| Imagine if you bought a cup of yoghurt, ate its | | | | organic is a good thing. Private labels have entered |
| contents and then ate the cup. That's the new | | | | into the space in a big way. Retail chains like |
| innovation frontier in the trend towards healthier | | | | Safeway and Whole foods have focussed on |
| alternatives that are good for the environment. | | | | organic as a competitive differentiator. The |
| An organic food company in California is | | | | category is now reaching consumers who shop on |
| researching this product. Another example is edible | | | | price. Secondly, Private Label is making organic |
| films. Researchers at the University of Arkansas, | | | | more broadly acceptable, penetrating a deeper |
| Division of Agriculture have invented and patented | | | | layer in society. Thirdly, it will create supply. |
| several protein based films that can serve as | | | | Farmers and suppliers will realise it's not just a fad |
| carriers for certain organic acids which inhibit the | | | | and is here to stay. |
| growth of the three major foodborne bacteria: | | | | Why are people turning to organic foods? There |
| Listeria moncytogense, Salmonella, and E. coli. In | | | | are three primary drivers of organic. First, it's |
| addition, the film can be a vehicle for antioxidants, | | | | better food. Canadians don't tend to pay the real |
| nutraceuticals, flavors, colors and other functional | | | | cost of food. As a percentage of income, |
| ingredients. Anticipated applications include fruits | | | | Canadians pay far less than many other western |
| and vegetables, meats, seafood, frozen snacks | | | | countries. So the barrier to entry is relatively |
| and pizza, cereals, nuts and more. The category | | | | lower. Second, having children makes families take |
| may be at the cutting edge of innovative trends | | | | a close look at the foods they buy. Third, having |
| today. | | | | a health event can dramatically change a |
| However, there are many challenges. Prices of | | | | consumer's perception and choice of foods. |
| organic food tend to be higher in the supermarket | | | | Cancer rates have grown due to poor eating |
| channel. The problem has more to do with supply | | | | habits. An aging population could potentially drive |
| and demand. According to an Arcus Study, on | | | | growth of the organic market. |
| one hand organic has grown by 20% over the | | | | The obsession of organic markets is supply chain. |
| last decade. And yet it's still a small business, just | | | | Demand is less of a problem than supply, due to |
| $1.8B a year in Canada or about 3.5% of the food | | | | 20% annual growth. With corn going to ethanol, |
| industry. Small changes in supply and demand can | | | | Organic marketers need to solve long term |
| rock the whole industry. For example, a company | | | | problems, not just affordable grain and food from |
| with 7% share to grow to 10% will need to grow | | | | farmers. Also, decreasing the fossil fuel content in |
| its supply chain by an astounding 50%. The supply | | | | the supply chain is important. So anyone for edible |
| chain just doesn't exist today. | | | | yoghurt cups? Organic companies are expected |
| The #1 disincentive for people to buy organic | | | | to be big innovators. |
| today is price. The explosion of private label | | | | |