Why the Organic Industry is Important to the Economy

Sometime the week of May 5, 1980, a man called to tell me that he had lost his job from a reduction in force at General Foods.  I can pin down the date, because that week was my first week in the recruiting industry.

The company had merged the Jello® division with the Post® Cereals division.

With the exception of the organic category, over the past three decades, the U.S. economy has seen the consumer packaged goods industry shrink as an employer.

During the 1980’s, the sales in the consumer packaged goods industry was actually growing.  So was the population.

Evidence of this growth could be seen in the growth of the world’s largest trade show, the annual “food show.”

The Food Marketing Institute that hosts the show once rotated its annual convention to different cities.  In the early 1980’s the show became so heavily attended that only the city of Chicago (and perhaps Las Vegas) had the hotel capacity and the convention center space to accommodate the show.

More and more companies were attending the show as it grew in popularity.  In response, the city of Chicago greatly expanded the McCormick Center to accommodate a show that a person could spend days attending and see something new every day.

However, as the show was growing in vendor popularity, the food industry was actually taking a swing in the other direction in terms of the number of people employed in the industry and the number of companies in the industry.

Companies were becoming brands or divisions of larger companies.   Durables (Everready®, Duracell®, Ray-O-Vac®), Personal Products (Schick®, Cheseborough-Ponds®, Gillette®), Food (Carnation®, General Foods, Quaker Oats®, Best Foods®), Beverage (Odwalla®, Gatorade®, Naked Juice®), frozen foods (Edy’s/Dreyer’s Ice Cream®, Breyer’s Ice®, Ben & Jerry’s®), and on through the industry, companies were disappearing.

Brands were not disappearing.  The sales were not declining.  However, companies and jobs were disappearing.  Where some products may have required two, three,  or more companies of people to manufacture, market, and distribute through to the retailer, there now existed one company employing a third or a fourth of the two or three companies required in the past.

Of course, there have been spins offs, splits, sell offs of divisions and brands, but the head count has not returned for yet another reason.

At the time that the Food Marketing Institute® moved the trade show to Chicago, Walmart®, Target®, SuperValu®, Safeway®, Kroger®, and Costco® had much smaller ownership of the total consumer packaged goods market.  There were far more retailers that bought direct store delivery for local store warehousing.

Manufacturers deployed much larger sales teams to cover many more regional retailers.  The need to employ people just to support these sales teams created even more jobs.

Additionally there were third-party vending companies (brokers) across the country to call on buyers at retail chains that numbered anywhere from two or three stores to normally less than twenty-five stores.  In the 1990’s, three brokerage houses emerged to dominate the food brokerage business: Acosta, Crossmark, and Advantage Sales and Marketing.

The organic category is kind of it own unique entity.  It is part of the consumer packaged goods industry, but exists in kind of a fourth dimension. The Natural Products Association™ provides lists of retailers, suppliers, information for members, and conducts trade shows.  and lists of the hundreds of companies in the natural products industry.  The federal government has strict guidelines on what is legally an organic product and provides information to retailers, producers, and consumers on organic products (USDA Online Publications).

The organic food industry has created hundreds of new companies that are able to get retail presence other start-up companies may not be able to get, because of the demand for  their niche products.  The result is that the organic industry is creating jobs, and creating those jobs across all categories of consumer packaged goods:

Categories
Bulk
Equipment / Appliances
Grocery
Healthcare
Herbs / Medicinal Products
Literature / Media
Miscellaneous
Natural Home / Textiles
Packaged Food
Packaging
Personal Care
Pet Products
Raw Ingredients
Refrigerated / Frozen
Services
Supplies
Vitamin / Supplement Products
NPA Buyer’s Guide

“The World’s Most Noble Headhunter!”

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