Pure and Profitable

March 17, 2002

Call it what you like, hippie chow or whole foods, sales of organically grown produce and grains are on the rise in America.

According to the U.S. Department of Agriculture, U.S. retail sales of organic foods grew from $1 billion in 1990 to $5.5 billion in 1998.

In a January 2000 study titled, The Organic Consumer Profile, the Hartman Group found that almost one-third of the U.S. population currently buys organic products, and that 60 percent would be willing to try them. And according to the 1,200-member Organic Trade Association, from 1999 to 2000, the sale of organic processed foods grew by 38 percent, while the sale of organic frozen entrees, including pizzas, increased by 24 percent.

But when it comes to sales of organic pizza in the foodservice market, the jury is still out. Depending whom you ask, it represents anything from a niche market to the next organic trend -- even a food fad destined to pass.

"I think it's a trend, said Ken Crouse, president of Stillwell's Stone Fired Pizza, the eight-year-old Stillwell, Kan.-based company that began making organic and natural pizza for the retail market in May 2001. "It's a trend that started on the West Coast, migrated east and is now coming to the middle of the country."

"It's neither a trend nor a fad," insists John Coletta, executive chef at CaliTerra, an up-scale restaurant in the Wyndham Chicago Hotel. "Organic and natural pizzas are here to stay. What we're seeing is a desire on the part of a growing number of people to get back to natural ingredients and integrity in the food they eat and the lifestyles they live."

On the Radar?

Technically speaking, organic foods include crops grown without pesticides or chemical fertilizers, and processed without additives or coloring. Consumers of organics consider them more healthful and better-tasting than foods grown with the help of chemicals.

It's no surprise, then, that customers driving demand for them are baby boomers hoping to cheat the grim reaper.

"People 50 and older are more health conscious and more concerned about the safety of the food chain," said Sonja Tuitele, director of corporate communications for the Boulder, Colo.-based Wild Oats Markets. The 14-year-old retail chain sells freshly made organic and natural pizza by the slice in many of its 109 stores spread throughout 23 states and British Columbia. "We're seeing a lot more baby boomers moving toward organics, including pizza, as part of a lifestyle change. They're looking for well-balanced foods, free of additives, artificial colorings and fats."

But baby boomers aren't the only ones cozying up to organics. College age students and Generation Xers also are seeking out organic options. Additionally, the Organic Trade Association says people who buy organic foods tend to be well-educated women, with incomes of $50,000 or more, and living in urban settings on either U.S. coast.

"Whether it's the food they eat or the clothes they wear or the cars they drive, our diners tend to be upscale and discerning," said Coletta, whose organic-natural pizza offerings include a Marguerita Pizza, a Grilled Organic Vegetable Pizza, Mountain Air Dried Beef Pizza and a Wild Boar Sausage pie. "These are folks who enjoy inspired cuisine. They're people who have experienced commercially sold pizza and now demand higher quality ingredients."

And the same is true at the retail level, according to Wild Oats' Tuitele. The chain's customer base is indicative of a "high demo skew," she said, with an average household income of $67,000. "Our customers are more educated and more aware of organic and natural products. They're looking for great tasting foods, a healthier lifestyle, as well as convenience. Our pizzas offer it that."

Count the Cost

While the cost of ingredients -- often between 25 and 40 percent higher than non-organic ingredients -- drives up the final price of organic foods, cost doesn't appear objectionable to some customers. Stillwell's Ken Crouse said his frozen pies are 20 to 30 percent more expensive than other good frozen pizza, and 70 to 100 percent higher than low-end frozen pizzas he calls "belly stuffers."

Crouse insists that volume sales will lower his price, and his goal is to acquire freezer space in Kroger's 2,500 stores early next year. That's when Stillwell will out a 12-ounce, nine-inch pizza, for mass-market retail chains. Currently his pizzas are distributed by food brokers and fancy food distributors and sold in some regional Midwest supermarket chains.

"What we need is a Kroger and other large volume-driven chains, that can move a lot of product and have a commitment to a broad line of offerings, including organics," Crouse said.

For Coletta's customers, "Price is definitely not a barrier," His all-natural and freshly made 12-inch pizzas sell in the $13 to $15 range. "Today people want value and value means a lot of things, including price. Our diners spend what we charge and come back again, because we give them a full eating experience, including great taste and the level of service they expect."

Orean Thomas, owner of Orean Health Express, in Pasadena, Calif., said price doesn't keep his customers away either. Thomas sells seven-inch pita pizzas for $4.39 at his fast-food vegetarian eatery, which is located less than a half mile from a McDonalds and a Burger King. The lifelong vegetarian contends his restaurant is frequented by refugees of such fast-food havens, because they want healthy food options.

"People are willing to pay the price, if what they're getting is healthy and tastes good," said Thomas. "Consumers understand you get what you pay for."

Topics: Pizza Toppings

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