Expert foresees long-term growth in organic market

A leading supermarket executive said he believes a recent spike in organic produce sales at mainstream retailers represents a sign of the times that will continue after the pandemic subsides, and that large organic producers would do well to gear up for expansion the next few years.

Jim Donald led the 1990s development of Walmart grocery sales and, more recently, served a three-year stint as CEO at Starbucks, before returning to lead Albertson Cos. as co-chairman two years ago.

"Organic produce is seeing major increases and those increases will continue," Donald said. "Organics are outpacing conventional in growth. The organic marketing is screaming, 'Keep that going.' Anything green and organic is blowing out."

He shared his upbeat assessment on changes in supermarket produce sales in general, and organics in particular, with farmers who logged into an Organic Produce Network webcast in July.

Opportunities for sales of organic produce to mainstream supermarket chains have improved during the pandemic, Donald said, in part because other food outlets have declined significantly.

"With 40% of produce that was going elsewhere coming back into our stores, the supermarket business is going to get stronger over the next 18 months," he said. "There are no restaurants open, so we're cooking every night."

His message to members of the Organic Produce Network—composed of major retailers such as Costco, Walmart and Albertson's and large organic farmers who supply them—is to keep the supply coming.

For shippers serving supermarkets, Donald emphasized the importance of making sure produce is properly tagged with a bar code or GS1 label that allows checkers to scan the product as organic at the register.

"GS1 labels are critical in order to capture the organic premium at the register," he said.

The pandemic has intensified some developments that were already in motion before the virus turned Americans' economic habits upside down, he said.

Although the trend toward buying through the internet rather than in person at the store has affected produce, Donald said he does not foresee supermarkets suffering from the decline in brick-and-mortar sales that has devastated some other retail sectors.

"A good e-commerce platform stands on a good brick-and-mortar platform," Donald said. "Brick and mortar is here to stay."

Another trend that began before the virus, increased during the pandemic and figures to continue is major retailers' improved ability to merchandise organic produce.

"The way retailers are communicating about their organic produce is far better," Donald said. "Our stores have organic sections as well as commingling with conventional. I think retailers are better now than they were pre-pandemic."

Shoppers can more easily find organic produce, he said, because large produce retailers have developed effective combinations of designated organic sections within the produce department and displays of select organic varieties alongside their conventional counterparts.

The ability to continue supplying food during the pandemic has strengthened communication and respect among supermarkets, growers, front-line retail workers and the public they serve, he said.

"The change comes from our customers and how glad they are that we are there for them now," Donald said. "You might ask yourself if communication has improved during the pandemic. That matters, whether you are a farm manager, store manager or corporation manager. Communication is something you have to have every day; during a crisis, you need to hear the leader's voice every day."

Donald said he believes the ability of the food industry, including the produce sector, to continue delivering through the pandemic has strengthened ties with the broader community.

"The food industry now is as strong as it has ever been," he said. "Retailers have a better appreciation of the front-line workers and the community. We are better than we were."

Another related trend Donald said he expects to continue to help the organic sector is the rise of plant-based foods.

"There is no ceiling at all on organics; the ceiling is where you want it to be," he said. "Organic is mainstream in our supermarkets. It has taken over more square footage than I would have ever imagined. As long as we're selling food that was purchased outside of the supermarket before, there is no ceiling."

He said he believes that in these challenging times, the organic produce sector stands on the verge of another leap forward.

"If you go back to when organics launched, remember how excited we were," Donald said. "Remember that, because that excitement spreads."

(Bob Johnson is a reporter in Sacramento. He may be contacted at bjohn11135@gmail.com.)