Sunday, August 27, 2000

Blooming Prairie proves organic foods are on the rise

By Anne Fitzgerald
The Des Moines Register

        Most days, activity at Blooming Prairie Cooperative Warehouse resembles a beehive.

[photo] Jesse Singerman, CEO of Blooming Prairie's warehouse in Iowa City.
(Des Moines Register photo)
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        In a facility the size of two football fields, workers stack and unstack shelves as they fill orders from millions of boxes, bags and bottles stuffed with beverages, pills and other natural food products.

        The Iowa City, Iowa, co-op, one of the largest natural food distributors in the country, ships products to buyers in 13 states. With sales topping $100 million for the year ended June 30, Blooming Prairie is part of a new style of agriculture that features alternative approaches to the production, processing and marketing of food.

        “It's been a really steep growth curve,” said Jesse Singerman, chief executive officer of the co-op, which is owned by 2,000 buying clubs and food retailers throughout the Midwest.

        A lot has changed in the 26 years since Blooming Prairie was founded in 1974 by members who were, at the time, considered part of a counterculture.

        At the beginning, the co-op's product list fit on a single sheet of paper; today, it takes two books of about 300 pages each to contain price lists for retail and buying club customers.

        The first warehouse was on the third floor of an old brick building in the heart of Iowa City, and workers used a freight elevator with a 500-pound weight limit; today, electronically tracked inventory is stored on shelves 25 feet tall and moved by fork lifts and other heavy equipment. In the old days, the lead time on orders was about a week; today, the turnaround can take less than a day.

        Blooming Prairie's sales grew from $2 million in 1980 to about $20 million in 1990 and more than $100 million now.

        Two factors drove growth.

        One was the increase in demand for “natural foods,” which include organic foods and other products made without the use of artificial ingredients or preservatives.

        “People are very concerned about what they are eating,” said Linda Johnson, general manager of Wheatsfield Grocery, a natural foods co-op in Ames. Consolidation also drove up sales. “The whole industry has gone through a massive consolidation in the past 10 years.”

        That includes Blooming Prairie, which in 1988 acquired another major natural foods distributor in Minneapolis.

        At Blooming Prairie, about 40 percent of the food products are organic, said Sue Futrell, director of marketing and sales. The co-op expects annual growth to top 20 percent in the years ahead, which is the projected growth rate for organic food sales nationally.

        As a food distributor, Blooming Prairie operates largely out of the limelight, hidden from consumers' view as it supplies meat, dairy products, fresh produce and a wide array of processed products to stores and restaurants.

        Signs that natural foods are growing in popularity are evident from farm gate to retail rack:

        • In small but growing numbers, farmers are shunning synthetic chemicals and antibiotics to produce organic crops and livestock.

        • Farmers and rural entrepreneurs are banding together to form processing and marketing ventures to capture more of the profit from a growing global demand.

        • Food distributors and retailers are seeing significant growth in their natural products business.

        One of Blooming Prairie's customers is Whole Foods, the largest U.S. natural foods supermarket chain. The co-op supplies 16 Whole Foods stores.

        Out-of-stock items are “a chronic problem in the industry that doesn't seem to be getting any better,” Ms. Futrell said.

        Another issue is increased interest by major food manufacturers and retailers in the natural and organic foods business. Companies such as General Mills Inc., Wal-Mart Stores Inc. and Super Valu Inc., are expanding quickly in that area.

        Ms. Singerman said she does not worry about co-ops like hers being squeezed out of the business.

        Dennis McLearn, general manager of New Pioneer Co-op, an Iowa City food cooperative already doing more than $8 million in business annually and about to open a second store, takes a similar view.

        “It's no longer a lunatic fringe,” he said. “It's everywhere. It's mainstream.”

        The natural foods trend is global.

        In Europe, Japan and China, consumers are clamoring for natural foods and other products. China alone is experiencing a compound annual growth rate of more than 40 percent in demand for organic foods and beverages, according to a recent issue of Organic and Natural News, a trade magazine.


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