Monday, October 03, 2005

Stores rush to meet soaring demand for organic and natural foods

Darn tootin' Toronto is underserved for organic produce! Thankfully the grocery store where I get lunch has an OK organic selection and my grocery delivery now offers milk and eggs. So things are looking up. Now I just want more local organic produce.
Stores rush to meet soaring demand for organic and natural foods
09:14 AM EDT Oct 03
VANCOUVER (CP) - Once restricted to the confines of health-food stores and farmers' markets, organic and natural foods are flooding the market and speciality and big retailers are rushing to meet the demand.
With a growing number of consumers and the lower prices that come with scale, organic foods are filling a greater number of store shelves than ever pushing them to the tipping point in the marketplace.
Aron Bjornson, marketing manager at Capers Community Markets, says the supply chain has improved dramatically bringing far greater access to a broad range of natural and organic products.
"Fifteen years ago there was a limited selection of items, the quality was not always consistent and now we're getting high quality and organic and natural products that aren't just in single categories," Bjornson says.
"You really can do a full shop of organic and natural goods."
And the Vancouver market may be one of the most lucrative as well as competitive in Canada.
With not only Capers Community Markets, owned by U.S. natural foods retailer Wild Oats Markets Inc. (Nasdaq:OATS), and Choices, a local chain, but also U.S. grocery operator Whole Foods (Nasdaq:WFMI), which opened its second Canadian store in Vancouver, the market is growing by leaps and bounds.
Even bulk retailer Costco offers several organic products to customers.
According to market research conducted by Synovate for the Certified Organic Associations of B.C., 53 per cent residents in and around the Vancouver area bought some organic food in the past year.
In 2003, a report prepared for Agriculture Canada estimated the organic food market had grown from what was once a small scale niche market into a $23 billion business around the world.
And Capers estimated that the demand for organic and natural products is growing at a pace greater than 20 per cent per year, a speed that prompted the chain to accelerate its expansion plans.
"There's a big spur in consumer demand and if carry on this trend there are industry experts that have said 10 per cent of the Canadian retail market will be natural and organic by 2010," Bjornson said.
The chain will open its fourth store in the Lower Mainland next spring, with an eye to expand even further in the Vancouver region and east to Calgary.
Last week, Planet Organic Health Corp. (TSXV:POH) announced that it would open a new 8,800-square-foot store in Calgary early next year, the second location in the city.
Diane Shaskin, vice-president the Edmonton-headquartered organic grocer, said her company, which was seeing 30 per cent annual same store sales growth, was also looking to expand in Toronto.
"We are now currently doing an active search in the Greater Toronto Area," Shaskin said in an interview from Victoria. "They're underserviced in the organic food market in Ontario."
In Ontario and Quebec, Loblaws (TSX:L), one of the largest grocery retailers in Canada, has worked hard to use its scale to bring down the price of many items to the same price as their regular offerings.
"It gave consumers who may not have tried organics an opportunity to try the products and we've seen a very strong receptiveness to the introduction of these products," Loblaws spokesman Geoff Wilson said.
The big grocer has also invested in growing its offering of organic products under its President's Choice brand and now offers more than 250 products under the label.
Though Wilson says it is still a relatively small percentage of Loblaw's $26 billion in annual revenue, it is growing "at a very nice rate."
"We're very pleased by organic business, and we continue to expand. Our natural value departments are now a mainstream department that we put in all of our larger format stores," he said.

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