I'm in Oregon and I have a budget of $500/month for all food (groceries and eating out) and household/toiletry items for a family of four voracious eaters! My husband does have to grab fast food one night a week as he runs to school and that comes out of a separate budget (student loans!), and he also eats very little for breakfast and lunch most days of the week but probably makes up for it at dinner time and late-night snacking!
We are very tight but we are usually able to do it. My sister lives in Sonoma County, California and we stay in Orange County, California for a week or so at least once-twice a year so I've done plenty of grocery shopping in California, and I think our grocery prices are pretty comparable here in Oregon.
I buy almost exclusively organic (some things I don't always buy organic are bananas, avocados (although sometimes they're cheaper than conventional at Trader Joe's!), oranges/clementines, green onions, cabbage, eggplant, pineapple...). Also I buy only grass-fed beef and pastured corn- and soy- free eggs and chicken, and pastured pork products. Sometimes we do have to buy conventional chicken and bacon but not very often at all. We buy raw grassfed organic milk, and raw cheese as much as possible.
How do I do it? I make *everything* from scratch. We eat very little processed/convenience/snack foods. Instead of cereal for breakfast, we eat oatmeal, millet porridge, eggs, custard, or oat pancakes. For snacks we have dairy products (cheese, cottage cheese, yogurt, etc), nuts, fresh fruit, fresh veggies, homemade dips (hummus, bean dip, etc), fruit & veg smoothies, etc. The only thing I buy instead of make are brown rice pasta (we are gluten-free), corn tortillas and corn tortilla chips, and salsa. We also occasionally buy grassfed hot dogs as a cheat when I don't have time to cook (beats fast food!). Other than that we make just about everything.
I meal plan meticulously, and I make a list and stick to it. If we run out of fresh produce 4 days before I'm supposed to go to the store, we just do without (we almost always have frozen fruit and home-canned applesauce, frozen veggies, and generally have fresh carrots and celery on hand even when we have nothing else!).
I shop at 4 different stores usually and 4 different farms (it's a big pain in the butt but it's what I have to do). I know how much things generally cost so I know when and where something is a good deal. I always go to Trader Joe's & our local natural foods store for the bulk of my stuff, and then sometimes but not always go to Winco for a few items (some bulk stuff, cheese (when we can't afford raw), cottage cheese, plain yogurt, canned olives, etc, and Costco occasionally (although I think when our membership is up this year I'm going to be done with Costco), for things like organic corn tortilla chips, toilet paper, dishwasher detergent, contact solution. I go to one farm for my ground beef and milk and whole roaster chickens, a separate farm for my eggs, and a different one for my honey. I buy pork products at our weekly farmer's market.
Meal planning and grocery shopping are time consuming but that's how we stay in our budget. I plan a month's worth of meals at a time and then I shop for 2 weeks at a time, twice a month. I always save a bit of money so I can run to the store a few times in between big shopping trips. I know we always run out of fresh fruit and a few other items so I like to have some extra money on hand so I can restock before the next shopping excursion (and some things don't last the full two weeks so it's good to have a plan and know what to buy first and then have the money to go back and get the fresh stuff that I need later).
Honestly I think the best way to save money on groceries is by being strict about meal-planning and shopping from a list. No matter what types of foods you buy/eat, if you plan ahead of time and then stick to it, you should be able to slash your food bill considerably.