Next Step for Organic: Priced for the Masses

Americans’ shift toward less-processed food is not a fad. Organic and loosely-defined “natural” foods are hot sellers not just at the likes of Whole Foods and Trader Joe’s, but everywhere from mainstream grocers (e.g. Kroger, Safeway) to drugstores (e.g. Walgreens). Research firm Kantar Retail suggests organic and natural food sales have grown at a compound annual rate of 12% each year since 2000, with total sales over $50 billion in 2013; meanwhile, conventional food’s growth rate has been in the low single-digits.

Source: Kantar Retail IQ

Many organic and natural brands, though, are regional players whose lack of scale limits their distribution and their ability to provide broadly accessible prices. There’s a reason even fans of Whole Foods nickname the store “Whole Paycheck”; Kantar recently reported that “43% of shoppers would like to buy more organic products but they can’t afford them”.

Enter… Wal-Mart? It may be the last name organic-seeking consumers think of, but the country’s largest retail grocer aims to change that. Earlier this month they announced a partnership with Wild Oats (a recently-revived natural/organic brand) that will “[remove] the price premium associated with organic groceries”. Reuters comments:

Organic foods often cost more than their conventional rivals, and that has limited purchases by the legions of lower-income U.S. shoppers who are needed to propel a niche product into a national player.

Walmart caters to that audience and says it will price Wild Oats products at par with conventional items and at least 25 percent below branded organic foods. The Wild Oats offers will include staples such as salsa, organic olive oil, canned black beans and tomato paste.

It’s just the latest sign that the industry is maneuvering to meet consumer demand for fresher, less-processed food. What remains to be seen is whether organic consumers with an affinity for local and sustainable products will be open to the large-scale organic production involved with supplying Wal-Mart.