CHICAGO — The COVID-19 pandemic continues to fuel growth of the organic food industry, according to the Organic Trade Association (OTA), Washington. Organic food sales hit $50.1 billion in 2019, up 4.6% from the previous year.
While 2020 sales are still being calculated, preliminary insights from the OTA show organic was the “claim” of choice for at-home eating during the pandemic. And while it may appear easy to purchase store perimeter organic products, such as milk, meat and produce, once you enter the ambient and frozen aisles, it becomes more challenging. The more complex the food formulation, the more difficult it is to source organic ingredients. This challenge is especially pronounced for frozen meals.
Frozen foods were one of the fastest-growing categories in the grocery store in 2020, according to the Power of Frozen 2021 report, published by the American Frozen Food Institute, McLean, Va., and conducted by 210 Analytics LLC, San Antonio. In 2020, frozen food sales grew in both dollars (up 21%) and units (up 13.3%), with nearly all types of frozen foods seeing double-digit sales increases, per data from IRI, Chicago. The growth was first driven by pandemic stocking and later by pandemic cooking burnout.
Frozen foods have come a long way since the TV dinner. The supermarket freezer has become a destination for authentic global cuisine in single-serve and family-size portions. In many instances, consumers view the category as minimally processed and simply a frozen form of fresh, which is void of preservatives and other undesirable ingredients.
“There is no one way in which frozen food consumers define ‘healthy’ in frozen foods,” said Anne-Marie Roerink, president of 210 Analytics. “Some think about the type of food, with vegetables and fruit being frequent mentions. Others define it by what is or is not in there, such as low and no salt, artificial ingredients or GMOs. Descriptions vary from avoidance of ingredients they find undesirable to inclusion of ingredients they seek out. Others focused on growing or processing methods, such as fresh frozen and organic.”
Organic claims, such as 100% organic, certified organic and made with organic ingredients, represented $965 million of frozen food sales in 2016, according to IRI, as compiled for the Power of Frozen 2021. That number jumped to more than $1.5 billion in 2020, representing a compound annual growth rate of 8.9% and a noteworthy jump of 18.7% from 2019.
Across many nutrition and production traits, frozen food consumers most likely are to be interested in “real” ingredients, followed by fresh frozen and the absence of artificial colors. While many organic shoppers may wish there were more 100% or organic certified options, this is not an easy feat for food manufacturers, which is why better-for-you brands typically seek organic meal components that the judicious consumer may be most concerned with being produced organically and will call them out on product labels.
This approach reflects the supply issues that continue to dominate the industry, as organic food supply lags demand. This tightness prevailed a decade ago, and the pandemic exacerbated the situation.
“Same challenges as before, but many more piled on top,” said Simone Cormier, national spice coordinator, Allegro Spice Facility, Westminster, Colo., a subsidiary of Whole Foods Market, Austin, Texas. “It’s a mess.
“With all of the logistical — and potentially agricultural — challenges we currently face, pricing is highly volatile right now. The same is true with availability. You find product, and if you do not secure it fast enough, it’s gone or the price has increased. I see this almost daily. So there’s no dragging of feet anymore. If you need it, find it, and if the pricing is acceptable, then you better grab it. And not a one-month supply; you need to be thinking six months to one year’s supply, especially considering all the delays in getting the product in hand.”
One of the biggest challenges in frozen meals is the availability of organic herbs and spices. Many herbs and spices — conventional and organic — are sourced from outside the United States, simply because they grow best in tropical climates absent in most of the country. The pandemic has reduced the work forces abroad and at ports, slowing the growing, harvesting and importing of the flavorful ingredients for frozen meals to feature an organic claim.
The US Department of Agriculture requires certified organic products to have at least 95% organic ingredients in order to have the official organic seal on the package. There is an approved national list of allowed non-organically produced agricultural-based ingredients for use in organic-certified foods. Herbs and spices are not on the list, which means foods certified organic can only contain organically certified herbs and spices.
“The calculation (of 95% organic ingredients) is based on the weight or volume of the organic ingredients — excluding water and salt — divided by the total organic ingredients,” said Gwendolyn Wyard, vice president, regulatory and technical affairs at the OTA. “Units must be consistent, calculated either by weight or volume.
“The organic regulations require the use of organic ingredients; the allowance for non-organic ingredients is an exception to the rule. Non-organic can only be used when organic is not available and the ingredient is essential to the organic product.”
In other words, the product could not exist without the ingredient. Of course, herbs and spices are not essential to Hormel Foods’ Applegate Organics’ Organic Chicken and Apple Breakfast Sausage, but the spices do give the link the flavor consumers expect. The organic-certified (95% organic) frozen meat is made with organic chicken, organic apples, water, organic honey, sea salt and organic spices.
The company’s That Great Organic Blend Burger is made with either organic turkey or grass-fed beef, organic mushrooms and organic rosemary extract. The latter is an herb-based ingredient that slows oxidation and the development of rancid off flavors.
The Bridgewater, NJ-based company takes great strides to source organic ingredients, even for some of its more complex frozen foods, such as the Applegate Well Carved line. The beef and vegetable product is made with organic grass-fed beef, organic cauliflower, organic black lentil, organic spinach, organic butternut squash, sea salt, organic spices, organic dehydrated garlic and organic rosemary extract.
“With the right planning, availability has not traditionally been an issue,” said Bob Kaake, principal, Slice of Kaake Consulting, Noblesville, Ind.
Enter the pandemic
The coronavirus brought many supply issues, according to the OTA’s 2020 Organic Industry Survey. Organic food companies with international supply networks were under pressure, as many source raw materials that are produced in Asia, Latin America and Africa. Lockdowns disrupted supply chains. India, for example, is a major source of organic tea, herbs, spices and related ingredients. Emergency measures introduced by the Indian government halted food processing and exports.
Further, unprecedented congestion at Los Angeles and other California ports prevented importers from receiving product in a timely manner. This situation is resulting in shippers being assessed demurrage and detention charges, which raises the cost of imported product.
“It’s difficult for frozen meal manufacturers to absorb these additional costs,” Mr. Kaake said. “It’s already more expensive to produce and distribute frozen foods because of the costs incurred throughout the frozen supply chain. It’s much easier to make a non-GMO claim or just source select organic ingredients. If you strive for an organic claim, it is best to commit to a contract versus source in the open market.”
Since May 22, 2020, the Food and Drug Administration has made it easier to substitute or omit ingredients in foods to help minimize the impact of supply chain disruptions on product availability associated with the pandemic. The guidance document provides temporary flexibility to make minor formulation changes in certain circumstances without making conforming label changes, such as making a change to a product ingredient.
“When it comes to organic ingredient substitution, it really depends on the certifying agency’s position,” Ms. Cormier said.
She cautioned that during these trying times it is crucial to work with reputable organic suppliers, as food fraud and adulteration are more tempting than ever. If an organic ingredient is priced low and available in abundant quantities, be wary. The best way to ensure a certified organic ingredient is organic is to have it tested for pesticides.
Frozen meals rely on a several ingredients on the National List to assist with sensory appeal. The non-organic ingredients are referred to as being “organic compliant.”
“There are specific allowances, as listed on the National List, that may be used when they are commercially unavailable in organic form,” Ms. Wyard said. “Commercial availability is defined as available in the form, quality and/or quantity needed. Cost is not an acceptable justification for using non-organic.
“With colors, for example, only the specific colors listed on the National List may be used provided organic forms are commercially unavailable. The certified operator must demonstrate to the certifier that they have searched for organic.”
"With all of the logistical — and potentially agricultural — challenges we currently face, pricing is highly volatile right now."
— Simone Cormier, Allegro Spice Facility
These are all colors derived from agricultural products; however, just because a color is extracted from fruits or vegetables does not make it organic compliant. To be allowed, the color must not be produced using synthetic solvents and carrier systems or any artificial preservative.
“There are also a couple exceptions to the organic requirement for some gums, as they are non-agricultural and therefore could not be organic,” Ms. Wyard said. “This includes gellan gum, the high-acyl form only, and xanthan gum.”
Arabic, carob bean, guar, locust bean and tragacanth gums, along with carrageenan, a marine gum, may be used only if they are produced using water extraction and when organic forms are commercially unavailable.
“Again, organic must be used unless commercially unavailable,” Ms. Wyard said.
COVID-19 showed that winners in the current crisis are those that have kept their supply chains close to home, according to the OTA. The virus outbreak has many US companies thinking about diversifying their source bases, as well as focusing on domestic growers.
“The US was once a large player in garlic and onion for dehydration, but droughts on the West Coast — particularly in California — over the last several years have severely impacted cultivation and supply,” Ms. Cormier said.
Mr. Kaake said, “Most of these crops moved to China, but they are coming back to the US.”
The time is right
Organic farmers in the United States are ready to advance organic agriculture with the Biden administration. On Feb. 23-24, a group of organic farmers met with members of Congress and USDA policy makers to brief the new administration on the array of challenges facing the organic sector and the role organic farming plays in climate change.
“We have a broad list of issues and policy ‘asks’ to discuss,” said Megan DeBates, vice president of government affairs for the OTA. “There are plenty of spaces now where our ‘asks’ can come in — the next farm bill, climate change policy, COVID recovery — so this is a great time to be presenting the organic case.”
Issues include ensuring continuous improvement and accountability in organic standards; increasing funding for organic research; providing organic farmers, businesses and workers with adequate support and protection to help deal with COVID-19; restoring full funding to help organic farmers cover their certification fees; and investing in federal programs to support farmers in successfully transitioning to and staying in organic production.
“It’s important that we reach out to the new administration early,” said Perry Clutts, co-chairman of OTA’s Farmers Advisory Council and owner of organic dairy farm Pleasantview Farm, Circleville, Ohio. “The (US) organic sector continues to be resilient, but we need to move forward on rules, specific to organic production, that will help organic farmers compete fairly.”
Doug Crabtree, co-chairman of the advisory council, organic farmer and co-owner of Vilicus Farm, Havre, Mont., an organic dryland crop farm that produces 12 to 15 crops a year, said, “I’m looking forward to discussing how organic is climate-smart agriculture, and how growing organic is key to reinvigorating rural economies. We will share how our organic farms are building healthy soils, capturing carbon in our soils, mitigating the climate crisis, expanding to meet consumer demand, putting new farming on the land, and contributing to our local economies.”