October 27, 2003
By Susan McClelland
Healthy Profits, Booming exports are driving the fortunes of organic food manufacturers.
It’s not surprising Arran Stephens got into the organic food business. His father ran an organic berry farm on Vancouver Island In 1967 and 1971, respectively, Stephens opened one of Canada’s first vegetarian restaurants and launched one of North America’s original natural food shops, called Lifestream. By 1977, he was making organic pastries, energy bars, juices and other prepared foods to sell in his restaurant and store. “Back then, there were no tofu or soy products around,” says Stephens, 59. “We had to make them ourselves.”
Stephens is no longer involved with the restaurant and store, but he’s still in the business. Nature’s Path, which he launched in 1985, produces organic cereals, waffles and granola bars and successfully competes against the multinational food companies that are now getting into organics. Nature’s Path has grown about 25 per cent a year, and with sales of more than $60 million in 2002, it’s the countries biggest organic food manufacturer. That growth should continue: Nature’s Path controls more than 26 per cent of the U.S. organic and natural breakfast-cereal market, and demand is skyrocketing. “I once was asked how a pipsqueak company like mine could ever compete against the giant cereal producers,” says Stephens. “I responded with, ‘Have you ever heard of David and Goliath?’ In my case, David has a product the public wants.”
It’s been a fairly muted retail revolution, but organic products have outgrown health food stores and muscled their way onto the shelves of every major supermarket chain in North America. The appeal now is mainstream, driven in part by increasing consumer resistance to produce that is genetically modified or grown with the use of pesticides. Since 1985, sales of organic foods in Canada have grown about 20 per cent a year, and there’s room for improvement: they represent less than five per cent- or about $1.2 billion- of the estimated $64 billion Canadians spent on groceries in 2002.
The windfall for Canadian companies has come from exports. “There’s a lot of confusion in the marketplace about how the major food companies are producing their products,” says Debra Boyle, president of Pro Organics., Canada’s largest organic food distributor. “That makes organic food very attractive.” Thanks to an abundance of high quality and comparatively inexpensive organic wheat- grown without chemical pesticides, artificial fertilizers and biological engineering-wheat-based products comprise the biggest component of Canada’s exports.
ShaSha Bread Co. in Toronto, for instance, was founded in 1999 by Shaun Navazesh, a former pastry chef. Working out of cramped , rented quarters, he sold small batches or organic sourdough products and, later, ginger cookies. Navazesh had no marketing budget and only a vague business plan, but his tasty bread was an instant hit. Within eight months, he moved his operation to a 750 sq. m plant in Etobicoke, Ont., and how he’s expanding to fill huge orders from U.S. specialty stores. The company grossed more than $2 million in 2002, and with the expanded sales into the U.S., Navazesh confidently forecasts fatter returns this year. He claims, however, that his business success is merely a by-product. “I am not blind to the opportunities,” he says. “My purpose, though, isn’t to make tons of sales. It’s to make the best bread possible.”
Philanthropy is something of an industry trait. Navazesh annually gives more than $100,000 worth of his bread to food banks and charities. And at Nature’s Path, Stephens donates on per cent of revenues from his EnviroKidz cereal line to charitable organizations. Those initiatives fit with the producers’ belief that their products serve a broader good. “Organic means less poisons in our air, land and water,” says Stephens. “I would love to see 10 per cent of our agricultural output be organic-then the movement would really start to snowball.” And, by extension, sales would really climb, too.
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