State of the Industry PreviewAs a part of our annual state-of-the-industry report, the editors at Snack Food & Wholesale Bakery magazine interviewed dozens of industry executives, including Radi.
Here is Dan’s report.
Think of the great superheroes of all time. Most great ones, if not all, shroud themselves in secrecy that adds an aura of mystery as well as of intrigue. They prefer to keep their real identities anonymous, but at the same time, in the name of righteousness, they allow their alter-egos to put on a display of power to save the day.
For that reason, “organic is the quintessential superhero,” says Doug Radi, vice president of marketing for Charter Baking Co., Boulder, Colo.
“Organic is still this relatively unknown entity, but it’s got this great kind of power story behind it,” he adds.
While organic produce, dairy and beverages grab the headlines, organic bread is still quietly doing its good deeds without the public acclaim. Getting the word out on organic is the goal for bakers such as Charter Baking, which sells organic baked goods under the Rudi’s Organic, as well as several regional brands.
“Our biggest opportunity is to drive awareness and education to understand who we are and what organic bread is,” Radi says. “At the same time, we have this powerhouse story, this nutrition powerhouse with whole grains and all of these wholesome, simple ingredients baked without all of the additives and preservatives that you find in a lot of other commercially available breads.”
Last summer in the Denver area, a hotbed of organic consumers, Charter Baking ran an aggressive promotion campaign titled “What’s in your bread may surprise you.” To increase ingredient and brand awareness, the campaign touted the “better ingredients, better bread” in Rudi’s Organic branded products compared with the artificial ingredients and high-fructose corn syrup in conventional baked goods.
The campaign drove awareness in organic by 50% and gave the brand a 20-point lift in sales of Rudi’s Organic products.
“In Denver, that business trend has been sustained, even though we turned off all of the support in September,” Radi notes.
Despite its premium price, organic bread sales are increasing in single-digit rates, but its down the 20-25% annual growth that Charger Baking had experienced historically, Radi says. Due to the economy, the transitional consumer who occasionally may purchase organic bread has most likely fallen out of the category. However, Radi notes, sales remain positive to show food is growing for a number of reasons.
“From a bread standpoint, the filter we’re looking at is a more inelastic, higher income consumer filter,” Radi explains. “I continue to hear healthy, health and wellness and whole grains as key purchase drivers. I don’t think we’re seeing a shift in category or variety purchase habits. It’s more a shift toward a slight value filter. The consumer is saying, ‘I may buy private label organic bread now or I might buy it in a conventional store instead of in a natural food store’ so we’re seeing some channel shifting, but we’re not seeing a holistic exodus from the category.”
Radi doesn’t necessarily believe value trumps over variables in the bread aisle. However, it has become part of the equation, especially for those with lower incomes or who are struggling to make ends meet.
“I don’t think value is coming as a key purchase driver over health and wellness, and the whole grain and organic story,” he says. “It’s just part of the story where it hadn’t been much before.”
In fact, according to Chicago-based Information Resources Inc. consumer panel survey, 60% of consumers with incomes under $50,000 indicate they’re buying more private label. In households where the income hits the $100,000 market, only about 30% indicate they’re buying less branded.
“We’re at that $100,000 consumer category who is buying super-premium and organic breads,” Radi says.
Editor’s Note: Our state-of-the-industry report will be mailed to subscribers later this month. If you would like a single copy, contact firstname.lastname@example.org.