The Lure of Local and Organic Foods

With the cost of food hitting all-time highs, why are consumers willing to
 pay a premium for local and organic?


It’s the last weekend of April, but it feels like late summer harvest. Wooden crates of local heritage tomatoes (grown in greenhouses, of course), in colours from deep crimson to apple green, stand out among meticulously arranged displays of the season’s first greens: arugula, dandelion, stinging nettles. The remnants of last fall’s Okanagan apple harvest are on offer alongside squashes of various shapes and sizes, no two alike. 


Even the cloudless sky seems out of season as the sun beats down on the backs of shoppers wandering from stall to stall at the last winter farmers’ market of the year at Nat Bailey Stadium. They pause to compare the flavour of honey produced near clover fields (mild, velvety) to that produced near Japanese knotweed (pungent, medicinal). They question meat producers about what they feed their livestock, inspect fresh bread baked with wild yeast and sample artisan raw-milk cheese, all to a soothing soundtrack of a busker predictably performing Joni Mitchell’s “Big Yellow Taxi.” (“Hey farmer, farmer, put away that DDT now.”)
 

Everywhere you look, reusable cloth shopping bags are being filled with food. Organic, free-range eggs ($7 a dozen) have already sold out, and the queue in front of a truck selling wild fish is at least 10 people deep. The crowded market – now a Vancouver institution with four weekly locations throughout the summer and fall, one winter location and a holiday market – has come a long way from its humble beginnings when eight farmers set up shop in the Croatian Cultural Centre in 1995. These savvy shoppers aren’t here for deals, though; those early heirloom tomatoes come at a hefty premium ($12.99 a pound). In fact, price doesn’t even seem to be a factor. When authors of a 2008 national survey (conducted for the Ministry of Agriculture and Agri-Food Canada and the non-profit Farmers’ Market Canada) asked consumers at 70 farmers’ markets across the country to rank the importance of 14 influences on their grocery buying choices, price came in last after factors such as whether products were local, in season and organic. 


That these enlightened grocery shoppers prioritize so many considerations above price signals a fundamental shift in the way we buy food. The phenomenon is not limited to farmers’ markets. In B.C. production and consumption of organic food has grown by double digits every year for the past decade, and nearly half of retail sales of organic products occur in mainstream supermarkets. 


The growth of organic and related segments of the food market is continuing at a time when global food prices are being driven to all-time highs by crop failure and oil prices. The rapidly increasing cost of basic ingredients such as sugar, wheat, corn and vegetable oil has led to record prices of processed foods such as cereals and bakery goods. Beef and pork prices are also on the rise. This spring, economists at the Bank of Montreal and the Toronto-Dominion Bank estimated that food prices in Canada could jump by as much as eight per cent by the end of 2011 – and that was before bad weather in Mexico and the southern U.S. caused the price of fresh vegetables to spike by 18.6 per cent in March compared to the previous year, according to Statistics Canada. And yet, many consumers are still willing to pay a premium for products boasting the labels organic, local, free range or biodynamic. 


For food producers and retailers, who have long struggled with their products being thought of as commodities (a tomato is a tomato is a tomato, right?), this represents a major marketing coup. They have managed to convince consumers that some food is better than other food. However, with a lack of scientific research actually proving that organic food is more nutritious, the reasons consumers are making these choices appear to go much deeper than concern for their own well-being. 


“My primary reason for shopping here is seeing farmers face to face – you know, that connection,” says Katy Proudfoot, a 29-year-old UBC PhD candidate, who is at today’s farmers’ market to purchase locally grown produce. “I’m a student and on a tight budget so I can’t afford it, but I prioritize food. The money doesn’t matter. I don’t see it as an extra cost. It’s too important.” 

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The Vancouver local food loyalty

So how did the organic, local food industry achieve such loyalty? Well, much credit for kicking off the revolution in how we buy food goes to the supermarkets that pioneered selling organic. Chains focusing on organic food, such as Choices Markets Ltd. and Capers Community Market (which merged with American chain Whole Foods Market IP LP in 2007), are estimated to only claim around one per cent of the grocery market share in North America, and yet their influence is far-reaching. The most obvious way they have changed the landscape is by offering local producers that are too small to deal with conventional supermarkets an opportunity to sell their product and eventually scale up. They’ve also pushed mainstream grocery stores such as Safeway and Save-On-Foods and even small ethnic grocery stores to carry organic products sourced closer to home. In B.C., Capers and Choices have grown into the dominant players in the organic grocery scene, a sector of the food industry that government analysts describe as “experiencing phenomenal expansion.”


The growth of the organic industry in B.C. suggests that these grocery chains cracked some of the fundamental problems with selling food. Michael Pollan, the well-known American food journalist, describes the food seller’s challenge in his influential book The Omnivore’s Dilemma: “The growth of the food industry will always bump up against this troublesome biological fact: try as we might, each of us can only eat about 1,500 pounds of food a year.” What this means for the food industry is that growth is more or less limited to population growth, which is around one per cent.


Companies that want to grow faster have typically relied on two options: first, getting consumers to pay more for the same amount of food by processing it (for instance, commodity corn is more profitable as a sweetener than as produce); or second, convincing consumers to eat more (McDonald’s famously achieved this with its revolutionary “supersize” campaign). Pollan relates how a General Mills vice-president described the issue to him: “The executive patiently explained that selling unprocessed or minimally processed foods will always be a fool’s game, since the prices of agricultural commodities tend to fall over time. More food coming off the farm leads to either falling profits – or more processing.” What makes Whole Foods and Choices different is that they are convincing consumers that some whole foods (unprocessed raw ingredients, such as produce or meat) are worth more than others. 


The real challenge was then that the average consumer couldn’t distinguish one farm’s corn or eggs from another’s, or at least they weren’t accustomed to thinking about their food choices that way. Retailers such as Choices and Whole Foods had to begin thinking like Starbucks. If the average coffee drinker didn’t distinguish between coffees – or, in other words, they treated coffee like a commodity – Starbucks would have to get them in the door by selling more than just their brew: a familiar atmosphere, an identity, an experience. 

 

Walking through the Cambie Street Whole Foods Market on a recent Wednesday afternoon, I could immediately see that it is an entirely different shopping experience. Rather than squinting at the fine print on a small sticker to find out which province or state an apple was grown in, a prominent sign claims, Food From Around Here (which, according to Whole Foods’ definition, means grown in B.C.). Kurstin Leith, vice-president of purchasing for the Pacific Northwest region of Whole Foods and the woman who is leading my tour, points out local heirloom tomatoes on offer, stacked precariously in a perfect pyramid and clearly signed to display where they were grown. In the meat section, a chalkboard describes the local producers of pork, chicken, turkey and beef, including details of how the cattle were raised. Near the cheese cooler, there’s a photo of the Italian family that produced the Parmesan cheese for sale. These products are being presented in a much different manner than the anonymous groceries piled into shopping carts at Safeway; you get the sense that every product can be traced to its origin. 


“Traceability is key,” says Leith. Having worked with Capers for 25 years, she has observed the general public becoming increasingly critical of the practices of industrial food production (factory farming, pesticide use, etc.), and she believes many wish they had the time and energy to investigate the source of all of their food. That’s where retailers such as Whole Foods step in. “You know that organic produce is coming out of China now? We can only be OK with that if we have a third-party inspector visit the plant, then follow that product every step of the way from China to North America.”


Many consumers have clearly put their trust in retailers to do their food investigations for them, but Leith acknowledges that an increasing number are looking for more than just an assurance that their food was produced without pesticides. As one shopper at the winter farmers’ market put it, “You appreciate the food more when you know the person who grew it.” Clearly, speaking directly to the farmer who had a hand in the pork chop that will end up on your plate is worth paying for, at least for some shoppers. 


“If you look at farmers’ markets and how fast that movement is growing, you see that it’s what consumers want,” says Leith. “It’s an amazing model, but it’s not realistic. You can’t change the way people eat that way. How many people are being touched in a farmers’ market compared to a Whole Foods Market?” 


Retailers of organic foods have responded to the local-food movement by attempting to replicate that feeling of connection found at farmers’ markets. At an on-site demonstration kitchen in the Cambie Street Whole Foods, consumers are shown how to prepare various products, an educational role the producers themselves step into at farmers’ markets. The store brings in growers and ranchers to converse directly with shoppers. When farmers can’t get away from their fields, “vendor profiles” (displayed on poster boards near the products) tell the stories behind the food. 


The language that has emerged is perhaps retailers’ most significant contribution to the shift in how we buy food. Terms such as “organic,” “free range,” “biodynamic” and “natural” have been infused with specific meaning so that savvy consumers can engage in a dialogue about food production as they walk through a store. For example, with only two words, “naturally raised,” a rancher can first identify the type of customer who might buy their product (someone fluent in the language), and tell her that his cattle was fed primarily grass, rather than grain or corn-based feed, and lived in a pasture outdoors instead of in a feedlot. 


Grocery shopping begins to resemble reading a newspaper: browsing and consuming bits and pieces of a narrative. You can walk into one of these supermarkets, as comfortingly clean and predictably laid out as any mainstream supermarket, and leave having fulfilled a personal pastoral fantasy. You’ve seen photos of the field where the cow that became your steak grazed; perhaps you even know his name. 


But to critics, these marketing accomplishments are only that. In a January 2010 article in the New Yorker, Nick Paumgarten questions whether Whole Foods is indeed “a virtuous grocer” or in reality just “a cynical con” and “an overpriced luxury for yuppie gastronomes and fussy label-readers.” Those most dedicated to the local, organic movement – including a number of shoppers at the winter farmers’ market – complain that Whole Foods and its like are ultimately tainted by corporate compromises and half steps (read: organic tomatoes from Chile) and also sell processed organic foods grown on industrial farms that are ultimately products of the same food system they purport to resist. 


“This is where the controversy lies: Are there really health benefits to eating organic? The jury is still out on that one,” says Brock Smith, a marketing professor at the University of Victoria. Smith sees the organic movement as a standard example of well-executed differentiation. “With food, it’s very difficult to say, My cucumber is better than yours. But [the organic industry] has done a good job of communicating the other benefits of caring about how what you put into your body was produced. That’s the name of the game in marketing: if you can control the attributes that consumers are considering when they make choices, you have influence.” 

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The Whole Foods influence

At the Cambie Street Whole Foods store, that effort to influence the factors that shoppers are thinking about is ongoing. “People feel that Whole Foods can’t be as local as a farmers’ market, but we can be,” says Leith, who is now being rushed out of the store by another VP to meet with a potential pork supplier in the Fraser Valley. “But we still have a lot of work to do in educating consumers around that.”


Surely none of the people involved in producing or selling organic would agree that their success is simply an achievement of marketing, their products no different than the rest. Put aside the arguments about whether such food is actually healthier, whether we omnivores ought to care about the suffering of the animals we consume and whether environmentalism has a place in the grocery store. The question then becomes, Does the food actually taste any better? 


At a Whole Foods-organized meeting this past April of 50-odd meat ranchers and producers at Vancouver’s H.R. MacMillan Space Centre, it becomes apparent that the answer to that question is complicated. Whole Foods has initiated the gathering to court potential suppliers because they believe consumers want more locally produced meat than they’ve been able to source. But there’s much skepticism in the room. Consumers don’t understand why raising older animals might be better, one rancher complains. Another wonders whether consumers accustomed to flavourless factory-farmed meat could ever accept the stronger flavour of meat from an animal that hasn’t been castrated (a common practice that Whole Foods encourages its producers to resist). 


Joe Rogoff, president of Whole Foods’ Pacific Northwest region, rises to address the ranchers. He makes clear that his company is thinking long term and wants to support responsible producers while provoking consumers to become more enlightened. “When we first got into grass-fed beef, our customers didn’t like it,” he recalls. “But once they read about it, heard the stories and tasted it, their tastes changed.” Later, over a fair-trade coffee during a break in the symposium, a longtime Capers employee reminisces about her pioneering days of selling the first small, deformed organic apples. 


Part of the presentation deals with the certification scheme Whole Foods plans to roll out in Canada this summer. The program, managed by a third-party certifier, will rate meat producers on a scale of five on how they treat their animals. In order for a chicken producer to earn a level-four rating, for instance, its chickens must spend two-thirds of their lives on pasture and must not be transported more than eight hours for slaughter, among other requirements. In effect, the Whole Foods executives are rewriting the narrative on what it means to buy food. 


The way the execs describe their efforts to change consumers’ tastes, the success of the local-organic-natural industry seems more radical than a simple differentiation strategy. Retailers and producers are not only providing what consumers want, but are forcing them to reconsider why they buy the way they do. And Whole Foods doesn’t see its role as anything less. According to Kurstin Leith, Whole Foods CEO John Mackey describes his company as heroic. “He wants to end poverty, work toward sustainable oceans, evolve agriculture to the next level. Those seem like lofty goals, but we really want to change the way the world eats.” 


Whatever the goal, the marketing approach appears to be working. Industry analysts describe the organic food market as the most dynamic and rapidly growing sector of the global food industry, which is evidenced by sales of organic food products in Canada doubling from $1 billion to $2 billion between 2006 and 2008. While the amount of beef North Americans eat each year is falling (from 29 kilograms per capita annually in 2000 to 26 kilograms in 2009), local producers keep expanding. 


Don Millerd, an owner of Pemberton Meadows Natural Beef, says the distributor that markets the majority of his meat, operated by his daughter and son-in-law, is growing sales by 10 per cent each month. “The meat is tasty. It’s looked after at every stage of its life, so it’s just a little better,” he says. His products sell for around twice as much as conventional meat. 


Nevertheless, UVic’s Smith thinks the industry has a long way to go in showing consumers why they should spend more on organics, aside from discussing pesticides. “The terms are confusing. There’s too much wiggle room,” he says. “Consumers facing that confusion will spend less unless producers are clear about the benefits.” 


Producers seem to get that. At the B.C. Association of Farmers’ Markets conference that took place in Richmond this past March, much discussion was devoted to how producers can convince shoppers that their products are better.


In his keynote speech, Joel Salatin, an American rancher who has become an evangelist of natural farming, put it succinctly: “It’s our job to turn all these patrons at the farmers’ market into people who are scared to walk into a supermarket. This is education, but it’s also confrontation. Everyone says, The customer is always right. But that’s not true. They’re not always right. Often the customer is ignorant and stupid.”