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By EDWARD D. MURPHY, Staff Writer Tuesday, May 15, 2007

Don't think that full parking lot outside the new Whole Foods Market in Portland has gone unnoticed.

Certainly the executives who run mainstream grocery stores -- essentially Shaw's and Hannaford in southern Maine -- have seen the stream of cars going to the store, which is known for its wide selection of organic foods.

Now they're fighting back, trying to undercut Whole Foods' pre-eminence among consumers who are interested in taking home a wide variety of organic and natural products to put on the family dinner table.

Hannaford Bros., for instance, recently sought and received certification as an organic retailer from Quality Assurance International, an independent agency that oversees a program that ensures that stores meet organic guidelines. Hannaford is the first traditional supermarket chain to gain certification, and it now offers more than 3,500 natural or organic products, about 10 percent of the store's products. Most of the products are distributed among conventional brands rather than relegated to a separate aisle.

New and remodeled Shaw's stores will have more room devoted to that chain's Wild Harvest line of natural and organics, part of the chain's effort to present itself as the place for "premium fresh and healthy" food.

And the number of Maine certified organic farms has doubled in a decade, providing a greater ability to produce the steady stream of products that chains need.

"It's key to our competitive strategy because that's where we're going to differentiate ourselves," said Judy Chong, spokeswoman for Shaw's. "A box of crackers is a box of crackers, but when you've got locally grown organic produce ... people really focus on quality."

Sales of organic and natural products are far outpacing food sales in general, said Harry Balzer, vice president of NPD Group, a consumer marketing research firm.

Balzer said food sales as a whole grow by a percentage point or two a year, while sales of organic foods grew by 16.5 percent in 2005, according to the Organic Trade Association, to $13.8 billion. That number is expected to grow by 11 percent annually through 2010, the group said.

Nearly a quarter of the American population eats organic food on a regular basis, Balzer said.

"It's about the same size as the number of people on a diet in this country," he said. "It's as mainstream as dieting."

For farmers, that means a growing market for organically grown food and more space on grocers' shelves.

Russell Libby, executive director of the Maine Organic Farmers and Gardeners Association, said the number of certified organic farms in the state has grown from 16 in 1986, to 180 in 1996 and to 360 this year.

Libby said the number of organic farmers is probably much higher because some may follow organic growing principles -- by not using pesticides or artificial fertilizers on plants and using organic diets and no antibiotics or growth hormones for animals -- but haven't sought certification.

Libby said the biggest growth has been in dairy farming, which is significant because it usually takes a couple of years for a dairy farm to shift to organic production.

There are three significant markets for organic food, Libby said. A fast-growing segment is direct-to-consumer, which means sales via farm stands, farmers' markets or community-supported agriculture, in which consumers buy a share of the harvest up-front and get a steady supply of fresh fruit and vegetables through the year.

A second market is the small wholesale business, he said, with sales to restaurants and independent local natural food stores. The third is traditional wholesale sales to grocery chains, and the growth in organic farms is essential to providing a large enough supply for those customers, Libby said.

"That has built some real nice markets," he said. "The opportunity is for, literally, thousands of (organic) farms in Maine."

Libby said Hannaford has been a popular customer among farmers because they can ship to the chain's Maine warehouse. Selling to Shaw's, he said, involves trucking the produce to Massachusetts.

Chong said Shaw's highlights its New England-grown produce in the store because more customers are ranking locally grown organic food above just organic. People are prepared to pay more for organic and locally grown food, she said, but "we've seen that difference shrink" as more farms produce organics.

Unlike Shaw's, Hannaford has been moving its organic products, particularly house brand Nature's Place, throughout the store -- organic juices next to the conventional juices, organic bread in the bakery aisle, even organic pickles next to the Vlasic and Heinz brands. The goal, said spokeswoman Elizabeth Dallara, is for shoppers to "easily locate natural and organic options next to recognized national brands."

But while the price difference has narrowed and organic products have caught on with consumers, Balzer warned that the days of rapid growth in sales may be numbered.

He said Americans place the highest value on products that are low-cost and make life easier. Organic foods, most of which require a little more preparation than popping them into the microwave, "don't make life easier or cheaper."

"Our willingness to try (something) new is insatiable," Balzer said. "We like to see results right away, (and with organics) the only immediate feedback is it costs you more."

Staff Writer Edward D. Murphy can be contacted at 791-6465 or at: emurphy@pressherald.com