Whole Foods Discovers Competition

Whole Foods investors yesterday discovered competition. The value of stock in this iconic retailer of natural and organic foods dropped by a whopping 19% today after they announced disappointing earnings. Founder John Mackey put his finger on the problem, saying:

Competition is more intense right now than we’ve possibly ever experienced before. For a long time Whole Foods had the field to ourselves. That was nice, but we don’t anymore.

U.S. Natural Foods Market“The field” he’s referencing is the natural and organic foods market. And mainstream food retailers are jumping in with both feet. In 1998, the market for fresh, natural foods was dominated by specialty food retailers like Whole Foods controlling 75% of a market segment worth $6 billion dollars. By 2012, the market for such foods had grown eight-fold to $48 billion. But specialty food retailers by then saw their share of the market shrink to 38%. Conventional food retailers had muscled in to take 55% of the market.

Wal-Mart announced a deal with Wild Oats in April to launch 100 mostly organic products in their stores — a move that will put increasing pressure on Whole Foods.

Kroger reported in March that their Simple Truth natural foods brand is growing at “an astonishing pace.”

Rejoice, food evangelists! Your exhortations — backed up by Foodie-in-Chief Michelle Obama — are reshaping the food market and spurring competition to sell presumably wholesome food to America.

Along the way, some handsome profits will be made.

Click here to read more from the Wall Street Journal and here to read more from Bloomberg.

Earth, from the Four Elements. 16th c painting by Joachim Beuckelaer

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