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Certified success – The once small and alternative organic market is blooming into a mainstream industry, with Boulder at its epicenter.

Boulder’s little secret is out — in a big $13 billion way.

Regulations have helped organic producers reach the mainstream

By Alicia Wallace, Camera Business Writer

The once small and alternative organic market is blooming into a mainstream industry, with Boulder at its epicenter.

The recent growth spurt, industry members said, is thanks to the U.S. Department of Agrictulture’s organic certification that was implemented a little more than a year ago."The word niche doesn’t really work anymore," said Bob Scowcroft, executive director of the Organic Farming Research Foundation in Santa Clara, Calif. "Organic isn’t really a niche market. It’s exciting entrepreneurs because of the tremendous growth in the sector."

That growth has been constant — about 20 percent annually for the past 10 years, according to the Organic Trade Association. By the end of the year, the industry is expected to have sales of more than $13 billion, said Barbara Haumann, senior writer at the OTA, the Greenfield, Mass.-based organization that follows the industry.

By 2007, she said, that could grow to $30.7 billion.

"It’s a very healthy category and it’s continued to be very healthy," said Haumann of the industry’s sales. "But it’s very hard to track how much had to do with the labels."

The National Organic Standards put into place Oct. 21, 2002, support the definition of organic — animal products that haven’t been treated with chemicals, hormones; and fruits and vegetables that have been grown without pesticides, bio-engineering or fertilizers.

In February, legislation was proposed that would lift the requirement of USDA inspection on the 100 percent organic feed for livestock, said Margaret Wittenberg, vice president of marketing and public affairs for the Austin, Texas-based Whole Foods Market.

"The consumers were just unbelievably angry with this," she said. "The consumers didn’t want this watered-down."

The defeat of the bill maintained the integrity of the certification, Wittenberg said.

The four-category voluntary label — 100 percent organic, organic, made with organic ingredients, and containing some organic ingredients — has created more consumer trust in the products, said Mary Mulry, senior director of product development and standards for Wild Oats Markets Inc.

"It ensures the customer that the word carries a significant meaning," Mulry said. "We believe that (the certification) has been an integral reason why we’ve continued to see more growth and awareness."

Chuck Marcy, president and CEO of the Longmont-based Horizon Organic, agreed.

"Our founders worked on this for over 10 years," said Marcy, who said all of Horizon’s products are 95 percent or more certified-organic. "We as a company believe (the standards) validate what we’ve been doing. It has given consumers a lot more confidence in our products."

Overall, 14 percent of the U.S. population is consuming more organic foods than last year, according to the 2003 Whole Foods Market Organic Foods Trend Tracker, which surveyed 1,000 people on their eating trends.

Bring on the competition

Larger businesses have been able to roll out new products under the seal. For Horizon, that meant becoming the first company to introduce a USDA-certified infant formula.

For producers, such as the new Aurora Organic Dairy, getting certified meant getting a foot in on the expanding arena.

Aurora Organic was spawned from the Boulder-based Aurora Dairy Corp.

For 30 years, Aurora Dairy has produced milk for nationally distributed brands. Aurora Organic’s formerly conventional Platteville, Colo., dairy farm will be converted over to certified-organic by July 2004, said Clark Driftmier, Aurora Organic’s senior vice president of marketing.

Aurora Dairy Corp. has conventional farms in Florida, Georgia and Texas. Driftmier said it is too soon to speculate whether those farms will take the route of the Platteville farm. But a greater demand means a much greater supply is needed, he said.

"We really need to get this one up and going," Driftmier said. "All of the long-term trends in organic show continued strong growth. Organic dairy and organic milk are among the brightest parts of the growing market."

But it’s not only the locals who are standing at the fence with their gloves wanting to play along. Bigger, conventional companies — H.J. Heinz Co., Campbell Soup Company, and PepsiCo Inc.’s Frito-Lay, to name a few — have released organic products specific to their niche, such as organic ketchup, organic tomato juice and organic tortilla chips.

Some longtime members of the organic industry said they welcome the competition.

"You have to understand that our mission is to change the world, not own it; people can’t be protectionists here," said Steve Demos, founder and president of White Wave, the Boulder-based soy product producer, which was acquired by dairy processor Dean Foods last year.

"We want the world to change, we want these big companies to engage … they’re all going to jump on the bandwagon, which will drive more consumers," he said. "Our culture is very hungry for authenticity, and we’re real. We’ve been doing this since 1977. Bring it on."

Other than competition, more players mean more production, said Victoria Smith, vice president of marketing for Boulder-based Rudi’s Organic Bakery.

Rudi’s sales are 45 percent higher than last year, which Smith attributed to consumers gaining greater clarification on organic products.

"I think the more people that are selling organic food, the better that is for the industry," Smith said. "The better that is for the consumer. It is giving the consumer more choices. It supports the organic farmers."

However, for some smaller farms, the cost of certification could possibly limit involvement in the maturing field.

With a sponsorship from Horizon Organic Holding Corp., Boulder’s Growing Gardens’ Cultiva! Youth Project fields were granted USDA certification.

"We probably couldn’t have done it without (Horizon’s) help," said Ramona Clark, Growing Gardens’ executive director.

The seven-month certification process for Growing Gardens initiated more of a change of perspective for the nonprofit, rather than a change of gardening practices, Clark said. For the 14- to 18-year-old youths that plant, cultivate and harvest the fields, having a certified product brings confidence and insight, Clark said.

Mike Munson’s family has owned their farm located just east of Boulder for more than 25 years. Munson said he will decide within a year whether to certify about 20 acres of his 100-acre farm.

The inspection and certification would cost about $800. Because the certification is on the ground, not the produce, it should take about three years, he said.

"I have to decide what I want to use manures on. To be certified you have to use non-manmade chemicals," Munson said.

The farm’s prized pumpkins are not in consideration, he said.

"I’ll never certify organic jack-o-lanterns. It creates a very mediocre type of pumpkin. They’re very ridgy," he said. "And from the feedback I’ve gotten, people don’t either. They’re most likely going to carve it."

Munson said the certification has its ups and downs.

"It’s good because it keeps people honest and it’s specific about the requirements for having the label organic," he said. "Do I think it’s practical? I don’t. (There are) some organic methods out there that are just as harmful as man-made.

"We’re very, very conscientious about everything. We grow things organically now. We grow all of our lettuces, sugar snap peas and tomatoes organically. It just hasn’t been certified ."

The cost of going organic

Christine Nohejl is the owner of Mountain Fresh Organics, a one-woman company that delivers boxes of various organic fruits and vegetables to customers’ doorsteps weekly.

Nohejl, who has been operating the business for about a year and a half, gets her certified produce from wholesalers. Although the average Joe might not know about the regulations, she said, some of her 70 customers are appreciative of the certification.

"A lot of them are families and most of them have kids," said Nohejl, whose customers not only live in Boulder, but also Longmont, Louisville, Lafayette, Gunbarrell, Erie and Superior. "It is very important for them to have certified organic foods for the health of their family."

But the financial hurdle of getting certified or raising the percentage of organic content within a product is a tad too high for some retailers and organic companies.

Steve Phillips, general manager of the Boulder Co-op Market, said the 1-year-old market has the opportunity to become a certified-organic store, but cannot afford the cost of certification. Phillips said the market, which hasn’t yet turned a profit, expects to see a positive sales month in October or possibly November.

Fiona Simon started Fiona’s Granola close to two years ago. Her homemade granola can be found at local Whole Foods stores, the Boulder Co-op Market and other retailers. Simon said she wants to get the brand going national, but is at a crossroads in that decision.

Her product is currently 85 percent organic. To raise it to the 95 percentile range, she needs organic nuts and oil, which are too costly for her business. If she got the certification, she said she would have a greater chance of securing investment money.

She would also have to raise the price of a pound of her granola by a dollar.

"It’s a really tough decision for me, because I don’t want to price myself out of the market," Simon said.

She said the certification has also hurt her tagline, "Organic goodness in every bite."

"It was fine up until recently. Unless I’m certified, I can’t even take that tagline," she said. "There are organic oats in every single bite. To me, it’s true. Why can’t I say that?"

Despite the standards being strict, Simon said she applauds them.

"I think the end goal is for consumer protection," Simon said. "Sure, there are growing pains to get there for little people like me, but it’s a very positive end goal."

Contact Alicia Wallace at [email protected] or (303) 473-1332.

http://www.dailycamera.com/bdc/business_plus/article/0,1713,BDC_2462_2374593,00.html

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