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Just wild about going organic $15B in food sales have specialty and mainstream stores competing to meet the rising demand (Newsday)

More than a decade ago, Dana Conklin, granddaughter of King Kullen Grocery Co. founder Michael J. Cullen, predicted that organic and natural was the future of the food industry and persuaded the board of directors to open Long Island's first, full-service natural-foods supermarket in 1995.

Conklin's forecast has been borne out over the years by the numbers. The Organic Consumers Association estimates sales of certified organic foods at $15billion last year. A survey released by the Organic Trade Association in 2004 noted that sales in this sector had nearly tripled since 1997. And as evidence of this growth, King Kullen is poised to open its third natural and organic supermarket - Wild by Nature - next month in Hampton Bays.

"She had the foresight just as her grandfather had the foresight about supermarkets," said Joe Brown, King Kullen's vice president of sales and merchandising and co-president of Wild by Nature. "She convinced the board of directors that this was a great future, and it is a direction the food industry is going to go and that we needed to get in on the ground floor."

No longer on the fringe

These days, Long Island shoppers, like others across the nation, are likely to find organic products in their regular supermarket. Ronnie Cummins, national director of the Organic Consumers Association, estimates that roughly half of organic sales are through conventional supermarkets. And the choice of retailers appears to be growing. Whole Foods Market opened a second Long Island store in Jericho in October and has plans, at least a few years away, to open a store in Lake Grove.

The largest natural food chains, such as Whole Foods Market Inc. and Wild Oats Markets, lead the way in terms of sales, but major mainstream chains also have shown an interest. Wal-Mart Stores Inc., which began offering organic products five years ago, recently announced that it was expanding its organic baby products to include infant formula and apparel made with organic cotton.

"More and more customers are looking for organic, and not just organic but affordable organic," Mia Masten, a Wal-Mart spokeswoman, said. "That's what we can provide."

All of this, experts say, points to exploding demand, especially as prices come down, although consumers have proven they are willing to pay a premium for organic and other specialty products.

"Prices can be 50 to 100 percent higher, and two-thirds of consumers say they buy it because of health," Cummins said. "The driving force is women - moms or grandmothers."

Entering the market

Initially, the first Wild by Nature, in East Setauket, went through "growing pains" - primarily getting the word out about the store's products and building a strong customer base, Brown said. King Kullen went through a similar experience building the business when it opened the second store in Huntington - an entirely new market - five years later, Brown said.

But he is anticipating a quicker time line to establish a customer base for the third store, planned to open sometime next month.

"There's so much more knowledge of Wild by Nature on Long Island," Brown said. "We now feel pretty comfortable in what we need to know. And we've learned a lot from our shoppers, who are pretty vocal and smart and know what they want."

Both Wild by Nature stores' sales have been growing steadily, Brown said, but declined to discuss actual figures. Over the years, the organic and natural food market has been transformed, with more products and increasing consumer demand, as well as improvements in taste and quality, Brown said. And the prices have come closer to those of mainstream products, lowering the hurdle of cost, which deters some consumers.

King Kullen now uses the "store within a store" concept, with Wild by Nature sections in its Port Washington, Bridgehampton, Commack and Glen Cove locations.

In the 1990s, organic consumers were more likely to be people with more education and higher incomes, Brown said. "Now the area of growth we are seeing are young families," he said. "Mothers are more in tune with the dietary needs of their children. ... So it's not as limited to economics and education as it used to be, and people are aware that there may be alternatives to how they manage their health with proper nutrition and diet and exercise."

The driving force in the food market is still price, said Harry Balzer, vice president of NPD Group, a Port Washington market research company.

According to surveys NPD conducted, the percentage of people who consumed any food labeled as organic within a two-week period rose from 13 percent in 2003 to 15 percent last year.

"The only stumbling block for organic will be cost," Balzer said, "because I do know that Americans do always continue to look for value. They never let food cost rise faster than their incomes."

A 2004 study conducted by The Hartman Group Inc., a Bellevue, Wash.-based consulting and market research company, said 66 percent of U.S. consumers buy organics at least occasionally.

The children factor

Mirroring Wild by Nature's expanding customer base of young families and mothers, the study found that having children is "the most significant trigger for entering the organic category."

Some consumers begin buying organic products while they are pregnant, and others when they need baby food or dairy products for their children, the report said.

"Parents who are purchasing organics are concerned with hormones and pesticides that they perceive to be negatively affecting their children's health," the report stated.

In addition, Asian-Americans, American Indians, Hispanic-Americans and African-Americans are "somewhat more likely" to purchase organics.

The increasing demand is good news for the industry, but does have its drawbacks, Cummins said.

Trying to meet demand

"We don't have enough farmers and ranchers in the U.S. to grow what we need, and you have these big companies getting into the sector when there are huge shortages in organic) dairy, meat and citrus," Cummins said.

About 45 percent of companies in the Organic Trade Association's 2004 Manufacturer Survey said that a lack of dependable supply of organic raw materials limited their company from generating more sales. As a result, Cummins said, retailers and manufacturers have begun to buy products from overseas, making it more difficult to determine whether the product is truly "certified organic."

He added that the large conventional dairy farms have been taking shortcuts when it comes to organic practices, weakening the quality and value of the product. He and the group are advocating for a national program to help farmers, especially dairy farmers, convert to organic practices.

Yet, even with the big chains making a push into the organic market, supermarkets like Whole Foods Market still believe that consumer demand and the market are large enough. Indeed, its sales rose 21.8 percent, to $1.67 billion, in the quarter ended Jan. 15.

"We feel that Long Island shoppers are looking for more all-natural and organic food," said Fred Shank, a Whole Foods Market spokesman. "The trend is that natural and organic food is growing and it's here to stay.

"We'd like to see other stores go natural and organic as well," he said, "because the rising tide floats all boats."