Leading Retailers Bet On Private Label Organic Products
Published by Julia Guth on August 18, 2010
Earlier this year, Five Winds partnered with students in Professor Stan Laskowsi's Masters of Environmental Studies program at the University of Pennsylvania to investigate the use of ecolabels on consumer products. A number of the students in the graduate environmental studies class, ENVS 617, investigated and analyzed different business and technical aspects around ecolabels as part of their term paper topics. This blog post draws on research from student Emily Marie Bush's term paper.
We've witnessed a strong retail trend: Retailers aiming to capitalize on two rapidly growing industries - private label brands and organic products. Demand for private label goods, which can be as much as 25 percent cheaper than national brands, is surging from low income and higher income consumers alike. Packaged Facts estimates private-label food and beverage dollar sales amounted to $87 billion in 2009, equivalent to 17% of total food and beverage retail sales in the United States. Meanwhile, organic food consumption is also ramping up; the USDA says organic agriculture has been one of the fastest growing sectors in the United States for over a decade.
Many retailers are creating extensive lines of organic products that include fresh foods like milk and butter, as well as processed and packaged items. Whole Foods Market offers organic products under its private label brand, 365 Organic Everyday Value. Safeway decided to market its organic line - O Organics - like a national brand in hopes that it could be sold in locations outside Safeway. The retailer partnered with Carrefour to sell the O Organics line in its supermarkets in Taiwan. Safeway's organic products also are being sold in Singapore and Taiwan by a Hong Kong based group. Due to this market expansion, Safeway has had phenomenal success with the ability to equal the achievements of Whole Food Market within just two years; O Organics sales reached $310 million in 2007 and predicted sales in 2008 are over $400 million.
Notably, Walmart has yet to create an extensive supply of organic private label goods. In 2006, the giant retailer announced it would start selling organic milk under its existing private label, Great Value. However, instead of expanding too far into private label brands, Walmart looked to its suppliers for help to test the ability of organic to sell. Because of the company's size and purchasing power, many national brands, like Kellogg, Kraft, and General Mills, agreed and are in the process of creating organic versions of many of their products.
Do you think private label organic products will become more common in the grocery stores you frequent?
Found in: Retail private label organic
