Norway firm rides national wave of desire for organic products

NORWAY - When some Eastern Iowa companies are happy just to break even, Frontier Natural Products Cooperative is experiencing double-digit sales growth.

The 28,840-member natural and organic foods cooperative is growing at about 10 percent a year, said Tony Bedard, chief executive officer.

“We started fiscal 2009 growing at about 8 percent,” he said. “That slid to break even before we finished the year on June 30 with 6 percent growth.”

The 33-year-old co-op manages three brand names: Frontier Natural Products, Simply Organic and Aura Cacia. It is riding a wave of natural and organic foods, spices and aromatherapy products going mainstream, showing up on the shelves of such supermarket chains as Hy-Vee.

“There are many customers who want to purchase organic or natural products, but they want to make sure you're doing it in a socially responsible way,” Bedard said. “You have to have sustainability in your portfolio. The end customer wants to feel good about what they're purchasing.”

Bedard said Frontier also is constantly developing and testing new products, including gluten-free baking and dessert mixes, and expanding its private-label business.

“We have customers who want to have their own label on organic herbs and spices,” he said. “ ... We are looking at having to add a new line because we've exceeded our capacity.”

Frontier, which projects it will have $70 million in annual sales in fiscal 2010, employs 295 people and hires temporary workers during busy periods. Bedard said technology, including use of wrist-mounted scanners, enables employees to be more efficient as they pull and fill customer orders.

“Bulk foods - taking large packages of herbs and spices and breaking them down into smaller containers - remains a major part of this business,” Bedard said. “That's how it all began in a log cabin on the Cedar River in 1976.”

Founders Rick Stewart and his then-wife, Colleen Greenhaw, launched Frontier when he was a student at Kirkwood Community College and she was a volunteer at a food cooperative.

Blooming Prairie Warehouse in Iowa City, which sold herbs and spices in

5-pound bags, was thinking of dropping the product lines because its supplier was switching to 10-pound bags and customers wanted 1-pound bags.

“I volunteered to repackage the herbs and spices in 1-pound bags,” Stewart recalled in a 1992 interview. “We took the 5-pound bags back to our cabin and sat at the kitchen table weighing out 1-pound bags, twist-tying and labeling them.”

Blooming Prairie turned over the ordering and invoicing operation to the Stewarts. Stewart and Greenhaw were divorced in 1982. Neither is associated with the Norway cooperative, which Stewart left as CEO in 2000.

Frontier's products are sold in all 50 states, and exports are expanding in Canada, Hong Kong, Taiwan, South Korea, Singapore, Guyana, Israel and Russia.

While some jars of herbs and spices are still filled by hand, most of the spices the co-op sells are packaged at high speed on sophisticated machinery. They are weighed individually to assure the proper amount is included and checked by X-ray for possible contaminants.

“We also check every shipment of raw material that we receive,” Bedard said.

Frontier recently completed a $2 million expansion of its quality assurance laboratories and doesn't hesitate to send back a shipment if it is contaminated or doesn't meet its standards.

“Food safety, which has always been a concern in natural and organic products, has become a major mainstream issue in recent years,” Bedard said. “We have always had the control of every aspect, assuring we can trace our products from the seed to the shelf.”

Sixty-three percent of Frontier's raw material volume is Fair Trade certified, Well Earth certified or organic, as compared to 49 percent a year ago.

Frontier knows each of the farmers supplying raw materials for its spices and food ingredients. Commodity managers average 50 visits a year to growers, mostly in overseas cooperatives.

“We look for opportunities to give back,” Bedard said. “In India, we support an organization that provides a million schoolchildren with a quality lunch each day. We want farmers and the families who work for them to be treated fairly.”

Frontier provides on-site day care for its employees' children. A cafeteria makes subsidized meals for employees and their children.

“Many of our employees are the wives of farmers in the area,” Bedard said.

Frontier is housed in a 145,000-square-foot production and distribution complex just outside Norway.

“We have 295 employees, and 293 of them think we're ready for another building,” Bedard said. “I happen to be one of two who feel we need to make sure before we go to the expense of another addition.”

Frontier recently received an Iowa Venture Award from the Iowa Area Development Group on behalf of the state's rural electric cooperatives and member municipal electric systems.

Rand Fisher, the group's president, said Frontier Natural Products is a leader “in the effort to convert food producers to sustainable farming and production practices.”

[mappress]