Sunday, July 12, 2020

Sustainable foods space set for new growth phase

Amazon’s acquisition of Whole Foods Market pre-empts the beginning of a new growth phase for the organic and sustainable products market, says Ecovia Intelligence.

Indeed, the company predicts that distribution will continue to move towards online retailing and home delivery schemes.

Sustainable foods and natural cosmetics were initially introduced in health and natural food retailers, with distribution expanding to the mass market over the last two decades.

Mainstream retailers now make up the lion’s share of organic food sales in almost all leading country markets.

Every large food retailer in North America and Europe is now marketing organic foods under their private labels. The next growth spurt is envisioned to come from mobile apps linked to delivery services.

Since acquiring Whole Foods Market, its 365 Everyday Value brand has become the number two selling private label on Amazon.

The online retailer is reported to have sold $10 million in Whole Food snacks, canned foods and frozen fruits and vegetables in the first few months.

The private label is projected to show over $40 million sales from Amazon this year.

Other natural food retailers are looking to actively market their private label ranges via home delivery schemes.

Organic food marketing under private labels are attractive to consumers as they typically sport lover prices, as well as generating higher margins for retailers.

As will be demonstrated at the forthcoming Sustainable Food Summit, most demand for organic and sustainable products is coming from millennials.

They are the fastest growing buyers of organic foods in the US, generating half of total sales. They are also digital consumers, buying 40% of their groceries online.

Research shows that 58% of millennials say they will shop at a store because of their private label ranges.

Amazon is capitalising on the aforementioned trends in North America, but Ecovia Intelligence said Amazon will find it more difficult to build the same footprint in Europe.

The organic food and natural cosmetics markets are highly fragmented with large retailers having the most successful private labels.

Whole Foods Market has just seven stores in the UK. Whilst there are over 20 chains of organic food shops in Europe, none have a regional presence, meaning Amazon would have to acquire and integrate several chains if it is to have a similar impact in Europe.

With the ubiquitous use of mobile devices and the growing influence of millennials, the next growth phase for sustainable products is likely to be with online retailer. The question is how will brands compete in the digital marketplace?

Whole Foods Market is already showing signs of moving away from small producers, as it focuses on private labels and high volume items. The future maybe digital, however will it be sustainable for small producers?

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