Natural and Organic Has Become a Me-Too Category for Grocers
What in the name of natural and organic foods happened to Earth Fare and Lucky’s Market?
With both specialty food retailers recently filing for bankruptcy and announcing they are closing up shop, it makes one wonder if the demand for natural and organic food is all it’s cracked up to be. Or, perhaps there are just too many players in the segment, which has grown significantly in grocery the past several years.
Asheville, N.C.-based Earth Fare and Niwot, Colo.-based Lucky’s Market hung their respective hats on the booming natural and organic foods movement. It was the best practice of both chains to tout their natural and organic products. Both went after the millennial crowd, a generation that has made it clear that it wants more of such foods.
But in the past several years, traditional grocery chains like The Kroger Co. and deep-discount chains like Aldi have steadily added to their organic and natural portfolios. Cincinnati-based Kroger, the largest traditional grocer in the nation, has found tremendous success with its Simple Truth organic and natural private brand, which has more than $2 billion in annual sales and is growing. Batavia, Ill.-based Aldi introduced its SimplyNature natural and organic private brand line several years ago and continues to grow it. Other large operations like Boise, Idaho-based Albertsons Cos. and Salisbury, N.C.-based Ahold Delhaize USA, which both operate several banners, also offer extended natural and organic selections. And then there’s Austin, Texas-based Whole Foods Market, which struggled before being acquired by Amazon, but has now seemed to find its way.
For several years now, food industry pundits have touted natural and organic products as a growth vehicle for grocers. That remains true. The U.S. organic market in 2018 broke through the $50 billion mark for the first time, with sales hitting a record $52.5 billion, up 6.3 percent from the previous year, according to the 2019 Organic Industry Survey released Friday by the Organic Trade Association.
But food retailers need to be more careful than ever in this segment. They need to pick and choose categories for natural and organic products carefully. They need to be watchful with pricing. Natural and organic is no longer trendy like it was 25 years ago. Such products are everywhere and have gone mainstream. Heck, even 7-Eleven is offering them.
Healthy food has become a me-too category, making it a challenge for brands and retailers to differentiate themselves. While some retailers like Kroger have achieved a loyal following and will continue with a head of steam, other specialty retailers of such products will continue to fall by the wayside. The category seems to have gotten too crowded for its own good.