Natural instinct: have a feeling the organic market's got a lot to offer? You're not the only one

Entrepreneur, August, 2003 by Nichole L. Torres

IF YOU'RE LOOKING FOR A HOT MARKET, look no further than organic products- those grown and farmed in such a way as to ensure sustainability (for example, without pesticides). According to the Organic Trade Association (OTA), the organic market is growing 20 percent every year. "Up to 6o percent of the population [is] willing to buy organic products," says Holly Givens, communications director of the OTA.

But to get those products into the hands of consumers, entrepreneurs must know their market well. The organic food and beverage market is estimated to be about $6.9 billion and is expected to grow between $12 billion and $13 billion by 2007, according to the Natural Marketing Institute (NMI), an organic market consulting firm in Harleysville, Pennsylvania Joe Marra, executive director of NMI, notes all areas are experiencing growth, especially spices, yogurt, coffee and meats.

Jumping into the trend is Ian Diamond, founder of Organic Connection Inc. in South Salem, New York. This entrepreneur, who's been in the organic industry for 20 years, launched his Web-based organic food delivery company in August 2002. Diamond, 44, owned an organic retail store in Melbourne, Australia, in 1985, but a drought forced him out of business. He then moved to New York in 1996.

Diamond noticed that while organic food in Europe was high-end, the offerings in the United States were "middle of the road," he says. "You don't see a wide range of organic foods, artisan foods or gourmet foods. In Europe, you see every food [category] covered with organic offerings." Wanting to replicate that variety here, Diamond set up his food delivery service, which specializes in organic meats. He projects $300,000 in sales for 2003.

Within any hot market, it pays to find your niche. Rochelle A. Lavens and Marleen Trader did just that with Heidi's Homemade Inc. in Columbus, Ohio. Started in 1999, this business specializes in organic pet food. The entrepreneurs have launched a brick-and-mortar store, an online store and a wholesale business.

"My dog, Heidi, got cancer' explains Lavens, who expects six-figure sales for 2003. "I was devastated." Lavens researched what went into pet foods and discovered some ingredients included spoiled foods, waste products and even parts of euthanized anlinals. "It was startling," she says. "I felt like I contributed to her illness." Detennined to help her pet, Lavens, 43, began making organic snacks, part of the organic diet she believes may have helped extend the dog's life by two years.

Now, says Trader, 49, the main challenge is educating consumers about how organic foods can benefit their pets. Lavens agrees: "You have to do your research. Don't mislead people--know your suppliers. Are they free range? Are they organic?"

Whatever avenue you choose, the future looks bright "I see organic products continuing to become more available in more places and with increasing variety in the product choices," says Givens. "There's still room for additional brands and companies."

While success in the organic market is inspiring, it's certainly not without its challenges. The federal government released new regulations in October 2002 detailing the specifications any product has to meet in order to be called organic. For any organic start-up, says Givens, learning the new regulations should be your first step. Check out www.ams.usda.gov/nop for more information.

Winning Ways

MEET THE WINNERS OF THE WHARTON BUSINESS PLAN COMPETITION.

TIMES HAVE CHANGED SINCE FIVE YEARS ago, when almost every contestant in the Wharton Business Plan Competition at the University of Pennsylvania's Wharton School was an Internet firm. This year, the watchword is "diversity," says Nicole Righini, associate director of entrepreneurial programs at Wharton. Among tech and energy-related companies, the 2003 winner was a pet health insurance business. Chris Ashton, 30, Natasha Ashton, 29, Laura Bennett, 37, and Alex Krooglik, 30, won $20,000 in start-up capital.

The fact that the Ashtons came from a personal standpoint helped--Chris and wife Natasha got the idea for the company when their cat, Bodey, fell ill in 2001. "We took her to the vet hospital--it was expensive," recalls Chris. After paying large out-of-pocket costs, the couple looked for the pet insurance that was easily available in England, their homeland, but wasn't as easy to find in the States.

The pair, students at Wharton, met up with Bennett, who had insurance experience, and Krooglik, who knew the technical side of a start-up. "We'd done surveys of pet owners and their needs," says Chris. "We collected over 2,000 responses to our first survey, so we had a strong assessment of what people wanted." They also got data from veterinary clinics to come up with a pricing plan.

It was the comprehensive business plan that helped set them apart from the competition, says Righini: "They'd given their business and marketplace a great deal of thought. They came up with a novel idea, and they were able to support it with their financials."