Pandemic Boosts Upward Trend In Sales of Organic Herbs

Quality, availability and price are the driving factors for the organic herb customer.

Originally printed in the May 2021 issue of Produce Business.

The “year of COVID” ushered in many changes to the lives of ordinary Americans, including a return to home cooking as dining out became restricted. And with home cooking came a nearly 13% jump in organic grocery sales, which totaled $56.4 billion in 2020, according to the 2021 Organic Industry Survey by the Organic Trade Association. Organic herbs were part of that growth.

That boost caps a decade-long record of strong growth for fresh organic herbs.

Chick Goodman, vice president of sales and marketing for Coosemans Worldwide Retail Group, headquartered in the US Virgin Islands and one of the largest specialty produce wholesalers in the US, notes that these days 75-80% of retail herbs in the US are organic. Goodman says, “Herbs were one of the first categories that went entirely organic in the US, beginning between 2006 and 2010. They were way ahead of their time.”

For growers, these are boom times. Chris Miele, sales manager for Jacobs Farm/Del Cabo, headquartered in Pescadero, CA, says the company has experienced 25% growth in the past couple of years. “People are home and taking the time to try new things,” she says. “This growth is consumer-driven.”

Steve Wright, chief customer officer at Shenandoah Growers, acknowledges the dual drivers of the boom: “Consumer demand for fresh, organic produce has steadily risen over the years, a trend that has accelerated in the context of the COVID-19 pandemic, as more consumers are cooking at home and increasingly concerned about eating and buying healthier foods.”

Headquartered in Rockingham, VA, Shenandoah Growers describes itself as “the nation’s largest USDA-certified organic, indoor/controlled environment agriculture company in the United States,” and claims the number one spot as a seller of fresh herbs in the US.

Even for growers of both conventional and organic herbs, organic takes the lead. “We are currently producing roughly 65% organic, 35% conventional. We eventually plan to go 100% organic,” says Suzette Overgaag, vice president and co-owner of Thermal, CA-based North Shore Greenhouses, Inc., growers of herbs and microgreens.

The surge in cable TV cooking shows gets a lot of credit for triggering interest in organic herbs even before the pandemic shut down restaurants and required a return to home cooking. “Fresh herbs became really popular when cable TV started to have cooking shows, and now you have people who came of age around the same time those shows began and they love using fresh herbs,” says Goodman.

Those shows have also broadened the range of herbs that shoppers are interested in trying. Miele observes that because of the cooking shows, shoppers have ventured, for example, in Asian types of cooking, requiring Thai Basil, lemongrass, or even makrut lime leaves, for example. Cilantro also is becoming more mainstream, instead of being limited to “Latin-type” foods.

The demand for fresh organic herbs isn’t limited to the US. In Canada, Imraan Esmile, president of Country Herbs, headquartered in Courtland, Ontario, Canada, notes sales of the company’s organic herbs have grown from 30-35% to 65-75% in the past 12 years. “People are searching more for organic product,” he says. “They are finding it to be more ‘real’.”

GO BIG ON BASIL

The most significant mover of fresh organic herbs is basil, at least in eyes of consumers and certainly in the experience of organic herb growers. Even as shoppers broaden their herbal palate, basil remains the king of fresh organic herbs and is not likely to be dethroned anytime soon. “Basil is still the king. It is 40-50% of herb section sales,” says Goodman of Coosemans Worldwide Retail Group. This jibes with growers’ experience as they call out their most popular fresh organic herbs:

• Shenandoah’s Wright says, “Basil is the top selling herb in the US, and its versatility and flavor impact keep its popularity growing.”
• “Basil, mint, thyme, and rosemary—in that order,” says Overgaag of North Shore.
• “Basil is the number one herb,” says Miele of Jacobs Farm/Del Cabo. She also gives a nod to rosemary, thyme, dill, and cilantro as “big staples.”

Basil’s popularity isn’t limited to the US market. “Our biggest sellers are basil and mint,” says Esmile of Country Herbs, the reason being, “Most people know how to use the product. If someone doesn’t know how to use a product, they won’t buy it.”

Although there’s little risk to basil’s top spot, seasonality plays a role in fluctuating consumer demand for the most popular organic herbs. According to Shenandoah’s Wright, “Basil, mint and cilantro are most popular in spring and summer, while herbs like thyme and rosemary are more even throughout the year.”

No matter the herb or the season, growers of fresh organic herbs are cautioned to keep their eyes on product quality. “The quality of the basil is the most important issue for the herb section,” says Goodman of Coosemans.

GET YOUR MIX RIGHT

How supermarkets hit the sweet spot for their mix of herbs requires an eye on seasonality as well as local preferences. While upscale stores may carry up to 20 varieties of organic herbs, growers report that major chains carry 12 to 15 varieties, and value-oriented retailers may limit their selection to 9 or fewer herbs, but there may be fluctuations in the mix, depending on regional ethnic favorites. “An item might be in the top five in an ethnic area, but would be in top 10 in a mainstream market. It depends on what the culture uses for herbs,” says Goodman.

Growers are ready to help retailers capture the benefits of seasonal swings. One tactic is cross-promotions. “We always try to suggest cross-promotion when ordering seasonal or holiday herbs,” says Miele of Jacobs Farm/Del Cabo. “There are various ways of connecting herbs with other items, for example, rosemary for meat or, during holidays, sage for turkey. Cilantro with avocadoes or onion in May for Cinco de Mayo appetizers.”

Don Helms, vice president of marketing for Shenandoah Growers, says “We’ve worked hard over the past three decades to develop and maintain strong relationships with our retailer partners, and as a result, we have a direct line of feedback that allows us to quickly react to market and consumer trends.

“Ensuring that the most popular herbs are always on hand and planogrammed appropriately is one of the most important things a retailer can do to drive sales. We offer a number of merchandising fixtures as well as permanent and promotional displays to take advantage of sales growth opportunities. As an example, merchandising basil with tomatoes, or mint with berries are natural parings and help drive sales of both products.”

STAY TUNED TO PACKAGING

Packaging plays multiple roles in the retail space. It can keep the product fresh and attractive, help shoppers find what they want instantly, and visually communicate brand identity. Growers of fresh organic herbs may offer multiple packaging options.

Overgaag of North Shore says her company offers both potted herbs in sleeves and herbs in clamshells, each of which appeals to a particular kind of shopper. “We find there are people who use list to cook with recipes, and then there are people who shop for what they feel like eating in the moment. Both of our items sell well in stores together,” she says.

At Jacobs Farm/Del Cabo, the clamshell is the most popular form of packaging for its customers, but Miele sees a shift toward fresh bunches among smaller retailers as awareness of the environmental impact of plastic grows. But bigger retail operations still want clamshells, the vehicle of choice for nearly two decades.

Supermarkets still need to keep an eye on the move from plastic, however.

“The new trend is sustainability,” says Coosemans’ Goodman. “Coosemans is the leader in this. We have a micro-perforated bag that has 75% less plastic than a clamshell. It’s a high-tech, multi-layer film that extends the shelf life of the herbs up to 20%. It cuts down on shrink for the retailer and makes for long herb freshness in the consumer’s refrigerator. We think this will be the next trend in the industry.”

He predicts, “Just as herbs were a leader in the conversion to organic in the produce department, herbs will be a leader in sustainability.”

“Increasingly, consumers are demanding more environmentally friendly and more easily recyclable packaging options,” says Shenandoah’s Wright. “We’re working hard to deliver on that without compromising the freshness of our products that consumers have come to expect.” The company offers nearly one dozen varieties of potted living herbs and 33 varieties of fresh-cut herbs in clamshells of varying sizes. The fresh-cut herbs are its largest selling product group.

SEE HOW THEIR GARDENS GROW

Whether large-scale or small, organic herb growers focus on operations that are environmentally friendly and sustainable.

On the large-scale side is Shenandoah Growers, which operates seven indoor growing locations (“Biofarms”) in the US.

Soil is at the core of the Biofarms’ indoor production system, which uses a proprietary, closed loop nutrient regeneration technology that enables each Biofarm to produce its own nitrogen rather than using chemical fertilizers. With its totally controlled indoor environment, Shenandoah claims it can grow produce using over 90% less water than field farming; it also recaptures, recycles, and reuses water. Because of the maximized efficiencies resulting from the controlled environment, “We’re able to produce in just one of our Biofarm facilities the equivalent of what can be grown on 300 acres outdoors,” Wright says.

On a smaller scale, North Shore Greenhouses grows all of its herbs hydroponically in its more than 10 acres of greenhouses, all powered by solar and geothermal energy. Growing the herbs hydroponically is especially important as the ready availability of water is dropping. “We save 70-90% of water compared to field-grown crops,” says Overgaag. In addition, over the past five years the grower has perfected “…a new invention of organic NFT (nutrient film technique) fertilizer solution, to feed our crops the very best nutrition, using limited resources, and the most efficient method possible.”

Predatory insects instead of pesticides also are used to manage North Shore Greenhouse crops.

CONSIDER RE-PRICING ORGANIC HERBS

Aside from seasonal variations, the pricing of fresh organic herbs is generally steady. This steadiness masks an underlying concern about pricing for growers of organic herbs. Simply put, growers can’t adjust pricing on the fly no matter what the weather or breaking news throws at them or when the supply chain hits bumps. “Pricing is very competitive, and you need to pay attention to what’s going on,” says Esmile of Country Herbs. “With herbs you can’t really adjust your pricing, like you can with apples or lettuce, for example. There are multiple factors.”

“Pricing is always an issue,” says Overgaag of North Shore. “We don’t ask much more for the product if it’s organic. The consumer still needs to be able to afford to buy the products, and we want to be an option on the shelf, so it’s a fine line to balance.”

Taking an historical perspective, Goodman of Coosemans observes that when retailers were moving from conventional to organic herbs, organic was as much as 5-10 cents more expensive per clamshell. But now, the pricing is almost similar, and if there is a difference it is at most 5 cents. His sense is that they can charge more. Organic herbs are “…a destination category,” Goodman says, and customers are looking for the best quality herb. Quality and availability are the driving factors for the organic herb customer. “It’s one of the few items in the store where I’ve seen the price go up and no impact on sales,” says Goodman.

Concludes Wright of Shenandoah Growers: “Our products carry relatively low price points that provide a strong value proposition. The fact that we are certified-organic and still able to meet those expected price points makes it less of an issue than you might think.”