While once relegated to shelves in small, independent health food shops, organic and natural foods are gaining widespread distribution in mass market retailers, growing at double-digit rates and entering the mass market lexicon enough to be the focus of large-scale consumer ad campaigns and buyouts from corporate America.
That march toward the mainstream is only furthered by last week's ruling by the U.S. Food & Drug Administration allowing food companies to make health claims regarding soy protein's role in fighting heart disease.
According to a recent study by Prevention and the Food Marketing Institute, 20% of the total population and 31% of college-educated adult shoppers already buy organic foods despite the fact that they command prices often 20% higher than their non-organic counterparts.
"The aging population is more concerned with health, and eating [well] is part of that," said Lehman Bros.' VP-research analyst Andrew Lazar.
Mr. Lazar predicted "we will continue to see the influx of natural and organic products in mainstream consumers' lives"-a fact that has sent traditional food companies, struggling within mature slow-growth categories, scrambling to get on board.
In late September, H.J. Heinz Co. announced plans to acquire a nearly 20% stake in leading natural food company Hain Food Group.
Days later, Kellogg Co. announced its intention to enter the high-growth arena with the acquisition of veggie burger and meat-alternatives marketer Worthington Foods.
Hain alone has grown at rates between 15% and 20% annually since its formation in 1993. That's phenomenal compared to the 3% to 5% that Howard Lizst, president of Campbell Mithun Esty, Minneapolis, said "is considered vibrant" for a mainstream food marketer.
Hain's sales now total $330 million, testament to the increasing popularity of its organic, all-natural brands, including Westsoy soy milk-based beverages and Terra Chips.
Worthington, too, has seen sales advance at rates upward of 17% to reach its present $170 million, based mainly on the popularity of its Morningstar Farms brand of veggie burgers and meatless entrees.
Helping fuel the sales surge of Hain, Worthington and others is the success in recent years of natural food retail chains Whole Foods Market and Wild Oats. Those chains saw sales jump in 1998 to $1.4 billion and $400 million, respectively, said Grant Ferrier, editor of Nutrition Business Journal.
Because of their success at luring upscale consumers willing to pay a premium for natural and organic products, the chains are credited with driving traditional retailers to carry those products themselves, Mr. Ferrier said.
According to a recent study by the newsletter, retail sales of natural products rose 11% to $19.4 billion in 1998, with mainstream grocery, drug and mass channels making up 36% of those sales.
Whole Foods and General Nutrion Centers each accounted for 7%, Wild Oats 2% and independent stores 48%.
Now that players within the natural and organic segment have gained wider distribution in mainstream channels, consumer advertising has become increasingly imperative.
Small Planet Foods, which has seen annual growth rates of at least 25% for its Cascadian Farm line of organic fruits, vegetables and entrees, is trying to broaden awareness with a first-time TV and radio ad effort in Denver and Boise markets that broke in October. It plans to expand that campaign for 2000.
The "Slideshow" campaign, part of a $5 million media budget handled by Boulder-based Sterling-Rice Group, will include three 30-second spots featuring company employees touting the high-quality farming that makes Cascadian Farm organic frozen products exceptional. The tagline: "Better food for a better world."
"The convergence of several factors, including baby boomers' connection between health and diet and concern for what kind of world they're leaving for children and grandchildren, offers us a window of opportunity now," said Martin Whitehead, VP-marketing for Cascadian Farm.
The marketer is also in the planning stages to launch a campaign for its Muir Glen line of pasta sauce and canned tomatoes next year.
Gardenburger drew attention to the now-booming meat-alternatives category when in 1998 it expanded what had been a relatively low-level ad budget to $14 million, including a buy during the final episode of "Seinfeld" on NBC, daring considering total 1997 company sales of only $13 million.
"We decided to really go for it and make consumers aware of our brand, which allowed us to grow business to $46 million sales in 1998," said Mary Dillon, VP-marketing.
Rivals benefited too. Worthington's sales of products within the frozen meat alternative category climbed 16.1% to $57.9 million in supermarkets for the year ended July 18, according to Information Resources Inc., while Boca Burger's sales jumped 79% to $17 million and Gardenburger sales increased 49% to $45.9 million.
RULING TO BOOST BURGERS
A further boost to veggie burgers is anticipated following last week's FDA ruling allowing marketers to make the claim that 25 grams of soy protein a day, as part of a diet low in saturated fat and cholesterol, may reduce the risk of heart disease.
Like its competitors in the meat-alternative segment-Worthington and Boca Burger-Gardenburger will carry the claim across packaging and communications for their soy protein-based products.
Boca last week waged what it called an "own the claim" plan, spending $1 million on page newspaper ads in 17 markets touting its products as a great way to get soy into your diet with the tag, "Happy stomachs, healthy hearts," as well as with ongoing direct mail and public relations effort.
The plan is incremental to the $3.5 million "Vegetarians Celebrate. Meat Lovers Salivate" print campaign Boca launched in April via Chicago Creative Partnership.
"When consumers hear news like [the new FDA claim], their minds are open and they are increasingly receptive to information; the time for us is now," said Katie Torres, Boca Burger VP-marketing.
KELLOGG'S AGGRESSIVE PLANS
Kellogg feels the same way. With its Worthington Foods acquisition set to close in December, Kellogg plans to invest aggressively against the company's primary Morningstar Farms brand, spending at levels far greater than what Worthington has put against the brand in the past, according to Stephen Benoit, president of Kellogg's natural and functional foods division.
Worthington this past May launched a $6 million print and TV campaign, its first ever, from Northlich Stolley Lawarre, Cincinnati, touting its meatless products with the tag, "Enjoy eating better."
Kellogg has not said whether it will move the account to one of its core agencies.
Not surprisingly, in light of its lack of growth in the cereal arena, Kellogg's current strategy is to look for new revenue streams, especially grain-based high-growth opportunities.
"Soy-based foods have enormous potential," Mr. Benoit said.
In addition to its heavy investments in innovation, marketing and mainstream distribution for Morningstar Farms products, six of which have quantities of soy that meet or exceed levels specified in the new FDA ruling, Kellogg announced plans to introduce a new soy-based cereal that meets the criteria for heart healthiness set by the FDA.
Likewise, other major players have stated intentions to take advantage of the