Salisbury-based Perdue aims to break organic price barrier with new chicken brand

Consumers want to buy organic food, but often they can’t because it’s too expensive.

Perdue Foods, the Salisbury-based chicken giant, aims to break that price barrier with a new organic brand it’s launching at a time when organic food is growing nearly six times as fast as the overall food market.

The poultry producer’s new line of frozen breaded chicken nuggets, strips and tenders, called Simply Smart Organics, debuts nationally in early October. Perdue also sells organic fresh chicken under the Harvestland brand, but says Simply Smart is its biggest and most affordable organic line yet.

The new brand will not only feature the USDA-certified organic seal, but will also be sold for about half, or even less, the price of similar products from other top brands, Perdue says. Those products can sell for up to $15 a pound.

“The cost of those items is typically much higher than conventional fully cooked chicken,” Eric Christianson, Perdue’s chief marketing officer, wrote in an email. “When faced with the decision at the shelf, price is often a deciding factor for families.”

“Organic” describes how agricultural products are grown and processed, without synthetic chemicals, genetically modified organisms, growth hormones or artificial preservatives, flavorings or colors. Sales reached a record of nearly $50 billion in the United States in 2017, up 6.4 percent from the previous year, most of it food, according to the Organic Trade Association. Organics accounted for more than 5 percent of total food sales.

Growth rate has slowed as the market has started to mature, but demand for organic remains robust, with explosive growth in some smaller categories, such as organic condiments.

Organic meat, poultry and fish is the smallest of eight categories the trade association measures, but it has the second fastest growth rate, up 17 percent to $1.2 billion last year. It was the first time the category broke the $1 billion barrier.

In the past five years, the sale of organic products has shifted from mainly natural food retailers to include traditional chains or club stores, said Angela Jagiello, the trade group’s associate director of conference and product development.

Traditional supermarkets now account for almost 40 percent of organic food sales. Walmart, Target and club warehouse stores are among the biggest sellers.

“It seems to be the center store is not so much where the excitement is,” Jagiello said. “The excitement is at the perimeter, where everything is fresh.”

Consumer awareness of organic food continues to grow.

“Consumers perceive organic to be better for them and their family,” Jagiello said. “Transparency has become a bigger thing. They want to know more about the ways their food is produced.

“They may not know everything behind the label, but they understand the product is produced with a level of care and oversight.”

There is disagreement about whether organic food is more nutritious, shoppers say they choose organics to avoid pesticides (though some pesticides are approved for organic food) or genetically modified organisms, or GMOs, said Phil Lempert, a supermarket analyst and editor of SupermarketGuru.com.

Retailers have begun to devote more store space to organic foods. Lempert said Walmart, Kroger and Whole Foods are pushing and promoting them.

“They know there’s consumer demand for it,” Lempert said. “What Perdue is doing is very, very smart, and they are able to deliver it at a cheaper price than typical organic chicken.

“It makes it more mainstream and opens it up to more consumers.”

He expects prices to decline as supply and operations become more efficient.

Scott Nash is CEO and founder of Rockville-based MOM’s Organic Market, which sells only organic produce and many other organic products.

The growth of organics among producers such as Perdue and among traditional grocers gives the overall industry a boost, he said.

Organic food is becoming more mainstream because, he said, “it’s the right thing, the evolution of something that’s good. The problem is supply always has been behind demand, which means it’s always been more expensive.”

As more large retailers sell organic food, he said, supply will begin to catch up, and prices should drop.

Over the three decades he has been selling organic food, Nash said, he has seen double-digit annual growth. As other retailers have jumped on board, MOM’s has gained customers.

“People don’t go from Doritos and Coke to kale overnight,” he said. “You have to start by walking by organic foods in the Walmart or walking by organic foods in Safeway, then you become curious and try it. … Those retailers are incubating our customers for us.”

Perdue’s Christianson said the company is seeing growing demand for products that consumers recognize as better for them.

The Simply Smart Organics line will be available in Giant, Walmart, Safeway, Shoppers, Harris Teeter, BJs and other stores, and online through Amazon Fresh.

The expansion of organics follows efforts by the nation’s fourth-largest poultry producer to reform its animal welfare practices, steps announced in 2016 and hailed by animal rights activists.

The company has been changing the way it breeds, raises and slaughters chickens. Perdue and its contract farmers are doing away with raising chickens in crammed, windowless sheds and instead installing windows and increasing space to encourage rest, play and other natural behaviors.

The company said this year it has continued to increase the number of chicken houses with windows to let in natural light, installed video monitoring in its harvest plants and established a controlled-atmosphere stunning system at a harvest plan in Milford, Del.

Perdue say it can keep prices competitive on its new organic line through economies of scale and efficiencies in its supply chain. For instance, Perdue’s own Perdue AgriBusiness supplies the grains used to produce feed to raise organic chickens, one of the biggest costs.

“We fully expect organic to increasingly play an important role in our product lineup,” Christianson said.

lorraine.mirabella@baltsun.com

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