Organic milk: Market moover

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11:48 PM CDT on Monday, April 11, 2005

By KAREN ROBINSON-JACOBS / The Dallas Morning News

The nation's organic milk producers – including a subsidiary of Dallas-based Dean Foods Co. – have stumbled into a problem that most companies only dream about: Their product is too popular. As diet-conscious consumers step up their purchases of healthier foods, organic milk suppliers are grappling with the first shortages since organic products made their way out of natural-food stores and into mainstream supermarkets.

NATALIE CAUDILL/DMN Some stores have been getting only 70 percent to 80 percent of their regular orders.

"There is a tight supply for organic milk," said Caragh McLaughlin, senior brand manager for Horizon Organic, a unit of Dean Foods, the nation's largest dairy producer. "Last summer demand started moving up. And over the winter it's gone crazy. ... And part of that was unanticipated by any of us."

The shortage has begun to ease after peaking in January and February, experts say, as spring gives cows access to more grass and organic feed. But the industry is still debating how to boost capacity while remaining true to the organic philosophy.

"We're working close together with ... [suppliers] to keep this from happening again," said Jake Fontenot, national grocery buyer for Austin-based Whole Foods Market Inc., which posted signs at many of its markets to alert consumers to the problem.

About 70 percent of the chain's milk sales are organic, he said.

THE RULES

For milk to be certified organic, it must meet these criteria:

No bovine growth hormones can be given to the cows.

Most antibiotics cannot be used.

Cows' feed and the land used to grow that feed must be free of any synthetic herbicide, fungicide, pesticide or petroleum-based fertilizer for at least three years.

Organic milk represents a fast-growing – and trend-defying – segment of the $10.2 billion milk market, where conventional milk sales have been flat or declined in recent years.

Organic sales at health-food and conventional stores grew more than 15 percent last year to $834 million, according to A.C. Nielsen LabelTrends, which tracks consumer spending in natural food and conventional stores.

Still, it remains a niche product at mainstream grocers such as Albertsons, where spokesman Walt Rubel estimated organics' share at 2 percent of milk sales.

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