Whole Foods 2007 Annual Report Download - page 10

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The Natural and Organic Products Industry
According to a leading trade publication for the industry, sales of natural products across all retail and direct-to-consumer
channels grew to approximately $57 billion in 2006, a 10% increase over the prior year. The natural and organic products we
offer in our stores include food and beverages, dietary supplements, personal care products, household goods, organic cotton
clothing, and related educational products. We believe the growth in sales of natural and organic foods is being driven by
numerous factors, including:
• heightened awareness of the role that food and nutrition play in long-term health, which has led to healthier eating
patterns;
• a better-educated and wealthier populace whose median age is increasing each year;
• increasing consumer concern over the purity and safety of food due to the presence of pesticide residues, growth
hormones, artificial ingredients and other chemicals, and genetically engineered ingredients; and
• environmental concerns due to the degradation of water and soil quality.
Natural foods can be defined as foods that are minimally processed, largely or completely free of artificial ingredients,
preservatives and other non-naturally occurring chemicals and as near to their whole, natural state as possible. Organic
products are grown through methods intended to support and enhance the earth’s natural balance. Generally, organic food
products are produced using:
• agricultural management practices intended to promote and enhance ecosystem health;
• no genetically engineered seeds or crops, sewage sludge, long-lasting pesticides, herbicides or fungicides;
• livestock management practices intended to promote healthy, humanely treated animals by providing organically
grown feed, fresh air and outdoor access while using no antibiotics or growth hormones; and
• food processing practices intended to protect the integrity of the organic product and disallow irradiation,
genetically modified organisms (“GMOs”) or synthetic preservatives.
Organic Rule
In October 2002, the United States Department of Agriculture’s (“USDA”) Organic Rule was implemented into Federal law.
The Organic Rule was created to address the rapid, consistent growth of the organics industry over the past 20-plus years and
the need for a set of national organic standards to serve as clear guidelines as to what is considered organic for the industry
and its customers. Under the Organic Rule, all products labeled as “organic” in any form must be certified by a USDA-
accredited certifying agency. Furthermore, all retailers, including Whole Foods Market, that handle, store, and sell organic
products must implement measures to protect their organic integrity by:
• preventing the commingling of organic and conventional products;
• protecting organic products from contact with prohibited substances (such as sanitation and pest control products);
• labeling organic products properly and clearly; and
• keeping proper records with regard to organic handling procedures and vendor relationships.
Whole Foods Market played an active leadership role in the development of the national organic standards. Margaret
Wittenberg, our Vice President of Global Communications and Quality Standards, served on the National Organic Standards
Board (“NOSB”) from 1995 to 2000. The NOSB members were appointed by the Secretary of Agriculture to act as industry
advisors to the USDA’s National Organic Program, developing the standards and protocols that form the backbone of the
USDA’s Organic Rule. As the sole retail representative on the NOSB, Ms. Wittenberg contributed a broad, realistic
perspective on how the standards could work most effectively at the retail level.
Whole Foods Market has been devoted to protecting organic integrity for years, and we are pleased to have the USDA’s
Organic Rule as a guiding standard. In May 2003, Whole Foods Market became America’s first national “Certified Organic”
grocer through certification from Quality Assurance International (“QAI”), a federally recognized independent third-party