Stores such as Costco and Wal-Mart are expanding their organic product offerings, which, according to Reuters, are hurting the retailers that pioneered the ‘organic’ trend.
Piper Jaffray, an investment bank, estimates that the number of organic items sold in traditional grocery stores has increased between 35 to 50 per cent in the last year. TechSci research estimates that the U.S. organic food market will reach $45,000 billion in 2015.
Reuters reports that 10 per cent of Kroger Company’s $108 billion annual revenue comes from organic products. These sales make the supermarket chain the second-largest seller of organic foods behind Whole Foods. Meanwhile, sales of organic products at Whole Foods are down 34 per cent to date, while Sprouts Farmer’s Market is down 25 per cent.
Sean Naughton, an analyst at Piper Jaffray, told Reuters that specialty grocers will need to slash prices or focus on higher-margin prepared foods. Chris Carter, a co-port folio manager of the $921 million Buffalo Discovery fund, predicts that Costco, Wal-Mart, Whole Foods, and possibly Amazon will be the largest sellers of organic foods five years from now.
