The Friday Fishwrap

Week-ending news, info and ideas... all wrapped up for you

Whole Foods to Close Fewer Wild Oats Units Than Expected September 7, 2007, NSFM

Whole Foods Market, Inc. will close fewer Wild Oats stores than it originally planned now that its purchase of Wild Oats Markets, Inc. is completed, according to co-chief operating officer Walter Robb. Robb spoke yesterday at the Goldman Sachs Investment Bank retail conference in New York where he offered this and other merger-related news.

Robb also told the gathering the supernatural grocer will identify all the stores it's closing by the end of the month. Robb didn't get into specifics at the conference in terms of store locations and the like. "They gave us the keys and they left town," Robb said of the Wild Oats pre-acquisition management. "We are well down the road with this (merger) in terms of cultural integration." Robb also said at the conference Whole Foods expects to have annual sales of $12 billion by 2010.

Publix Planning Six Organic, Natural-Specialty Format Stores

September 7, 2007, NSFM

Innovative Florida-based Supermarket retailer Publix is converting six of its Florida stores into full natural foods supermarkets. The stores will emphasis natural and organic products along with upscale specialty foods across all categories. Fresh prepared foods also will be a major product category emphasis in these natural foods supermarkets. Publix will use the "Greenwise" banner for the stores.

"After in-depth studies we decided we were going to have some 'Greenwise' markets," says Publix spokesperson Shannon Patton. "We've (Publix) seen an exceptional growth in organic and natural products. People continue to desire that kind of food. We are always looking for ways to offer our customers what they are looking for."

Publix will covert six stores in Naples, Palm Beach Gardens, Tampa, Boca Raton, Coral Springs and Vero Beach Florida to the natural/organic "Greenwise" banner, according to Patton. All of the stores are in the 35,000 to 50,000 square-foot range. The Plam Beach Gardens store is slated to be the first store to open later this year. The other 5 stores are scheduled to open next year after being remodeled and re-merchandised.

According to Patton the six new "Greenwise" natural supermarkets will feature a large selection of natural and organic foods, grocery products and non-foods items. The stores will also put an emphasis on merchandising a wide array of "eco-friendly" and green items and freshly prepared foods and ready-to-eat items.

The stores also will feature domestic and imported specialty foods and groceries including fine wines and cheeses from around the world. Product experts will be available in these departments to offer tastings and advice to shoppers regarding the specialty products. Patton says the stores also will offer a selection of some traditional grocery and perishable products for shoppers.

Natural~Specialty Foods Memo (NSFM) Analysis

Prior to and following the Whole Foods Market, Inc. acquisition of Wild Oats, NSFM predicted we would see supermarket chains and mass merchandisers begin to challenge Whole Foods in the supernatural retail category niche. We also suggested that the Federal Trade Commission was wrong in arguing against the acquisition/merger on the grounds they believed the deal would stifle category competition and lead to increased category retail prices.

We're seeing this retail category competition already beginning to unfold. For example,we reported earlier this week that Safeway Stores is planning a "Whole Foods style" natural supermarket in Pleasanton, California where the chain has its corporate headquarters.

We also talked about Supervalu Inc.'s Sunflower Market natural foods division and its plans to open 50 Sunflower Market banner natural foods stores over the next few years. Further, we discussed Supervalu's other banner Bristol Farms, an upscale gourmet/natural foods hybrid format, and it's potential to grow nationally and compete against Whole Foods now that the banner is under Supervalu ownership.

Now we're seeing Publix make a dramatic move into the creation of five natural/organic/ specialty supermarkets called "Greenwise." Publix has always been an industry innovator, including in the natural and specialty foods categories, in there stores. The chain were a "first mover' among supermarket chains in these categories and has lots of category merchandising experience under its corporate belt. As such we expect Publix to do a good job with these new natural foods supermarkets. If anybody can make the concept successful it's Publix.

NSFM expects to see more similar developments from other regional and national supermarket chains. Contrary to what the FTC argued, we believe the Whole Foods purchase and merging of Wild Oats, will create more competition in the supernatural retailing niche as well as in natural and organic category sales across all retail formats. We also expect to see some smaller natural foods retailers like 12-store (all in the west) Sunflower Farmers Markets (not affiliated with Supervalu) and a few other smaller chains build more stores at a faster pace.

Week-Ending News & Information

Food Safety: Study Says U.S. Consumers Concerned and Confused

Almost 90% of American consumers say they are concerned about food safety, yet they also say they are confused as to what exactly poses a threat to human health, according to a new study released yesterday. The study was conducted by market research firm TNS

nine out of ten of the 2,500 consumers questioned in the study say they are as concerned or more concerned today as much as they were last year about contracting food borne diseases but are unsure about what foods posed a threat. You can read a full summary of the food safety study here.

Speaking of food safety...The University of California at Davis, one of the top centers for agricultural and related food industry research in the world, may get a new state of the art federal food safety research center. Among its programs the center would research ways to communicate food safety to the concerned but confused consumers identified in the survey profiled above. Read more about the proposed "FDA Center for Excellence" food safety research center for U.C. Davis here in this article in today's Fresno Bee.

Healthy Foods Merchandising

Shoppers at Maine-based Hannaford Supermarkets stores are choosing healthy foods and grocery products much more often since the chain began its "Guiding Stars" nutritional foods identification system last year in September, 2006. The "Guiding Stars" nutritional content rating system rates food products throughout the store with either one, two or three stars--for good, best or better (3 stars) for nutritional value. The star ratings are placed right on the products shelf tag at the point of purchase for easy customer viewing. Thus far Hannaford has over 25,000 items rated using the star system in it's stores. The chain has evaluated the program and how shoppers are using it. You can read more about the program and the one-year evaluation here.

Safeway Stores, Inc.'s new corporate brand "Eating Right," a healthy and nutritional line of grocery and perishable products is setting sales records according to the chain's CEO Steve Burd. Burd said at this week's Lehman Brothers Back to School Conference that sales of the

"Eating Right" healthy line, launched earlier this year, were already ahead of the retailer's popular O' Organics brand's sales during the same time period when it was launched.

The "Eating Right " line features dry grocery and frozen food products across all store categories. Grocery categories include cereals, juices, salad dressings, snacks and others. Perishable categories include frozen entrees and vegetarian meals. There are over 100 food products in the line. The healthy/nutritious line's attributes include high protein, low fat, low cholesterol, multi and whole grains and fat-free. Each package has a simple colored-coded dot which identifies the products nutritional attributes. You can watch a webcast of Burd at the Lehman Back to School Conference where he talks about the "Eating Right" line and other Safeway issues and initiatives here.

Specialty Foods Briefs

Ethnic Marketing Research

A high percentage of young and middle income Hispanic adults (over 40%) identify themselves a participants in retailers loyalty card programs according to a new study by Ohio-based marketing consulting firm COLLOQUY. You can read a full summary of the study here.

Fast-Growing Specialty Foods Industry Continues to Attract Entrepreneurs

The growing specialty foods industry continues to attract new entrepreneurs who have a concept they don't see others taking to market, have found a need and want to fill it, or have a favorite recipe they decide to produce and market. This recent article in the Pittsburgh Tribune-Review profiles a number of such entrepreneurs in Pennsylvania who have launched specialty foods companies for various reasons and are finding success and growth in the nearly $40 billion a year specialty foods industry. The industry continues to grow rapidly. In fact it has doubled in total sales over the last seven years, from about $18 billion in 2007, to $38.5 billion last year. You can read the full story here.

Salty Specialty Sales

Five year old specialty salt purveyor Saltworks has been ranked by Inc. Magazine as one of its top 500 fastest growing companies for 2007. Saltworks offers a vast array of specialty salts; some domestic and others produced all over the world. The yound specialty company had sales of $5 million last year and expects to have sales of at least $9 million this year--a nearly 50% increase sales increase in 12 months. You can read more about Saltworks here. You can also visit their website here. The salt category is emerging as one of the top specialty categories in the industry. Salt Works specializes in sea salts which thanks to being popularized by celebrity chefs are becoming more and more a regular household item. In fact, large, mainstream spice giant McCormick has just introduced a line of sea salts to their extensive spice category lines.

Independent Specialty Grocer Keeps Things Fresh and Thrives

Independent grocer Battaglia's Marketplace has been successfully serving shoppers in Mississauga Ontario, Canada (near Edmonton) for 88 years.

The store, which is currently run by three brothers--Anthony, Joe and Frank Battaglia--focuses on customer service, super fresh foods and offering variety such as specialty and gourmet groceries, to keep its customers happy and always coming back for more. The store offers an extensive selection of fresh fruits and vegetables, lots of fresh homemade ready-to-go meals, fresh in-store baked goods, standard groceries and a large selection of specialty, ethnic and natural foods. If a customer asks for a specialty, ethnic or gourmet grocery item the Battaglia's will find it and stock it for them. The Edmonton Sun (September 5, 2007) has a lively profile about this grocery family and their fresh, service-oriented approach to grocery retailing. You can read the profile here