The Organic Foods Revolution

Thanks to companies like Kashi, interest in and consumption of organic foods continues to expand in the U.S.

By ReportLinker

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According to research that ReportLinker has published from research done by the NYU Stern School of Business, Center for Sustainable Business, people in the U.S. can give thanks for the explosive growth of the organic foods industry to Kashi.

You have most likely seen Kashi’s cereals in your local supermarket or grocery store. The Kashi company was founded in southern California in 1984 by the entrepreneurial husband-and-wife duo of Philip and Gayle Tauber. The Taubers were disappointed in the nutritional quality of most breakfast cereals of the time, so they set out to offer a healthier, but still tasty, alternative choice. Their whole-grain products were high in protein and weren’t made with any artificial ingredients.

By the year 2000, annual sales had reached $25 million. It was at that time that the Taubers sold their company to Kellogg’s.

Kashi was a very small company compared to the $7 billion per year Kellogg’s, a longtime giant in the cereal manufacturing and marketing industry. But Kellogg’s North American division president, John Cook, said of the acquisition, “Kashi will enhance our leadership position in the RTEC (ready-to-eat cereal) category and further extend our commitment to build our consumer base in the rapidly growing natural foods marketplace.”

Cook knew what he was talking about. By 2010, Kellogg’s independently managed Kashi brand was bringing in $600 million in annual sales, nearly five percent of Kellogg’s total revenues. But, also by 2010, the quest for more nutritious food products had evolved from its mid-1980s origins to include a lot more people, and they were equally concerned about environmental and human health risks posed by synthetic pesticides used in crops.  

People wanted “natural” foods, but the word “natural” on U.S. food product labels had no strict definition, and there was no strict protocol for having food manufacturers be lawfully permitted to describe their ingredients as “natural”. However, this dilemma would be addressed because of the introduction of GMO (genetically modified organism) food products in the mid-1990s.

In 1996, agricultural chemicals giant Monsanto began commercially selling GMO seeds. These seeds had been genetically altered such that the plants grown from them were resistant to Monsanto’s powerful synthetic glyphosate herbicide, trademarked RoundUp. As a result, farmers began liberally spraying these GMO crops with a lot of RoundUp, to more effectively kill the plant-killing weeds. As the weeds became more resistant over time, farmers increased the volume of spraying. Thus, GMO crops were getting to consumers with significantly higher concentrations of synthetic pesticide residue, a clear health risk.

In 2002, the USDA established a strict protocol for the production of food products to be lawfully labeled “organic”, which was clearly defined as being at least 95% organic. Synthetic pesticides could not be used, outlined practices to keep the soil healthful and regenerated had to be followed, and GMOs were forbidden. “Organic” came to be synonymous with “natural”.

But the roots of this revolution had been with the private Kashi company from the start. Kashi had developed its own organic certification program, trademarked Veri-Pure, overseen by an independent testing organization. In 2002, it was Kellogg’s Kashi brand which produced the first line of USDA Organic Certified cereals.

By 2015, according to Consumer Reports, “Around eight in 10 households currently buy at least some certified organic products — mostly produce and dairy.” And in spite of the continuation of obstacles to getting organic food products — including significantly higher prices, a fragmented and subdivided market, and persistent labeling confusion (“natural” still has no strict definition, for instance) — while total US food sales grew 3% in 2015, organic foods sales grew 11%.

See the report here.

ReportLinker is search engine for economic and industry statistics that turns data and PDF documents into structured knowledge.

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