Posted on September 1, 2006

Corporate roots thicken inside organic foods industry

Phil Howard connects the dots - and trends - of exploding category

Now that sustainability issues and the demand for organic foods has corporate America fully engaged in re-writing marketing and production strategies, organic food brands are popping up all over the landscape of industrial agriculture.

For those having trouble keeping track of who owns whom, sustainable food expert Phil Howard came up with a chart showing the tentacles of large, public corporations slipping further into organic foods industry.

Sustainable Food News caught up with Howard in his new office at Michigan State University where he was recently appointed Assistant Professor of Community Food and Agricultural Systems.

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SFN: You created the original chart while a researcher at the Center for Agroecology and Sustainable Food Systems at UC Santa Cruz. Why did you create the chart together in the first place?

Howard: I first put the chart together in 2003 for an article in CCOF’s (California Certified Organic Farmers) certified Organic magazine. At that time the USDA national standards had gone into effect about a year earlier, but most of the major acquisitions had already occurred.

Since then, there have been a few acquisitions, like Hain Celestial’s purchase of Spectrum Organics, but increasingly the world’s largest food processors are introducing organic versions of their own brands.

Related to this trend, the prices paid for independent national brands have declined from the peak period of acquisitions, which was just prior to the introduction of national standards. As organic has grown to the point where it is practically mainstream, it’s no longer necessary to appeal just to die-hard organic consumers.

SFN: How quickly do you believe the organic food industry will consolidate? Do you think more original brand names are inevitable under the larger corporate banners?

Howard: There are very few major organic brands left to acquire, but a lot of room for the introduction of organic versions of well-known conventional brands. Another area that is growing extremely rapidly is the introduction of organic private label store brands by retailers.

SFN: Can any smaller producers survive independently in the business climate the industry is entering?

Howard: It won’t be easy, but a handful of national organic food processors have managed to remain independent, including Eden Foods, Amy’s Kitchen, Nature’s Path, Clif Bar and the Organic Valley cooperative of farms.

Growing interest in local foods may help producers who are smaller than these companies to survive, particularly if they can market directly to consumers, or find retail outlets willing to carry their products.

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