Natural, Organic Items Grab Bigger Share In Mainstream Supermarkets

Natural, Organic Items Grab Bigger Share In Mainstream Supermarkets

Jul 08


By Dana Hunsinger Benbow
July 8, 2012
The Indianapolis Star

Original Link

There’s shower gel made from carrots. Egg-white protein powder. Diapers with no chlorine. Medjool dates and dried papaya.

This isn’t some exotic, hippy supermarket au natural. This is Kroger, one of the largest mainstream grocers in the nation.

“Used to be this was all very faddish,” said Gregg Proctor, who heads up natural foods for Kroger’s central division, which includes Indiana. “Not anymore. We’re adding new items constantly because if we don’t get it when it comes out, our competition will.”

There seems to be a race to pure foods among the nation’s largest supermarkets as they ramp up their offerings, even launch their own brands of organics and naturals, and then heavily advertise the healthy choice.

It all makes sense, considering sales of this segment of groceries are outpacing traditional grocery sales.

Nationwide, natural and organic food sales grew 8 percent in 2010 versus the less than 1 percent growth in the $630 billion total U.S. food market, according to the Nutrition Business Journal. It grew at about a 5 percent rate each year from 2005 to 2009.

With that growth and popularity comes a definite consumer advantage: Slowly but surely, the price of natural foods is falling.

“Make no mistake, there is a definite price differential,” said Meg Major, editor-in-chief of Progressive Grocer, a trade publication covering the industry. “But as that once small segment is growing bigger and bigger, it’s not only raised awareness but affordability.”

Cincinnati-based Kroger, which in the past four years has seen sales in its natural foods division double, has made it a point to focus on the segment.

“We want to be a purist in natural foods,” Proctor said as he stood in front of the dairy section, filled with dozens of milks from soy to almond, goat cheeses and strawberry yogurt drinks. “It’s all about giving customers what they want.”

Inside more than 1,300 of Kroger’s 2,500 stores are Nature’s Markets, a store within the store that is devoted solely to natural foods. At one location in Indianapolis, there are four aisles and 20 freezer doors filled.

No need to read labels or ingredients. If you buy here, everything is natural, from the chocolate-covered coconut stacks to the frozen veggie pizzas.

“I like to see (big grocers) are paying attention,” said Linda Marble, a chef at a Sheraton hotel, who was shopping in the Nature’s Market this week.”

In her cart were dark chocolate almond granola bars for her 10-year-old son. It was because of him that Marble began shopping natural and organic a few years ago.

“I wanted him to eat more natural ingredients rather than the processed foods,” she said. “Now with Kroger having all this stuff, I don’t always have to go to the specialty retailers.”

In fact, conventional retailers have surpassed the specialty natural food stores, responsible for 54 percent of organic food sales in 2010, according to the Organic Trade Association. Natural retailers brought in 39 percent of total organic food sales.

So why exactly are the mainstream guys moving in the natural direction?

“Our whole food culture is moving in a direction of less preservatives, less processed and just the whole ingredient count is so much more on people’s minds,” Major said.

And it’s a chance to capture customers — and keep them coming back.

“It’s part of that continuing strategy to build loyalty and points of differences,” Major said. “Stores can offer these signature products that can only be had there, and customers come back to get it.”

But there is one hurdle when it comes to this food category: education. There can be some confusion as to just what natural versus organic is.

Certified organic food products are regulated by the U.S. Department of Agriculture and produced by farmers and manufacturers under a strict set of rules, including no growth hormones, antibiotics, conventional pesticides, synthetic fertilizers or ionizing radiation.

Natural foods are not regulated, which leaves the meaning of that term largely up to the grocers that sell them.

Take Meijer, which launched its own line of natural foods three years ago. It has its own strict set of rules to label a food natural, including no genetically modified organisms, no high-fructose corn syrup or artificial sweeteners, no added hydrogenated oils or trans fats, no artificial food coloring, flavoring or preservatives.

Its line includes everything from chocolate chip pancake mix and white cheddar popcorn to tomato sauce and bean salsa. It also has a store-branded organic line.

“Both continue to grow, both in customer demand and in terms of sales,” said spokesman Frank Guglielmi. “We continue to invest and expand in those categories as Meijer customers continue to ask for more in those categories.”

Target, too, offers both national brands and its own natural brands, Archer Farms and Market Pantry. Those two brands include more than 200 products, such as roasted red pepper chicken sausage, spinach and goat cheese pizza and triple berry clusters cereal.

Target spokeswoman Kristin Jahnke said the retailer has experienced growth in the natural food category, but in particular, “our own food brands have grown at a fast rate.”

Marsh, which doesn’t have its own line of natural foods, has been stepping up with healthy options in other ways. That includes a new labeling system that makes it easier for shoppers to know which foods are healthy without having to read the labels.

It also hired a full-time dietitian to answer questions and even go on shopping trips with customers.

The Indianapolis-based grocer tracks units and sales on a weekly basis and has seen marked growth in sales of its expanded organic offerings, said spokeswoman Connie Gardner.

As for Kroger, in the next year it will be making yet another major push in the natural food category, Proctor said.

That includes tripling the number of items it offers in its own line of natural foods called Simple Truth by the end of 2013.

“By then we will have hundreds of products to offer,” he said. “We want to become the leader, period.”


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