Mid-Week Natural~Specialty Roundup

Retail Roundup: New Store Openings of Note

Whole Foods Opens Its Largest Western U.S. Store

Whole Foods Market, Inc. opened its largest Western U.S. store last week in Cupertino, California in the heart of the Silicon Valley. The store is almost 70,000 square-feet and will serve as the supernatural grocer's Northern Califronia flagship store.

The market features an in-store restaurant which can seat 200 people and includes an outdoor patio seating area. The restaurant features made-to-order entrees, Asian Dim-Sum dishes and wood oven fired pizza's among its upscale offerings. Other special features in the store include a cooking school, an in-store meat smoker and an extensive fresh cut fruit and vegetable bar.

The store's produce and perishables departments are expansive as are the offerings of natural, organic, specialty and gourmet groceries. The store also has an upscale cafe featuring a vast variety of coffee and related drinks. The new Whole Foods replaced an older, smaller store just down the street from the new location. The store is one of the most upscale markets in the Bay Area, a region which contains many upscale specialty supermarkets.

Safeway Opens New and Remodeled Upscale Lifestyle Stores

Not to be outdone, Northern, California-based Safeway Stores also just opened a nearly 70,000 square-foot store in the East Bay Area about 25 minutes from the chain's corporate headquarters. The upscale store is Safeway's Lifestyle format and includes all of the retailer's most recent additions to that format: an in-store eating area, expanded produce and perishables departments, a coffee bar/cafe and an extensive selection of natural, organic and specialty foods and beverages, among other upscale features.

Safeway also just opened an expanded and remodeled store in Livermore, just a few miles from its corporate headquarters. The Livermore store is an expression of Safeway's very upscale thinking in terms of its Lifestyle format and is a prototype for new in-store features for the format.

The Livermore store includes four features new to the chain's Lifestyle format stores: an in-store coffee roasting operation, a seafood steaming station and a large gourmet nut bar. Another new feature for the format in the Livermore store is a large wine department featuring a temperature-controlled wine cellar and an in-store wine bar which will have regular wine tasting and educational classes from local and international vintners. The extensive wine department stocks over 2,000 domestic and international varieties of wine.

Natural~Specialty Foods Memo (NSFM) reported earlier this week that Safeway is planning to build a "Whole Foods Style" store in the chain's corporate hometown of Pleasanton. Livermore is just a few miles from Pleasanton and we expect the new upscale features, including the greatly expanded natural and organic offerings, in the Livermore store to be a "try out" in terms of features for the new Pleasanton store if it gets built.

We also expect the Livermore store features will be rolled out to other Safeway Lifestyle format stores across the country depending on a particular store's location and demographics. Lastly, we expect the Pleasanton "Whole Foods Style" store in the planning stages to have even more extensive in-store offerings than the already upscale additions to the Livermore store, especially in the natural and organic products categories as well as specialty and international foods. Stay tuned.

More Retail Roundup

Wegeman's Live Organic/Locally-Grown as Well as Sell the Products

Danny Wegeman, CEO of family-owned 70 store Wegeman's Food Markets, is not only increasing the number of organic and locally-produced foods his stores sell but he is living the organic, locally-grown life literally. Wegeman and his wife Stency are suppling the Wegeman's store in Canandaiua, New York with organically grown produce from their own research farm located just 10 miles from the store.

The Wegeman's Organic Research Farm is a 50 acre experimental organic farm located near the family's home in Canandaiuga. Danny Wegeman says the farm's mission is to provide locally grown fruits, vegetables and honey to nearby Wegeman's stores and to serve as an educational model for local growers, employees and consumers who want to learn more about organic food production. The farm is in its first year of production. You can read more about this venture and the locally produced foods Wegeman is selling in his nearby stores in this article from today's Rochester Democrat and Chronicle (Rochester, New York) here.

Popular International/Ethnic Grocer Retrenching in Chicagoland

Grand Mart International Grocers, a popular Eastern U.S.-based international grocery retailer who recently expanded into Chicago with 8 stores, is pulling back a bit from the region do to poor sales. The international retailer has already closed three of the stores. It says the closures are temporary and plans to reopen the 3 stores. However, local retail observors say they doubt the international grocer will reopen them.

The retailer says it plans to keep all eight stores and change the name on some or all of them. the chain also plans on changing the ethnic product mix in the stores to better reflect the demographics of each of the neighborhoods the stores are in. The Chicago stores, like the successful East Coast stores, focus on a large mix of Asian and Hispanic products. The stores offer ethnic prepared foods as well as groceries, meats and seafood, fresh produce, perishables and non-foods.

Many of the Chicago-region neighborhoods where these stores are located have different ethnic population mixes in addition to Asians and Hispanics--such as African Americans, Eastern Europeans and Southeast Asians (India, Pakistan). Grand Mart says their strategy is to adjust the enthnic and prepared foods product mix on a neighborhood by neighborhood basis to address this fact for the 6 area stores still open and for the 3 they say they will reopen soon.

Grand Mart has stores in Washington D.C., Maryland, Virginia, North Carolina and Georgia in addition to the Chicago, Illinois region.

Independent Ethnic Grocers Feeling Competitive Bite

This article from the September 3, 2007 Washington Post talks about how smaller, independent ethnic foods retailers are facing greater competition in their niche by large players like Grand Foods and others who have created ethnic foods super stores. The article also discusses how these independent ethnic grocers are being further squeezed by large supermarket chains and mass merchandisers who are increasing the number and variety of ethnic foods and related products they stock in their superstores across all store departments.

Wal-Mart Packs Them in the Aisles...But Not in a Store

WALMARTOPIA, a two-hour musical comedy hit New York last night, opening to a packed crowd at an off-broadway theater. The shows producers say the musical is dedicated to the retailer, Wal-Mart employees and customers. However with songs like "Consume" and lyrics such as "Oh joy, another day praying to the Smiley God," Wal-Mart executives might be less pleased than the New York off broadway audience. You can read more about the WALMARTOPIA premiere here.

Safeway Does Good for MDA

Safeway Stores, Inc. has raised $7 million dollars from employees and customers for the Jerry Lewis Muscular Dystrophy Association Telethon which aired on numerous TV stations over the Labor Day Holiday. More here.

Wal-Mart Isn't the Low-Price Leader?

A new study by Zenith Management Consulting LLC. says 85% of Wal-Mart's retail prices are higher than its competition as a group based on a study which included taking nearly half a million retail price checks in Wal-Mart, Kmart, Target and numerous national grocery and drug chain stores.

The report says consumers percieve Wal-Mart's retail prices are lower because of a complex set of price-altering mechanisms the chain uses. Further the report's authors say Wal-Mart's core competence isn't its famed logistics system or low-price strategy but rather its perception-altering public relations stategy vis-a-vis its retail pricing. You can read an expanded summary of the research report here as well as download the full report.

Natural~Specialty Supplier News, Info & Resources

Upcoming Industry Trade Shows & Conferences

September, 2007

September 26-29. Natural Products Expo-East, Baltimore Convention Center, Baltimore, Maryland. For show info: www.ExpoEast.com. Phone: 866-458-4935. This is one of the two big natural products shows of the year. It's a must for anyone in the natural foods industry to attend. It also is an excellent show for those in the specialty foods industry as the natural-specialty products convergence continues to grow

Sept. 9-11. Philadelphia Candy Show. Philadelphia, PA. For show info: www.phillycandyshow.com. Phone: 888-226-3989. This is a good show to attend for anyone in the candy or confection categories, especially if you have or are looking for east coast business.

October, 2007

October 15-17. National Coffee Association (NCA) Fall Educational Conference. Marriot Hotel, NY, NY. For conference info: www.ncausa.com. This is a seasonal informational conference on all aspects of the coffee industry.

October 29-30. Grocery Innovations Canada 07. Toronto Congress Center. For conference and show information: http://www.groceryinnovation.com.ca/. A great opportunity to participate in the Canadian market.

November, 2007

November 9-11. Coffee Fest Seattle. For information: www.coffeefest.com. Phone: 425-283-5058. Seattle is the home of Starbucks and this show always offers the latest in industry innovations and ideas.

November 11-13. Private Label Trade Show. Private Label Manufacturers Association. Rosemont Convention Center, Chicago, Illinois. For show info phone: 212-972-3131. You can also email for info at: info@pima.com

This is the annual show of the largest private/corporate label association in the U.S. Retail chains are increasingly private labeling natural and specialty products for their store brands. This presents a huge opportunity for suppliers if they want to participate in this growing niche.

NovemberFest, All Asian Expo, Comida Latina. Jacob Javits Convention Center, NY., NY. For info: www.allasiafoodexpo.com. www.expocomidalatina.com. www.kosherfest.com. Phone: 207-842-5504.

This will be a large combined specialty foods show featuring kosher, asian and hispanic food items. It's a great one-stop center to exhibit or view new and existing products representing these three key catagories. There also will be meetings, presentations and educational seminars at the show.

News and Information Briefs

>Food industry giant ConAgra has purchased Alexia Foods, a privately-held natural and specialty producer of upscale frozen potato and other products. With its purchase ConAgra says it wants to gain a foothold in the fast growing natural and specialty foods industries.

This isn't the first time ConAgra focused on the industries. In the early 1990's the food giant even purchased--and later sold--Southern California-based specialty and natural foods distributor Young's Specialty Foods.

ConAgra's move into natural and specialty shows the increased interest in the catagories by large consumer packaged goods companies. And it comes at a time when large supermarket and mass merchandising chains like Kroger, Safeway Stores, Supervalu, Wal-Mart, Target and others are putting increased emphasis on merchandising and selling natural, organic and specialty foods. The ConAgra purchase of Alexia Foods isn't a suprise and we expect to see more such acquisitions by ConAgra and other large mainstream food companies.

The frozen natural-organic foods market is hot...The natural frozen and refrigerated foods sector is growing at five times the rate of the conventional frozen foods market--10.6% for natural vs. 2.4% for conventional, according to a fairly recent report from research firm SPINS. This is another good resaon for ConAgra and others to buy natural-specialty companies like Alexia which are in this fast-growing category. You can read more about the frozen and refrigerated natural category growth and opportunities in this story from Sustainable Industries Blog here.

>Fast growing natural-specialty beverage company Honest Tea is going green. The Bethesda, Maryland-based company has moved into a new 4,600 square-foot office building which the company gave a full green/environmental treatment prior to moving in staff.

The green attributes include: Recycled rubber flooring made from tires recovered from landfills on the office kitchen and storage room floors, sustainable bamboo flooring is used throughout the rest of the facility, recycled tea crates are used as tables in the reception room and other tables in the offices are made from recycled glass. The company also added windows that open to cut down on the use of air-conditioning in the summer and installed energy star-rated lighting in the office complex to reduce electricity use. Rather than buy new office furniture for the new facility the company reused their existing furniture from their previous building.

Honest Tea's greening of their new office space demonstrates not only good environmental concern but also is an excellent way for a company to match its corporate behavior with its customer base. Honest Tea consumers tend to be younger, well educated and environmentally savvy and concerned. By greening their corporate space Honest Tea shows it can walk the walk as well as talk the talk.

Why Brands Matter

The current edition (September 6, 2007) of Knowledge@Wharton, an excellent publication of the University of Pennsyvania Wharton School of Business, has an excellent piece on the importance of brands and "why brands matter." We suggest this as reading for all natural and specialty foods marketers as it has important information, facts, ideas and lessons you can use daily in building your brands. You can read this highly reccomended article titled "When a Black T-Shirt is More Than a Black T-Shirt: Why Brands Aren't Losing Their Luster," here.

Building a Specialty, Artisan Cheese Brand

A good example of building a brand in a short period of time in the specialty foods niche is Washington State-based Beecher's Cheese, a four year old artisan cheese company. Although the company was started just four years ago it's already a major prize and award winner in the cheese category. The cheese also is a tourist attraction at the famous Pike Place Market in Seattle. Shoppers have learned of the brand and travel from all over the area to buy it at Pikes Place Market.

Beecher's Cheese is currently available in several states. The company has requests--even demands--for it nationally but they are planning a slow rollout based on not harming the artisan nature and quality of the cheese. You can read an article about Beecher's Cheese Company here from the September 4, 2007 edition of the Seattle Post-Intellegencer.

What Effects Does Food Industry Outsourcing Have on Food Safety?

Many natural and specialty foods manufacturing and marketing companies outsource all or a portion of their product manufacturing to third-party contract manufacturing firms. This practice is even increasing among many larger conventional foods companies.

The Associated Press has an important story on outsourcing and consolidation in the food industry and how it can effect food safety. This article titled: "Does Outsourcing, Consolidation Put Food Safety at Risk"? is important to those involved in all sectors of the natural and specialty foods industries--especially suppliers and marketers. You can read the full story by clicking here.

After you read the Associated Press story you can go here to Retailwire.com and read comments (and participate yourself by registering) about the issue.

Outsourcing, consolidation and food safety are three hot button issues for the industry and we (NSFM) will be writing much more about them. Recent product recalls have put food safety more in the general news and it will continue to be in the media for some time.