improve product perception or result in an all-natural claim. For example, La Pasta has begun changing its labels to add the word \"fresh\" in front of the 90 percent of ingredients the company actually sources fresh, Buckley explains.

And Schwartz is a fan of high-pressure pasteurization, which kills microorganisms on products ranging from packaged lunchmeat to refrigerated guacamole via high pressure, as a means to attain a cleaner label.

\"It fits in well with the all-natural space,\" he says.

Speak the truth
Critical to success within the natural and organic space is a message that connects with shoppers. And retailers need to ensure own-brand messaging here is honest and informative.

\"Be very transparent in your ingredients,\" Lines advises. \"Yes, natural product claims are not regulated, but consumers knowledge and desire to understand each ingredient is increasing.\"

Buckley points to Whole Foods Markets approach to all-natural as a great model. The retailer put together a list of ingredients that are not permitted in its products and shares that list with its shoppers, creating a sense of trust.

Kroger is another retailer that demonstrates transparency on the own-brand natural and organic front. Its Simple Truth and Simple Truth Organic products are free from 101 artificial preservatives and ingredients – all of which are listed on Krogers www.simpletruth.com website.

And any claims should be clearly visible on the front of the packaging, Schwartz adds, noting that the type of consumers who will be browsing natural and organic products is actually going to spend some time reading the package.

He also believes retailers should develop an \"umbrella brand\" for their natural and organic items, like Kroger did with its Simple Truth and Simple Truth Organic labels, and Pleasanton, Calif.-based Safeway did with its Open Nature and O Organics labels. By going with that type of niche brand on the packaging, retailers make it easier for consumers to differentiate the products from traditional items under a store brand.

Speaking of packaging, retailers will want to ensure it meshes with the eco-minded values of natural and organic shoppers. Buckley notes that many existing natural and organic foods and beverages already boast environmentally friendly packaging.

\"The packaging is a very important part of the message,\" Schwartz explains. \"You dont want to put a natural or organic item in something that screams plastic.\"

On the packaged lunchmeat side, he is a big advocate of the cardboard carton, which, as a natural fiber, connects with consumers. Plus, its recyclable and can be made from post-consumer recycled material.

No matter how pretty or informative the package is, retailers also will want to invest in consumer education and marketing that go beyond it as well.

\"Trust and reputation are important factors for these consumers, Bowry explains. \"Social media has been an important component in educating this shopper. Standard couponing, sampling and in-store demonstrations continue to be effective\" on the marketing side.