Organic products sold under Kroger’s private-label brands have topped $1 billion in annual sales, representing 1 percent of the grocer’s total revenue.
The country’s second-largest retailer has more than 35,000 stock keeping units (SKUs) that are organic or natural, approximately 5,800 of which were added in the past year, according to a Bloomberg report. Kroger’s Simple Truth natural and organic brand, which was expanded and repositioned two years ago, is one of the grocer’s key growth drivers. The brand is positioned as being “Free From 101” artificial ingredients and preservatives.
“This is one area where the customer has clearly said that we’re interested in,” Michael Ellis, Kroger’s president, told Bloomberg. “We’re really just answering the customer’s call for more and better.” Although Kroger would not disclose the exact organic food sales figure, executives told Bloomberg it has already exceeded $1 billion.
Cincinnati-based Kroger, which operates 2,600 supermarkets in 34 states, said it also plans to introduce an organic wine this fall.
The large influx of new organic food products hitting the market, and the growing number of stores and chains where they are available, has lowered prices, making organic food more accessible to mainstream shoppers. Kroger executives told Bloomberg they call it a “blurring of groceries and natural foods,” because most Kroger shoppers buy both organic and conventional foods.
“There’s more margin pressure now on natural and organic than there’s ever been,” said Rodney McMullen, Kroger’s CEO, during a recent quarterly conference call with investors, where he shared the company’s quarterly financial results. “It seems that it’s becoming more and more of a competitive category, and so although margins tend to be better in natural and organic, I don’t know if that’s going to continue for the foreseeable future.”
