Retail Memo: Henry's Farmers Market to Open New Store in Santee, CA On November 12; More New Store's and Remodels On the Way

Retail Rebirth: A New Henry's chain is Being Born

Natural foods retailing chain Henry's Farmers Market, which was bought from Whole Foods Markets, Inc. by Southern California-based Smart & Final, Inc. last year, will open the doors of its newest store, a new, larger and upgraded location on Mission Gorge Road in Santee, California, on Wednesday, November 12. Santee is in San Diego County.

The new Henry's, which replaces an older, smaller store nearby, has been in the works for over one year and will be the first tenant of The Marketplace at Santee, a new shopping center on Mission Gorge Road in the city, according to the retailer, which operates 36 natural foods stores in Southern California and Texas under the Henry Farmers Market and Sun Harvest banners.

There are 28 Henry's stores, located in San Diego, Orange, Riverside, San Bernardino and Los Angeles Counties in Southern California. The eight Sun Harvest natural foods stores are located in Texas.

The Henry's and Sun Harvest natural foods stores were acquired in June, 2007 by Whole Foods when it merged with rival Wild Oats. Shortly after the deal went through, Whole Foods Market, Inc. sold the Henry's and Sun Harvest stores to the investment group which owns Southern California-headquartered Smart & Final.

Smart is Final is a chain of 235 non-membership food and grocery-focused club format-style stores. It has stores located in California, Oregon, Washington State, Nevada, Arizona, Idaho and in the northern region of the country of Mexico.

Smart & Final also recently introduced a new format called Smart & Final Extra. The first store opened in Southern California.

The Extra stores are about 30,000 -to- 35,000 square feet and are sort of a hybrid discount and food-focused store. They carry a larger selection of fresh produce, including some organics, for example than the Smart & Final club-style stores, along with offering a larger variety of single pack food and grocery items than those stores do. The club-style Smart & Final stores carry some single-items but focus on multi-packs and larger sized products.

The larger, modernized Henry's Farmers Market store opening next week in Santee, California will feature expanded product selections in all departments as well as an increased organic produce selection, according to the natural grocer.

The new and larger Henry's store is approximately 25,000 square feet.

"We believe our customers will respond quite favorably to this beautiful new site," says Santee Henry’s Store Director Mark Montejano. "With the added square footage, we are able to offer expanded selections of the fresh and healthy foods Henry's shoppers count on. Plus, the bright, airy space makes the entire shopping experience more enjoyable," he adds.

The previous store was about 15,000 square feet or so.

The re-opening of the Santee Henry's Farmers Market (it's a new store though) is the first of a series of Henry’s new and remodeled store openings throughout Southern California over the next few months.

The Escondido (also in San Diego County), California Henry's Farmers Market store remodel and expansion project is slated to be complete this December and a new Henry’s Farmers Market store in Woodland Hills, California is scheduled to open in early spring of 2009, for example.

Henry's Farmers Market is holding a grand opening celebration at the new Santee replacement store, called "Henry’s Barn Stormin’ Bash," on Wednesday, November 12. The event will offer numerous special festivities at the store from 7 a.m. to 3 p.m. on opening day, according to a company spokesperson.

Among the free to the public activities on Wednesday will be food sampling throughout the store, a pumpkin pie recipe contest and live entertainment, including local bands and dance performances. There will be face painting and balloons for children (of all ages) as well.

The first 100 shoppers on Wednesday will receive a free Henry's reusable canvas bag full of healthy snacks., according to the retailer.

The mayor of Santee will appear at the store for a ribbon cutting ceremony, and there will be a community pancake breakfast held there, with the proceeds to be donated to Connor's Cause for Children, a local charity.

Additionally, Henry’s Farmers Market will match pre-tax sales from its "Grab & Give Food Drive" at the new Santee store on Wednesday (part of the grand opening) to donate to its annual holiday partnership with Father Joe's Villages, which provides meals for needy families in Southern California.

The old Henry’s store in Santee will be closing its doors at 6 p.m. on Tuesday, Nov. 11 to prepare for the new store’s grand opening event the following morning.

We're rather impressed with the extent, variety and comprehensive nature of the Santee store grand opening. Most retailers do about half the amount and variety of activities Henry's is doing for the grand opening next week. We call it good marketing. We particularly like the various tie-ins with the local community and charity groups. Doing good for community while doing good for sales is a winning combination in our analysis and opinion.

As we wrote in this this June 2, 2008 piece, "Retail Memo: Analysis: Free of Wild Oats Markets, Inc.'s Ownership, Henry's Farmers Markets Seems to Be Starting to Get its Groove On," since Henry's has become a part of the Smart & Final ownership group, the existing stores have been dramatically improved, as has the overall operation.

In particular have been the improvements from Wild Oats' ownership of the store produce and meat departments and selections, which were looking rather sad during the last couple years of Wild Oats' ownership. (Whole Foods Market, Inc. didn't own the Henry's and Sun Harvest stores for long; they basically sold them as soon as acquiring them as part of the deal. Therefore they neither had the time or desire to do anything with them, except sell the stores.

We've also written about the fact Henry's new ownership and expanded management, merchandising and operations team plans to grow the natural foods chain considerably in Southern California, and perhaps outside of the region.

Henry's Farmers Market also has a few other upcoming changes and surprises in store.

With nearly 30 stores, the natural grocer already is a player in the parts of Southern California it has stores located in. As it adds new stores, and continues to improve the existing stores like it has been doing, Henry's could become a major player in the natural, organic and specialty foods retailing categories throughout the huge Southern California market region.

Retail Memo: Washington D.C's Famous Georgetown Neighborhood Could Finally Get its Long-Desired 'Social Safeway' Supermarket

From the Natural~Specialty Foods Editor's Desk: Nearly three years ago Pleasanton, California USA-based Safeway Stores, Inc. embarked on the huge task of converting what are now about 1,755 supermarkets under numerous retail banners in the United States into what it calls its "Lifestyle" format.

Safeway's "Lifestyle" format is a fairly upscale store design package which features soft colors inside the store, hardwood flooring in departments like produce and wine, and spot lighting instead of bright lights, along with numerous other attractive design elements.

The "Lifestyle" format combines Safeway's traditional value-oriented style of food and grocery retailing with a greater focus on natural, organic, premium and specialty products merchandising across all store categories.

This merchandising emphasis includes expanded selections of natural, healthy and organic food and grocery products like Safeway's own popular O' Organics and Eating Right store brands, along with manufacturers' brands.

The "Lifestyle" merchandising focus also includes store branding of Safeway's fresh, prepared foods offerings, including its premium Signature Cafe brand of ready-to-eat and ready-to-heat items. Additionally, under the "Lifestyle" format Safeway has dramatically expanded the number of premium, specialty, ethnic and gourmet food and grocery items it carries in its supermarkets.

Perhaps the most interesting and important aspect of the "Lifestyle" format is that with it Safeway has tried to create a much more social supermarket. The retailer has used design features like outdoor patios and terraces in some cases, farmers market-style produce departments, wine cellars and old fashion butcher shop-style meat departments in both its new and remodeled supermarkets as ways to create a more social and enjoyable shopping experience for customers.

By and large the "Lifestyle" format has been a big success for Safeway, which has thus far converted about 70% of its U.S. supermarkets--which operate under such banners as Safeway (Northern California, Oregon, Washington state, Arizona, Colorado, Washington D.C., Maryland and Virginia); Vons (Southern California and Nevada); Carrs (Alaska); Dominicks (Illinios and Indiana) and others--into the "Lifestyle" format, according to CEO Steve Burd. Plans call for all of the supermarket chain's stores (except the handful of Pak-N-Sav warehouse stores it operates in Northern California) to be converted to the "Lifestyle" format by the end of 2009, Burd told Natural~Specialty Foods Memo earlier this year.

One strategy Safeway has been using during its three year "Lifestyle" conversion format is to expand the size of certain stores and upscale them considerably in neighborhoods in which the shopper demographics are strong for food stores offering a lifestyle experience along with expanded selections of natural, organic, premium and specialty foods.

The supermarket chain has a number of stores that were opened long ago that sit in such premium demographic neighborhoods. Many of those stores, such a one currently being proposed (a remodel) in Oakland, California's upscale College neighborhood, another in Berkeley, California and yet another in the upscale Georgetown district in Washington D.C., are older, small supermarkets that once fit well in these neighborhoods but have long outgrown the gentrification and upscaling that's gone on in them. These stores and others present a huge sales opportunity (at least a doubling of annual gross sales) if expanded and remodeled based on the respective neighborhoods' demographic profiles.

Washington D.C's Georgetown, home to Senators, lobbyists and the well known Georgetown University, has long wanted Safeway to grow and upscale the Safeway supermarket that's been in the neighborhood for decades.

This has particularly been the desire of Georgetown University students and faculty who like most university communities are on the cutting edge of the natural and organic foods trend. Additionally, the wealthy political and business movers and shakers of Washington D.C., many who reside in Georgetown, have wanted a Safeway supermarket in the neighborhood like the ones ("Lifestyle" format) in nearby Alexandria, Virginia, which is one of the more wealthier suburbs of the nation's capital city.

This desire for a more "social" Safeway has been discussed in the Washington Post newspaper, on numerous area online food forums, and in the pages of the Hoya, the student newspaper of Georgetown University.

Well, it looks like Georgetown University students and the Georgetown neighborhood's who's who of political and corporate residents and their frequently entertaining spouses are going to get their long-desired "social Safeway", according to a story in today's edition of the Hoya, the Georgetown University student newspaper that was founded in 1920.

And, according to the article reprinted below, it looks like Safeway plans to serve up a "Lifestyle" format supermarket for Washington D.C.'s Georgetown neighborhood (where former President John F. Kennedy lived before being elected to office) befitting the areas demographics, love of food and desire for a more social grocery shopping experience.

Perhaps the new Georgetown "Social Safeway" will be ready for the new U.S. President and his family when he--either Barack Obama or John McCain--takes office next year?

Safeway to Get a Little More 'Social'
The Hoya--Georgetown University
By Kaitlyn Gallagher Sep 01 2008

Who would have thought that a mundane trip to Safeway could turn into a social event?

In an effort to create a more welcoming atmosphere, owners of the Wisconsin Avenue Safeway are planning extensive renovations to turn the current grocery store into a “Social Safeway” shopping center almost 50 percent larger.

The new establishment is envisioned as a curbside, two-level shopping complex complete with an outdoor terrace and two parking levels.

Craig Muckle, a Safeway public affairs manager, said the renovation plans are still in the developmental stages. “We are still working with the Advisory Neighborhood Committee and the District government, so the start date hasn’t been identified yet,” Muckle said.

The building would be moved curbside to make it more accessible and inviting than its current spot behind a large parking lot. It would also be turned into a two-level complex, with the lower level occupied by separate businesses and the grocery store on the top. Safeway administrators are currently unsure which businesses would occupy the downstairs level, according to Muckle.

Muckle also said the terrace would be added to give weary shoppers a place to rest. “It essentially will be like an indoor/outdoor café setup where you can purchase food, sit and overlook the store.”

The enormous parking lot will be scaled down, but according to the renovations, parking won’t become scarce: There will be two levels of parking behind and below the store. As a result, there will also be two entrances.

The Georgetown store’s redevelopment is part of Safeway’s long-term rebranding strategy announced in 2004 in which existing stores in North America will get hardwood floors, muted lighting and improved produce, delicatessen, bakery and floral sections.

The renovations specific to the Wisconsin Avenue Safeway, though, such as the shopping area and outdoor terrace, were designed to suit the Georgetown community.

“Every store is different in and of itself, but this plan is strictly for Georgetown,” he said.

The square footage of the new store would be approximately 65,000 square feet, which will be nearly 45 percent larger than the existing store.

“I definitely think it will make the shopping experience more enjoyable, and it will definitely be a way for more people to meet,” said local resident and frequent Safeway customer Elizabeth Williams. “This already is considered the ‘social Safeway’ in D.C., but these changes will only make it that much more social.”

The closure of the current store during construction is projected to be an issue for local customers, but Muckle said he hopes customers will remain loyal to Safeway and use its home delivery service or visit nearby grocery stores in the interim.

Supply-Side Memo: Sweet Success With Organic Honey

For 25 years Richard Spiegel has been producing and marketing organic specialty honey from his company headquarters--a converted hog barn--in Hamakua, on Hawaii's Big Island.

Spiegel, who refers to himself as a retired hippie, owns Volcano Island Honey Co., where he produces award-winning organic kiawe honey using sustainable farming and production methods.

Spiegel recently told writer Karin Stanton in an article by the Associated Press, and published in the Honolulu Advertiser, that sales of his organic honey are so good he's having trouble keeping up with the demand. However, he added, he doesn't consider that his real success. Rather, Spiegel says, his goal is to "inspire other farmers to look for creative, eco-friendly and sustainable methods to produce good food."

"I've been trying to change the world since forever," he told Stanton. "I started as a lawyer, but that wasn't doing it." he added.

It seems Spiegel found his calling not in the law, but rather with the bees, producing and marketing organic honey.

Volcano Island Honey Co. produces and sells what it calls Rare Hawaiian Organic White Honey. Honey varieties include: Organic White Honey, Organic Winter Honey, White Honey With Organic Ginger, Organic White Honey With Hawaiian Lilikoi and others. (See a complete list here.) The sweet nectar has won numerous specialty product awards including a Silver Sofi in 2007 for outstanding new product from the National Association for the Specialty Foods Trade (NASFT).

Richard Spiegel (left) explains the fine points of how he produces his organic honey and farms sustainably to a group touring his farm and production facility.

Spiegel also uses his honey company as an educational laboratory to educate individuals and groups about sustainable and organic farming. He offers tours of his farm and of the production facility, located in the converted hog barn, to students, community groups, neighbors, farmers and agriculture groups--and just about anybody who cares to see what he's up to.

The company also publishes a newsletter which talks about the comings and goings on at the organic farm as well as sustainable and organic farming in general.

We suggest you read more about Spiegel, his award-winning honey, his views on sustainable farming methods, and what he thinks about farming and food production in general, in this short piece from the AP, published in the Honolulu Advertiser (December 31, 2007). It's a sweet story about a natural and specialty foods entrepreneur who's on to a sweet idea. (Full story here.)

Marketing Memo: Safeway's O' Organics Brand in Asia

Safeway's O' Organics On the Shelf at Carrefour Hypermarket, Taipei, Taiwan

On Friday, December 21, we reported that Safeway Stores, Inc.'s O' Organics brand organic grocery products were being sold at a Carrefour Hypermarket in Taipei, Taiwan. France's Carrefour is Europe's largest retailer, and the second largest retailer in the world after Wal-Mart.

Further, on Sunday, December 23, we followed up our original story with a piece providing new and additional information about the O' Organics brand in the Taipei Carrefour Hypermarket and in other Carrefour stores in Taiwan, along with some new reporting and analysis about the brand's marketing in Asia.

We also reported in that story that Market Place by Jason's, the 4-store, upscale format from Hong Kong-based Wellcome supermarkets, is also currently selling O' Organics brand groceries in Taiwan.

>Read our December 21 piece here.
>Read our December 23 piece here.

Now, one of our sources, Rachel Lanning who lives on Taipei, has taken a couple pictures of the O' Organics brand shelf sets for us in the Taipei, Carrefour.

The first picture (below) shows a variety of O' Organics shelf-stable grocery items in a 3 or 4-foot segregated shelf set in the store. The various O' Organics brand items are grouped together, creating an O' Organics organic set.

Photo: By Rachel Lanning

The set pictured above contains O' Organics fruit preserves, crunchy and creamy peanut butter, salad dressings, tomato ketchup and canned goods. [Note: Ms. Lanning tells us there is a "reduced price" sign on the O' Organics peanut butter. (you can see it on the shelf rail in the picture.) She thinks the peanut butter might be being discontinued, as she said the price reduction was considerable from what she paid for the item a couple weeks ago.]

The second picture (below) shows O' Organics brand boxed pasta dinners and packaged pasta in a set in the Taipei Carrefour. Box pasta dinner items include O' Organics regular organic macaroni and cheese and O' Organics organic alfredo macaroni and cheese. The store carries a number of different cuts of O' Organics dry pasta in the set as well. (You can see the linguine in the right of the picture.)

Photo: By Rachel Lanning

Carrefour currently has 48 Hypermarkets in Taiwan. The stores are merchandising a broad selection of O' Organics grocery items including: canned goods, ketchup and other condiments, salad dressings, teas, peanut butter, fruit preserves, soy milk, boxed dinners, pasta and a few other items.

Ms Lanning, who lives in Taiwan, told us Carrefour has reduced the retail prices on the O' Organics items a couple of times since they were introduced. She says this happens often in Taiwan because it's can be difficult to get local Taiwanese consumers to try American products.
"This happens a lot in Taiwan (lowering prices from the original retails)," Lanning told us. "Carrefour, especially, will try out new products, and if they don't sell, we'll never see them again."

As an example, Lanning said last year Carrefour introduced peanut M&M's in their Taiwan stores. "I think I ended up buying about 30 bags in a span of two months, since the price kept getting cheaper and cheaper," she said. "But no Taiwanese were gutsy enough to buy them." The peanut M&M's were discontinued by the Carrefour store.

Market Place by Jason's, an upscale retail food store format of Hong Kong's Wellcome supermarket chain, also is selling O' Organics organic grocery items in Taiwan, as we mentioned above, and reported in our previous stories.

The Market Place by Jason's format was just created this year (2007), and there are currently four stores open to date. The retailer created the upscale, natural-specialty foods format to target the growing consumer demand in the region for natural, organic, and international specialty foods and products. The Jason's stores in Taiwan are carrying about the same number of O' Organics items as Carrefour is in its Taiwan stores.

We thank Rachel Lanning for her field reporting for us, and for the photographs.

Safeway's O' Organics Brand: Part Duex

Safeway's O' Organics in Asia: More on the brand's being on sale at Carrefour-Taiwan. The brand also is being sold by Jason's Marketplace on the Island of Taipei in Taiwan. From Taiwan its on to Japan--and elsewhere in the Asia-Pacific region--for the organic foods brand. Finally, closer to home, Central America, where Carrefour just happens to have 366 food stores, is up next for O' Organics' brand marketing travels.

On Friday, we reported that Safeway Stores, Inc. is currently selling a number of items in its popular O' Organics organic grocery products line at a Carrefour Hypermarket in Taiwan. As we wrote Friday, the international business and grocery trade press had reported last week that Safeway "plans" on selling items from the line in Asia and South America beginning next year. (read our Friday story here.) We're the only publication to date to report that O' Organics brand items are already being sold in Asia.

We've learned a few more facts: First, the Carrefour store (pictured at left) where the O' Organics items are being sold is on the island of Taipei, in Taiwan. It's a huge Hypermarket.

Additionally, Rachel Lanning who lives and works on Taipei, told us the Carrefour store is adding new O' Organics brand items regularly. "Just yesterday, I spotted O' Organics macaroni and cheese," she told us. A clerk at the store told us via telephone that the items are doing well thus far, and that the store is indeed adding new skus on a regular basis as shelf-space is made available.

All Taiwan-region Carrefour stores to sell O' Organics brand

Carrefour has about 48 stores in and around Tawian. We've learned that all of these stores are either currently selling--or will be doing so shortly--O' Organics brand grocery products. The stores' are adding additional skus as space (and merchandising plans) permit.

Carrefour Asia is a great international brand launching pad for O' Organics

Carrefour, Europe's largest retailer, and the second largest retailer in the world after Wal-Mart, currently has about 223 Hypermarkets (huge stores that sell food along with hard and soft goods) in Asia. The French retailer has 100 stores in China, 48 in Taiwan, 30 in Indonesia, 25 in Thailand, 11 in Malaysia, 7 in Japan, and 2 in Singapore. Asia is a fast-track grow region for Carrefour as well.

This base of 223 Hypermarts in Asia provides the O' Organics brand with a huge Asian launching pad. Include Japan, and eventually China, the worlds most populated nation, and fasting growing economically, and it's apparent the Asian continent offers great opportunities internationally to grow brand sales.

Wellcome's Jason's Marketplace on Taipei also selling O' Organics brand items

Ms. Lanning also told us Jason's Marketplace, which is an upscale format from Hong Kong-based Wellcome, is currently selling O' Organics brand grocery products in it's Taipei store. We verified this, and the store is merchandising a number of items from the organic brand. Among the items in the O' Organics line Jason's Marketplace is selling include cereals, juices, peanut butter, noodles and other packaged goods.

Wellcome is Hong Kong's largest and oldest supermarket and hard goods chain. The chain currently has 235 stores in the island region. Jason's Marketplace is the grocer's newest format, and is designed to appeal to the specialty and natural foods consumer in the region. As in the West, natural, organic and specialty foods are chief among the many food product demands for a increasing number of consumers in Asia, especially in developed and generally prosperous countries like Taiwan, as well as in Hong Kong, Japan, South Korea and increasingly in China.

Japan next on-tap for O' Organics brand

We've also learned from a source, an international grocery products trader, that the O' Organics brand will be introduced in retail foods stores in Japan soon. American grocery product brands do well in Japan, and the country has a huge network of supermarkets and convenience stores like 7-Eleven Japan and Lawson.

In fact, Lawson, which is the second largest Japanese convenience chain after 7-Eleven-Japan, has a format called Natural Lawson, which features an extensive selection of natural and organic foods and grocery products. (Think of it as a mini Whole Foods.) Natural Lawson is positioning itself to the growing number of Japanese consumers who want natural and organic foods. (Read our recent piece about Natural Lawson here.) The upscale, convenience-oriented chain currently has about 20 stores--and is growing. It would be a "natural" retail outlet for the O' Organics brand. In addition to the 20 Natural Lawson stores, Lawson operates 8,400 traditional-style cobini (convenience stores) in Japan.

Carrefour and the Central American leg for the O' Organics brand

In it's announcement last week about taking the O' Organics brand international, and selling the line to other retailers, Safeway CEO Steve Burd mentioned two regions: Asia and Central America. Carrefour just happens to operate about 366 stores that sell food and grocery products in Central and Latin America. The retailer has 237 Hypermarkets and 129 supermarkets in the region. All but 36 of these stores are in Brazil and Argentina, countries with enough consumers with good incomes to provide a nice market for the brand. The remaining 36 stores are in Columbia (35) the Dominican Republic (1 store.)

Obviously, with a deal done with Carrefour in Asia, it's a logical conclusion there just might be a similar deal for Central and Latin America with the mega-French retailer.

Smart marketing to take O' Organics to Asia and Central America first

Lastly, we believe it's extremely smart marketing to introduce the O' Organics brand internationally first in Asia and Central America. Most organic product's brand marketers looking internationally for sales, tend to usually look--and go--first to Europe because of the region's strong base of natural and organic foods consumers. However, European food retailers are expert at creating store brand natural, organic and specialty foods brands, and going head-to-head against their brands makes little sense for O' Organics at this point in time, if ever.

Rather, Asia and Central America offer a market where their aren't many full-line organic grocery brands. Although it's nothing like Europe in terms of overall sales potential, it's an emerging and growing organic foods market--and those who get their first will have an advantage.

Friday Fishwrap: Safeway's O' Organics Brand

Safeway Stores, Inc. is already selling its O' Organics store brand in Asia: At Carrefour in the Republic of Taiwan

The international business press and numerous grocery industry trade publications reported last week on a major announcement from Pleasanton, California-based Safeway Stores, Inc. CEO Steve Burd that the grocer would begin selling some items from its hugely popular O' Organics organic grocery products line to food retailers in Asia and South America next year.

This is an innovative move for a U.S. supermarket company, as historically it's difficult to find a retailer that has broken "out of the box" and offered a store brand to other retailers to sell, either overseas or domestically. It's brand marketing thinking by a retailer rather than the industry norm of merely merchandising and selling store brands in just a retailer's own stores. Food retailers all to often forget they're marketers as well as sellers--and Safeway is acting more and more like a brand marketer in all respects these days.

But, Memo to the Press: Safeway already is selling its O' Organics brand in Asia. In fact, a number of the organic brand's items are currently being sold by Carrefour supermarkets in Taiwan. Carrefour, the worlds second largest retailer after Wal-Mart, and Europe's largest, is selling O' Organics' brand peanut butter (creamy and crunchy styles), pastas and noodles, popcorn, salad dressings and a few other items in the 300-item organic grocery products line in at least one of its supermarkets, and maybe more, in Taiwan.

The jar of Safeway's O' Organics crunchy peanut better pictured above was bought by our primary source at a Carrefour supermarket in Taiwan. As you can see, it's sitting on the shelf in her home refrigerator.

The O' Organics items are doing rather well at the Taiwan Carrefour store, according to our sources. Shoppers especially seem to like the peanut butter, which contains only organic peanuts and salt, and has no hydrogenated oils.

One shopper at a Carrefour in Taiwan told us the O' Organics peanut butter is far cheaper--and tastes much better--than the organic brands she previously bought at two supermarkets there, Jason's and Wellman's, both which offer decent organic foods selections, she said.

The major Safeway brand initiative was announced by CEO Steve Burd on December 13 at the company's annual investors day conference for stock analysts and institutional investors at the company's corporate headquarters in Pleasanton. The conference also was broadcast live over the web.

At the conference, Burd announced the O' Organics marketing initiative to food retailers in Asia and South America, but didn't name retailer names--and made no mention of any current deal with Carrefour, nor that some of the brand's items were being sold in Taiwan. But the O' Organics items are in the Taiwan stores. Our sources have purchased them there.

Having an international food retailing heavyweight like Carrefour, which has about 12,179 supermarkets, hypermarkets, deep discount format food stores, cash & carry stores, and convenience stores in 40 countries, ranging from Europe to Asia and the Middle East to North Africa, offers a huge opportunity for Safeway to grow O' Organics into a global organic grocery products brand.

Carrefour, through its vast international multi-format retail food store network, could literally provide the brand international distribution in-house, so to speak.

Safeway's O' Organics brand was introduced in 2006. The grocer has said it's been the most successful one-year launch of any of its store brand launches to date historically. Currently, there are 300 items in the line, including packaged grocery goods, milk and other dairy items, beverages, juices and other perishable items, including organic chicken. The largest number of skus are in the dry grocery/packaged goods category. Safeway also has recently branded a few fresh produce items with the O' Organics brand, perhaps signaling a further branding effort in the perishables categories.

Burd said at the December 13 conference, the company expects the organic brand to do gross sales of about $300 million in 2007, up from about $164 million last year. That's huge growth, attributed significantly to a vast expansion of the brand and line in late 2006 and this year, however. These sales numbers still are most impressive because to date Safeway, like other chain grocers, has only sold the O' Organics line in it own stores. Safeway currently has 1,738 stores in the U.S. and Canada.

In another "outside the box" development regarding the organic brand, Safeway has inked a deal with mega-food service distributor Sysco Corp. to distribute selected items from the brand to its vast customer base of food service operators. Sysco has already began distributing some of the items in the line, and plans to expand both the number of O' Organics products it distributes, and the number of operators it's distributing them to, as well as the geographic reach of its distribution of the brand items.

We haven't been able to find out if Carrefour is selling O' Organics brand products in its stores in other parts of the world besides Taiwan. However, we're working on that. Meanwhile, it looks like we broke a story.

Since Asia is one of the two countries CEO Burd mentioned in describing the initiative at last weeks conference, we expect an announcement regarding Carrefour shortly.

The international marketing effort by Safeway for its O' Organics brand will be interesting to watch and analyze. With 300 items under the brand, it's already one of the largest organic foods brands in the U.S.; not just store brands, but overall brands. Safeway also has major plans to continue adding items and categories to the brand, so its sku count growth will be considerable in just the next 12 months.

With double-digit organic products category growth throughout the western world (especially in the U.S., Europe, Canada and Australia), and fast growing organic foods' sales in Asia, South America, Africa and other developed and developing nations, the brand has the potential to be a real, global, billion dollar brand in just a couple years.

Combine these new international developments with Safeway's plans to create numerous more O' Organics branded products, and increased placement in it's existing stores, plus in the 23-25 new Lifestyle stores it will build just next year alone, and pretty soon you've got one hell of a brand.

Farm-to-Food Memo: An Independent grocer's view

We are what we eat: A Boston, Mass. independent grocer talks about clean, organic and local food; sustainability, mass food production and society, and how his family market and cafe fits into the picture

Writing today at alternet.org, independent grocer Jamey Lionette says, "I am not a scientist, journalist or other specialist. I sell food. I help run a family-owned and operated neighborhood market and cafe that buys and sells predominantly local, clean and sustainable food."

In his article, Lionette, who with other family members runs Lionette's The Garden of Eden Market and the Garden of Eden Cafe, both located on Tremont Street in Boston's South End neighborhood, says "We Are What We Eat," which is the title of his piece. "I cannot speak about the reality of our food supply around most of the world," Lionette writes. "I can only speak of what is happening in the first world, where, unfortunately, only the privileged elite can choose to put real food on their dinner tables.

We believe Lionette's piece (and opinion) is an important one, especially since it comes not from a professional analyst, industry consultant, or pundit. Rather, it comes from an independent grocer, who deals with customers each and every day in his store and cafe. An independent grocer who spends much of his time buying from local growers, wholesalers and others, and has created a strong niche so that the store can not only compete against the large chain supermarkets in the region, but also can offer shoppers something more: that local touch only an independent grocer who lives and works in the neighborhood can bring when it's done well.

Lionette also discusses farming today, and how it impacts on his family's grocery store and cafe vis-a-vis his larger grocer competitors, such as Whole Foods Market, Inc., Trader Joe's, Wal-Mart and others. He further offers his opinion about the social implications of mass-production on the overall farm-to-food picture, and contrasts it with organic and local foods. But at what financial cost he asks, in discussing the prices of organic foods at retailers like Whole Foods and others.

We invite you to read Lionette's piece, which is excerpted from the book, Manifestos on the Future of Food and Seed, edited by Vandana Shiva (South End, 2007), as an independent grocer's (as well as writer's and citizen's) analysis of modern farming, food manufacturing, marketing and retailing. It also focuses on the larger economic and social implications of all of the above.

We believe the independent grocer's perspective is more important today than ever before. It's the independent who's been the innovator in food retailing. The first mover if you will. The first to merchandise organic foods, local goods, specialty products and so much more. The independent also is the backbone of the community and neighborhood. He or she is often the first merchant to put out a fund-raising canister, the first to support local groups and food drives, and the one who sustains those efforts in the neighborhood over time.

Often, when people discuss "buying local," they tend to leave out "shopping local" when it comes to their food shopping. In other words, shopping at the local independent grocer's store. How often do you here someone say: "I bought some great locally-grown vegetables at Whole Foods?'" Or, (fill-in the chain store name) offers locally-grown fruits, and I buy them every week? The point is: "eating local" folks also should think more about shopping local as well. Often supporting ones local grocer is supporting those same ideals involved in buying local foods.

We agree with some of what Lionette says in his piece and disagree with other parts. However, that's not what's important. What's key, and what we hope you walk away with after reading his piece, is his perspective on the issue, along with some new knowledge you can think about and perhaps even put to work in your day-to-day business activities.

Read the full piece, We Are What We Eat, by Jamey Lionette

Tuesday Talking Points Memo: Memo to Whole Foods Market, Inc.

Wanted in Australia: An upscale, natural, organic and specialty grocer that not only merchandises products in these categories extensively, but also creates a varied, diverse and exciting shopping experience in it's stores. A grocer who has the financial means to build a national high-end food retailing chain in an English-speaking country that currently is without such a food retailer. It's a niche begging to be filled. We think Whole Foods Markets, Inc. is a "natural" to fill this high-end food retailing niche.

December 4, 2007

To: Whole Foods Markets, Inc.

Fm: Natural~Specialty Foods Memo

Re: Australia is the place you need to be

Dear Whole Foods:

First, congratulations on the six-month anniversary of the opening of your London store. It's a beauty. It's also much bigger than most British supermarkets. Texas-sized.

We know it's been a tough six months. Your first store outside North America and all. Winning over British shoppers isn't easy--especially for an American food retailer in a time in which Londoners aren't all that keen on such things as U.S. foreign and environmental policy. However, our friends across the pond say you're starting to win them over-slowly but surely.

Whole Foods' UK-flagship store is the retail anchor (bottom level) of the 348,000 square foot Barkers Centre mixed-use building (above( on Kensington High Street in London. The building's upper floors are leased to the Associated Newspapers Co. The lower floors contain retail shops.

In fact, they tell us a number of British celebs like pop starlet Natalie Appleton, comedian Ruby Wax, TV broadcaster Mariella Frostrup and others, have been spied shopping in the store on the Kensington High Street of late. A pretty upscale neighborhood that Kensington High Street is, isn't it?

We think this is a good sign for you. The Brits love their celebrities, and like to shop where they do. We're not saying it's a social class thing or anything like that of course.

Some other good news: British retail analyst Bryan Roberts, of the consulting firm Planet Retail, said the other day the store seems to be gaining momentum. He says he was a bit concerned a few weeks after the store opened because the aisles were empty. However, he says he's visited the store numerous times in the last month or so and can tell the store in gaining in popularity. Shopper numbers are up, and pre-holiday business has been brisk, Roberts reports. He's a fairly keen observer of the UK retail scene. Good going.

After all, if Tesco can come to the U.S. and open hundreds of little grocery markets called Fresh & Easy, an American grocer should be able to open a huge, upscale natural foods emporium in London and do at least $1 million dollars in sales a week after things shake out and the Brits realize its not a national offense to do their food shopping at an American retail icon's store. By the way, we do hope you're shooting for $1 million a week in the London store?

The produce department at Whole Foods' London flagship store on Kensington High Street.

But we digress. The main reason we're writing and sending you this memo is to suggest you look into Australia. Europe and the UK are great places for great food retailers. And Britain has a number of them--Tesco, Waitrose, J. Sainsbury and more. They will keep you on your toes--and you them.

But it's Australia we have our eyes on for you in terms of a more large-scale international expansion. Why? That's a fair question. And it's an easy one for us to answer.

You see, there's a huge gap in the food retailing spectrum in Australia. Woolworths and Coles, the nation's two leading supermarket retailers, dominate the middle market. However, at the upper-end there currently exists no national supermarket chain offering a full selection of natural and organic products, upscale, fresh prepared foods and the "lifestyle" grocery shopping experience Whole Foods' has become so good at providing.

The Australian flag. Note the colors: red, white and blue. Look familiar?

Just like shoppers in the other, wealthier western countries, Australians are looking not just for a national natural and organic foods retail leader, but also a grocer who will give them an improved and differentiated in-store experience. Food retailing as theatre. In-store restaurants, wine bars, mini spas, huge natural body care departments. All those things you offer, and shoppers are increasingly demanding, in the U.S. and Western Europe. As you know, what you do (natural foods' retailing with a lifestyle-orientation) is one of the key growth areas in the supermarket business worldwide.

But the poor Aussies, they have no such national natural products, lifestyle-oriented grocer. It's a huge opportunity for you. Bigger overall than the one in the UK because of the demand. We think Whole Foods is the best-suited grocer to make a success out of the niche. Australian food retailers (and retailers in general) are world-class as middle-market retailing, but aren't so good a mining the upper or lower, price-impact niches. More about that later.

In fact, Australia also is lacking a national grocer at the lower, price-impact end of the spectrum. But that situation about to change dramatically. German grocer Aldi, which as you know owns Trader Joe's in the states, is in the process of building the first of what will be many "no-frills," price-impact supermarkets in the land down under. The European retailer plans on creating a national chain with it's limited-assortment, low price-oriented stores.

Another niche that's lacking down under is the Warehouse Club format on a national (and quality) scale. Guess what? Costco is preparing to go after the warehouse club store niche in Australia. Costco was supposed to enter the country last year but put it off. However, they're working on it and should have an announcement some time soon. So, if you do enter Australia in the higher-end niche, you'll have some company at least from another American retailer mining it's own retail niche.

So, as you can see, there's a high-end retail food market niche just waiting in Australia for a grocer like Whole Foods. We don't need to tell you this, but Australian's have much in common with Americans. Some smart people even think Americans and Aussie's are more similar than the British and Americans are. And, like with Britain, the U.S. has a very long history of positive relations (hiccup here and there of course) with the Aussies. Imagine how well a beer room like the one you have in NYC would do in Australia.

The high-rise towers in downtown Melbourne, Australia beckon a supernatural, lifestyle-oriented grocer like Whole Foods Markets to build a national, high-end chain in the country.

Please though, don't just take our word for it. Take a close look at the Australian food retailing landscape. Talk to some retail experts and analysts there. Ask them about what's going on in the country in terms of the pent-up consumer desire in all sectors, not just food, for more and better high-end retailers.

It's happening in the woman's clothing market, for example. Upscale Luluman, from Canada, is doing great with its high-end woman's activewear, and plans on building a bunch of stores over the next couple years in the nation.

The same is happening with woman's shoes and intimate apparel. Upscale shops are opening and doing great. Australian woman are demanding more and better quality. Believe it or not, it's even going on with men's clothes. Did you know there's only one quality, national department store chain in the country that sells higher-end men's clothes. That situation is likely to end soon. Guess what? It's the Brits who are looking to create another one. Yes, Marks & Spencer is one UK retailer looking at the land down under in a big way. Perhaps even for upscale food offerings as well as clothing and other department store product offerings

There's also a flight to quality in terms of upscale restaurants going on down under. U.S. chain restaurants like Cheesecake factory, Brio Tuscan Grill and PF Chang's China Bistro are being courted by shopping center developers, while these same builders are often saying no to fast food operators like McDonalds and Burger King. We know these aren't white table cloth restaurants (those are becoming super-popular as well). However, the point is that lower-end restaurant chains are being pushed aside in favor of higher-end ones.

We encourage you to use our memo as a mere guide for further investigation and research. In addition to talking with food retailing analysts in Australia, visit numerous stores in person. (Maybe you have already?). You'll see we are onto something in terms of a lack of focus in the natural, organic and upscale lifestyle niche.

Sydney, Australia (above) is regularly ranked as one of the world's "best" cities to live in, based on its natural and built beauty, vibrant economy, progressive nature, and many other positive attributes. Great cities and great countries, like Australia, deserve great food retailers at the upper-end of the spectrum as well as in the middle-range.

As we mentioned earlier, Australian retailers are world class at creating and operating middle-market retail food chains. However, they've never been great at niche creation and building. Of course, that's do in large part to the fact that historically there's really been only two metropolitan regions in the country, Sydney and Melbourne. However, much has changed. Not only have these regions grown dramatically, but many of the outlying areas have grown as well--in both numbers and culinary and health-oriented sophistication. Aussie food retailers just haven't caught up with these developments and changes yet.

You can be sure though that either they will catch up soon--and launch a national, upscale food retail chain. If not, a grocer like Britain's Waitrose or another similar European retailer will. For example, Waitrose announced last week that it plans on doubling it's store count and sales over the next 7-10 years. The grocer said much of that growth will come from stores outside the UK. We wouldn't be surprised if Waitrose's self-named "Chubby Grocer" Mark Price isn't looking at Australia as we write this sentence.

In closing, congratulations again on the six-month anniversary of your London store, the chain's first one in Europe and outside North America. (By the way, we hear you're looking for a location for a second store in London or nearby. Good move. Having just one store in a country is expensive.)

We do hope the positive trends our friends in London tell us are happening at the store blossom even brighter. However, do take a look at Australia. The country provides an opportunity for an upscale, lifestyle-oriented grocer, who's deep into natural and organic foods, to open a number of stores in a fairly rapid period of time and create the nation's first national, high-end grocery chain of note. We know you guys like building lots of big, interesting stores fast. And, Australians, like Texans, love big things. As such, we do hope you look into the opportunity in a "big" way.

Sincerely, Natural~Specialty Foods Memo

Note: The writer currently owns no stock in Whole Foods Market, Inc. He does, however, enjoy finding retail market niches and matching retail grocery chains with those niches.