Increasing competition for the organic dollar

Published online: May 18, 2014
Viewed 1151 time(s)

Organic continues to be the fastest-growing segment in the food industry and the competition for the organic consumer is increasing as well.

Organic and natural specialty retailer Whole Foods reported second-quarter revenue of $3.3 billion, up about 10 percent from the same quarter a year ago. Net income was $142 million or 38 cents per share for the quarter, all below expectations. Same store sales were up 4.5 percent, less than the 6.9 percent growth those stores experienced a year ago.

Whole Foods projects revenue growth of 10.5 to 11 percent and earnings of 3 to 6 percent for the fiscal year 2014 which is a reduction from earlier forecasts. Co-CEO John Mackey told investors the growth flattened-out due to increased competition in the organic and natural foods business.

And it isn’t going to get any easier, last month Walmart announced a deal with Wild Oats to launch a line of organic foods which will be sold at conventional-food prices.

Nutrition Business Journal says in 1998, conventional food stores had one-fourth of the $6 billion organic and natural foods market. In 2012, conventional grocers held 55 percent of the $48 billion organic and natural business while specialty retailers like Whole Foods held 38 percent.

Whole Foods is not backing down, the company added eight stores in the second quarter for a total of 379 with plans to have 500 stores and sales of $21 billion by 2017.