Media Memo: Safeway's O' Organics Brand In Asia

Financial Times picks up on (our?) O' Organics in Asia story

On December 21, we reported that Safeway Stores, Inc. was selling its O' Organics brand organic grocery products in Carrefour stores in Taiwan. We followed that story up with more reporting on the topic in a December 23 story--and then again with another story on December 27. {You can read our three stories here.}

Today, the prestigious Financial Times newspaper reported the story. The Financial Times is the first mainstream business publication to report on the O' Organics brand being sold in Asia. {Read today's Financial Times story here.} (Note: The major supermarket industry trade publications haven't reported the story yet.)

Note: In our stories we reported the O' Organics brand was also being sold in Taiwan and in other parts of Asia by Marketplace by Jason's stores, in addition to Carrefour. These stores are a fairly new upscale division of Hong Kong-based supermarket chain Wellcome.

In its story today, the Financial Times said that in addition to Carrefour carrying the O' Organics organic grocery items in its Taiwan stores, the brand also is being carried in stores owned by Hong Kong-based Dairy Farm Group.

Dairy Farm Group is the parent company of Wellcome Supermarkets. Wellcome is actually a separate division of Dairy Farm (which is a diversified company), and that is why we stated in our original reporting that the O' Organics brand items are being sold in those particular stores, under the ownership of Wellcome. The Financial Times story doesn't mention the Jason's stores by name--but that's where the O' Organics brand grocery items are being sold in addition to Carrefour.

The Financial Times story also says the O' Organics brand grocery items appeared in the fist Carrefour store earlier this year. However, we wrote our first story on the grocery items being in a Carrefour hypermarket in Taipi, Taiwan on December 21. The items were in that particular store at least a week--and probably longer--prior to December 21, 2007.

The Financial Times story also says Carrefour, the second-biggest retailer in the world after Wal-Mart, declined to say whether or not it has an agreement with Safeway to sell the O' Organics brand in areas other than Asia.

Carrefour declined to comment to us as well when we broke the story almost three weeks ago.

However, based on what our sources have told us, Carrefour at present doesn't plan to sell the O' Organic brand items outside of Asia at present, but that is subject to change.

The French mega-retailer is evaluating the potential of offering products from the O' Organics line in its stores in Latin America. (We provided some detail on this in our December 21, 23 and 27 stories.) Carrefour has over 300 stores in Latin America, the majority being in Brazil and Argentina.

We're pleased to see the Financial Times cover the story today. It's one of our favorite international business publications.

We are presently working on a story on potential O' Organics brand sales in Latin America. However, we don't yet feel comfortable reporting it based on our current level of sourcing, so we haven't. When we do feel comfortable doing so, you will be the first to know.

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.