Many report rising sales as selective consumers turn to healthy eating

NORTH BAY -- As consumers juggle priorities in a down economy, one item they're not dropping is organic food. In fact, more of them are picking it up, if the growth trajectories of local organic food producers are an indication. Chicken farmer, baker and ice cream maker alike are bucking the trend.

Alvarado Street Bakery, with 8 percent to 12 percent growth over the last two years, expects to bump its revenues from $24 million to $26 million by the end of 2009, said President Michael Girkout. "People are cutting back on Blockbuster and dry cleaning, but not on nutrition," he said. For employee-owned Alvarado Street, it's been a nail-biting couple of years. The company purchased its own building in Petaluma and doubled its space while the economy teetered. But the move turned out to be a good one.

"Our mortgage payment is less than the rent on our facility in Rohnert Park, and we've doubled our production with room to double it again. Now we can take advantage of opportunities that were waiting in the wings," said Mr. Girkout.

The one thing he and his 120 co-owners worry about is a shortage of organic wheat as Conagra and other food giants muscle into the organic food segment. Alvarado Street depends on a steady supply of organic wheat seed for its popular sprouted wheat line of bread.

Meanwhile, Barbara's Bakery in Petaluma is seeing double-digit growth in its private label business, said Director of Marketing Kent Spalding.

And supermarket shoppers continue to buy frozen organic foods from Amy's Kitchen of Santa Rosa, the nation's largest organic, vegetarian prepared food maker.

The 1,500-employee company headquartered in Rohnert Park had revenues of $240 million in 2008. In a recent interview with Fortune Small Business, CEO Andy Berliner said, "We expect to be a billion-dollar company in five years."

More supermarket shoppers are choosing Rocky and Rosie organic chickens from Petaluma Poultry, too. According to John Bogert, president and CEO of its parent company Coleman Natural Foods, 30 percent of all consumers eat natural products.

"And of those, in a survey we took recently, 93 percent said they would give up something else rather than go back to non-organic products," he said.

Buyers of Petaluma Poultry's organic chickens used to skew toward the educated and affluent, but no longer, he said.

"Our customers are average consumers who are trading up, following the trend toward health and fitness. There are more than enough of them to keep us growing. We don't disclose revenues, but Petaluma Poultry sales are up over last year, and we expect them to be up again next year," said Mr. Bogert.

After consuming a Rocky organic chicken, a family stroll to the organic ice cream shop for dessert seems in order.

Strauss Family Creamery in Marshall launched an unflavored ice cream base about a year and a half ago and sales have taken off, jumping 30 percent in a year. The organic dairy followed early this year with a new line of organic frozen yogurt base.

"Little organic ice cream and frozen yogurt shops are popping up all over. Rather than freeze their own yogurt or cream, they buy our base and flavor it," said Strauss Vice President of Sales and Marketing Rich Martin. "Organic ice cream or frozen yogurt are an inexpensive, natural indulgence. And people are eating locally too. It's not a fad, it's a trend."

Fifty-eight-employee Strauss also markets lines of liquid milk, cream, butter and yogurt. "Even though our products are some of the highest-priced in each category, overall sales are up 15 percent over last year. In this economy, we're thrilled," said Mr. Martin.