Last weekend, I stopped by my favorite coffee shop for a quick morning latte. I noticed the barista’s menu offered organic soy milk as one of the many ingredient choices available to enrich my coffee sipping experience. Perhaps even more impressive was the hastily handmade sign advising customers that organic soy milk was off the menu for the day due to unexpected demand.
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This example is one of many illustrating the fact that U.S. consumers today are using their pocketbooks more and more to vote for healthy eating. This trend includes the increasing availability of new organic food products, both fresh and processed, now being certified by the U.S. Department of Agriculture (USDA), marketed in the mainstream, and offered for purchase through food service restaurant channels and directly off retail shelves. And, perhaps just as important, consumers have demonstrated a willingness to pay a higher price for organic food products, in turn motivating brand owners to make organic products even more readily available.
Despite little existing scientific evidence supporting the health benefits of eating organic foods, consumers are increasingly incorporating organic food products into their daily diets. This switch to organic is part of an effort to avoid ingesting the pesticides used in cultivating food crops, a growing interest in fresher food products, and a perception that organic products are more healthful and nutritious. The expanding organic food market in the U.S. has one of the fastest growth rates in the food industry. In 2006, there were annual consumer sales of more than $16 billion and a growth rate of better than 20%, according to a manufacturer survey conducted by the Organic Trade Association. Although these numbers underscore the promise of the market, there are many challenges in meeting certification requirements for organic foods. Enterprise business systems are one tool that can help meet these challenges.
Responding to Market Demand
The availability of organic products such as fresh produce, whole grain products, and packaged foods, including breads and desserts, dairy products, and even organic pet food, reflects these current upward trends. And both small and large brand owners are responding to market demand, seeking to make more organic products available in greater volumes in local boutique organic markets, as well as across national grocery retail chains.
With an eye towards increasing profit margins in an industry that’s both price and cost conscious, the market consolidation of organic food processors is already underway and is expected to continue as brand owners look to expand as quickly as possible into these lucrative, organic demand-driven supply networks.
At the same time, U.S. consumers may be largely unaware of what’s required to earn and retain a USDA-certified organic label on the food products they select every day. In order for a food product to be organically certified, its manufacturer must be able to provide, on an ongoing basis, the origin of all food ingredients and flavorings. The company must also be able to provide detailed quality and sourcing information that shows that the ingredients were grown without the use of conventional pesticides, artificial fertilizers, or sewage sludge for a sufficient period of time.
Organic food manufacturers must also capture and maintain detailed manufacturing records that show that each organic food item quantity produced by control lot has been minimally processed, without the use of ionizing radiation or additives. Additionally, processing and handling during production, as well as transportation of organic ingredients and products to and from the warehouse and through the distribution network, must reflect quality control methods and testing. The process must be carefully managed so that no potential commingling or cross-contamination with other, nonorganic, processes can compromise the integrity of these certified organic foods.