Denver Business Journal
by Kimberly Morrison Jacksonville Business Journal
It was a decision that made good business sense. With the cost of producing organic soybeans on the rise and consumer demand flattening, Broomfield-based WhiteWave Foods Co. — a subsidiary of Dean Foods of Dallas — ditched organic in favor of conventional soybeans in all but three of its Silk Soymilk products.
But it turns out the change is costing WhiteWave in reputation among some of its consumers.
The Organic Consumers Association has called for a boycott of WhiteWave products, which also includes Colorado’s Horizon Organic-brand dairy.
Horizon and Silk represent the nation’s leading brand of organic milk and the best-selling soymilk brand.
“Dean Foods has just declared war on the organic industry,” said Mark Kastel, senior farm policy analyst at The Cornucopia Institute, an organic industry watchdog.
Soon after the shift to natural Silk Soymilk, WhiteWave announced it planned to introduce a natural dairy product to the market under the Horizon Organic label. It will mark the first non-organic product that Horizon has produced.
Industry advocates argue the introduction of natural products by leading organic companies blurs the line between natural and organic.
WhiteWave spokeswoman Sara Loveday said the company wanted to be able to continue offering its products at a competitive price, and is diversifying to meet changing consumer demand, which has been gravitating towards lower-priced, conventional milk in a broader recessionary trend of “trading down.”
At the same time, higher fuel prices and other factors have made organic soybean production less attractive, while profit potential for conventional soybean production has improved.
Organic soybean prices had increased to $28 per bushel last year, while conventional soybeans fetch $12 per bushel, according to the U.S. Department of Agriculture.
The combination with an economic downturn created an unsustainable cost structure for WhiteWave, but the company doesn’t think its betrayed organic consumers.
“We really don’t feel like we’re moving away from organic products,” Loveday said. “We feel like we need to diversify and answer some of the consumer demand. Natural is a large, growing industry.”
After more than five years of double-digit growth, the organic food industry is experiencing a flattening in demand. Organic food sales are expected to dip 1.1 percent to $5.07 billion this year, according to Mintel, a Chicago-based research firm.
But after a major push by food and consumer product companies in recent years to introduce products labeled as “natural,” eco-friendly,” “fair trade,” “sustainable” and dozens of variations, consumers are more confused than ever about what the claims mean.
“Many consumers do not understand green terminology,” said Suzanne Shelton, whose firm, the Shelton Group, recently released a national survey examining consumer perceptions on food labels. “They prefer the word ‘natural’ over the term ‘organic,’ thinking organic is more of an unregulated marketing buzzword that means the product is more expensive. In reality, the opposite is true.”
The USDA requires that producers of certified organic products meet certain standards, while other terms like “natural” are not regulated. Natural food is considered food that are minimally processed and don’t contain additives, and the U.S. Food and Drug Administration has discouraged the food industry from using the term because of its ambiguity.
WhiteWave says it partners with Conservational International to ensure its soybeans are grown without genetic engineering and are sourced in a sustainable, socially responsible and ethical manner.