Natural foods CEOs debate return on organic certification

BOULDER — To certify (organic) or not to certify?

That seems to be a major question weighing on the minds of several business leaders in Boulder County’s natural and organic foods sector.

Make no mistake. The public’s demand for organic foods has increased in recent years. But along with that have come higher prices for local food brands as they try to source organic ingredients. That’s to comply with a certification that was already rigorous. And, while demand for organic food has increased, the industry still faces the misperception from some consumers that organic or non-GMO or gluten-free might be better for you but also inherently loses a notch in the flavor department.

That’s leading some local brands that have organic certifications to consider spinning off “natural” or more mainstream lines of products, while some of those weighing whether to up their game with an organic certification question whether it’s worth the costs involved. The topic was one discussed at length in BizWest’s CEO Roundtable on the natural and organic food industry on Tuesday morning, a forum sponsored by the law firm of Berg Hill Greenleaf & Ruscitti and the accounting firm of EKS&H.

JJ Rademaekers, founder and CEO of Boulder-based JJ’s Sweets said spinning off natural versions of his company’s organic candies is an avenue his company has explored as it looks to entice consumers to try its products. He said that by tweaking a couple of ingredients from organic to non-organic, such as coconut milk, JJ’s Sweets could reduce costs significantly, and thus the retail price, of a natural line that isn’t certified organic but otherwise embodies the company’s values.

“If we’re positioned as super-premium and organic … and we’re expensive, there’s a real sort of barrier there,” Rademaekers said. “So as we transition, I could see us spinning off a natural line.”

That said, Rademaekers also stressed that his company and industry still must “combat” the notion that consumers trade flavor for wholesomeness with organic or other health-category products.

Scott Roy, president of Boulder Homemade Inc., which makes Boulder Organic Ice Cream, echoed Rademaekers’ sentiments and said that the flavor misconception is perhaps toughest to overcome in the indulgence category of things like ice cream and candy.

“You’ve already made the not healthy decision when you decide you’re going to buy candy, ice cream, etc.,” Roy said, adding that the deciding factor for most people at that point is “flavor, flavor, flavor.”

That can cause a lot of price pressure for indulgence brands operating in the organic space.

Mark Wood, founder of a company called ReMarkable Foods LLC that makes all-natural, gluten-free apple chips, said he’s considering adding an organic line, but also questions how willing consumers are to pay for it as he notices the organic produce sections of some grocery stores shrinking.

But others said it’s exactly that premium nature of organic products that draws many consumers in. The trick, said Compass Natural managing partner Steven Hoffman, is to continue to drive home the story about why organic is important. Organic, he said, can still be a major differentiator that helps consumers justify paying extra.

“If you can start telling the story better, you can start to show the true value of organic,” Hoffman said.

Of course, depending on the category, there are some realms where the barriers to organic certification can’t be overcome.

Marty Grosjean, founder and CEO of Only Natural Pet, said most pets eat meat. But organic meat is wildly more expensive to source than regular meat, and can lead to a 100 percent premium on the cost of say, a bag of dog food, to consumers. That’s not a leap most pet owners are ready to make yet, he said.

Seafood, meanwhile, can’t be certified organic in the United States at all. For LoveTheWild CEO Jacqueline Claudia, that means trying to market a premium line of seafood meal kits without the certification even though the company touts its fish as responsibly sourced and despite its sauces including only certified organic ingredients.

Claudia said she wonders whether people care enough to look at the side of the package and see that the sauces are organic, or whether they would rather have the product for a slightly lower price when they don’t see the certified organic label.

“So are we just throwing away money by buying organic ingredients for the sauce line?” she said.

Part of the issue for many producers is that the “natural” label isn’t monitored by the government like organic certification is, which means it’s come to mean less to consumers no matter how virtuous a product or company is. There was optimism Tuesday, however, that that could change as the FDA explores whether to define what natural must mean on food labels.

Other topics and issues facing the natural and organic industry covered in Tuesday’s roundtable included:

REAL ESTATE: Like many of Boulder’s industries, affordable space has become tough to come by for food producers, several of whom now maintain headquarters in Boulder but have moved production east to communities such as Longmont, Broomfield and even Denver. Simply Dara Inc., a company that makes Simply Dara Raw Balls snacks, is one such company as it builds out a kitchen at a facility in unincorporated Weld County east of Longmont that houses multiple natural and organic food companies. The company currently leases space in Boulder but needed to move production as it grows. “There’s good incentives to move out of Boulder,” Simply Dara founder Dara Haid said.

SOIL CONSERVATION: Hoffman recently returned from the climate summit in France, and said regenerative agriculture and soil conservation have become significant topics of discussion as world leaders look for ways to reduce carbon emissions. That plays into the natural foods industry’s strengths, he said. “It’s a thing where the organic industry can once again take leadership and drag everyone else along,” Hoffman said.

Participants in Tuesday’s CEO Roundtable included: Jacqueline Claudia, CEO, LoveTheWild; Marty Grosjean, founder/CEO, Only Natural Pet; Dara Haid, founder, Simply Dara Inc.; Steven Hoffman, managing partner Compass Natural LLC & co-owner, Best Organics LLC; JJ Rademaekers, founder/CEO, JJ’s Sweets; Scott Roy, president, Boulder Homemade Inc.; Mark Wood, founder ReMarkable Foods LLC; Heidi Potter, Berg Hill Greenleaf Ruscitti; Jim Cowgill, EKS&H; John DeVore, EKS&H. Moderator: Chris Wood, Editor/Publisher, BizWest.

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