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Hannaford Becomes First Organic-Certified Mainstream Retailer

Jim Prevor’s Perishable Pundit, May 16, 2007

When Whole Foods announced plans to open a store directly behind Hannaford’s flagship store in Portland, Maine, it was bruising for a fight — and now it’s got one.

Hannaford Bros. just became the first mainstream supermarket chain to be fully certified by Quality Assurance International, the same organization that certifies Whole Foods Market.

QAI runs a retailer program that is designed to enhance consumer confidence in a retailer’s organic offering by both auditing the procurement process and looking at things such as avoiding cross-contamination at the store level.

The Portland Press Herald picked up on the news and ran a piece entitled Grocers Heed Call for Organic Products and pointed out what this can mean for local Maine growers:

Russell Libby, executive director of the Maine Organic Farmers and Gardeners Association, said the number of certified organic farms in the state has grown from 16 in 1986, to 180 in 1996 and to 360 this year.

Libby said the number of organic farmers is probably much higher because some may follow organic growing principles — by not using pesticides or artificial fertilizers on plants and using organic diets and no antibiotics or growth hormones for animals — but haven’t sought certification.

Libby said the biggest growth has been in dairy farming, which is significant because it usually takes a couple of years for a dairy farm to shift to organic production.

There are three significant markets for organic food, Libby said. A fast-growing segment is direct-to-consumer, which means sales via farm stands, farmers’ markets or community-supported agriculture, in which consumers buy a share of the harvest up-front and get a steady supply of fresh fruit and vegetables through the year.

A second market is the small wholesale business, he said, with sales to restaurants and independent local natural food stores. The third is traditional wholesale sales to grocery chains, and the growth in organic farms is essential to providing a large enough supply for those customers, Libby said.

“That has built some real nice markets,” he said. “The opportunity is for, literally, thousands of (organic) farms in Maine.”

Hannaford is the customer of choice for local growers looking to sell to mainstream supermarket chains for the simple reason that Hannaford has a warehouse in Maine. To a small grower, a trip to Massachusetts or New Hampshire can make a big difference.

About 10% of Hannaford’s SKUs are now certified organic. One battle is that a lot of local growers may follow organic practices but don’t want to spend the money and do the paperwork to get certified. That means that the product can’t be marketed as organic.

Hannaford has developed “Nature’s Place” as its private label organic brand on dry grocery. Recently, however, the produce department began labeling most of its organic produce items with the Nature’s Place brand, turning it into a consistent, master brand that the consumer interacts with throughout her shopping experience.

Hannaford is known for an integrated set, in which organic dry goods are sold adjacent to their conventional partners, but that is difficult to sustain in selling organic produce in bulk as the dangers of consumers returning a stray plum to the organic section, and thus contaminating the display, are not insignificant.

The Portland Press Herald article ends with some doubts about the sustainability of the organic boom:

…while the price difference has narrowed and organic products have caught on with consumers, Balzer (vice president of NPD Group, a consumer marketing research firm) warned that the days of rapid growth in sales may be numbered.

He said Americans place the highest value on products that are low-cost and make life easier. Organic foods, most of which require a little more preparation than popping them into the microwave, “don’t make life easier or cheaper.”

“Our willingness to try (something) new is insatiable,” Balzer said. “We like to see results right away, (and with organics) the only immediate feedback is it costs you more.”

And this is the real question: Is this Hannaford effort and similar efforts around the country merely an effort to prevent the defection of a tiny minority of shoppers to Whole Foods or is there a substantial mainstream business that is seeking to buy organic? We dealt with some of this in a discussion regarding a presentation on organics in conventional stores given by the Perishables Group, entitled ‘Take-Aways’ From United’s Short Course On Organics.

The Perishables Group saw many reasons for optimism. Yet with organic in mainstream stores accounting for only 3% of produce sales and far less in volume, it is probably too early to really say.

One big advantage for Hannaford is its deep roots in Maine and New England. It should try and identify farmers whose parents, grandparents and great-grandparents sold to what started out as a produce store and became a produce wholesaler and eventually morphed into the Hannaford we know today. People in Maine may like organics but they love Maine’s heritage, and Hannaford is an integral part of that in away a Texas upstart can never be.

QAI certification is a feather in its cap, but buying locally in Maine since 1883 is a slogan Whole Foods can never match.

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