Organics Going Mainstream

   In the early 1990s I heard a vice-president of Whole Foods speak at a conference where she asserted that we - organic consumers - were mainstream, not fringe. Twenty years later............

Walmart to Offer Organic Line of Food at Discount Prices

By ELIZABETH A. HARRIS and STEPHANIE STROMAPRIL 10, 2014

Walmart plans to announce on Thursday that it is putting its muscle behind Wild Oats organic products, offering the label at prices that will undercut brand-name organic competitors by at least 25 percent.

The move by Walmart, the nation’s largest retailer and grocer, is likely to send shock waves through the organic market, in which an increasing number of food companies and retailers are seeking a toehold.

“We’re removing the premium associated with organic groceries,” said Jack L. Sinclair, executive vice president of Walmart U.S.’s grocery division. The Wild Oats organic products will be priced the same as similar nonorganic brand-name goods.

For now, Walmart will carry the Wild Oats label, which is owned by the Yucaipa Companies, a private investment firm, only in its pantry section, with items like tomato paste, chicken broth and cinnamon applesauce cup. Over 90 percent of its offerings at Walmart will be organic, while the rest will adhere to company standards about ingredients and additives, a Wild Oats executive said, but not to any government regulations.

Instead of hitting the entire national market at once, Walmart will first introduce Wild Oats at 2,000 stores in the coming months, only half of its national footprint, and then roll it out to the rest of the country. Mr. Sinclair said that concerns about supply kept the retailer from introducing the brand in all its stores at once.

“What we don’t want to do is launch it in 4,000 stores and then not be able to supply those 4,000 stores in the short term,” he said. “Certain commodities are challenging in terms of being able to access both the raw material and the processing capacity.”

In an effort to manage and ensure the supply, Mr. Sinclair said, Walmart plans to enter into long-term agreements with suppliers — for five years, for example — so it can lock in what it will need to meet its enormous requirements.

Over at least the next few years, Walmart’s move is likely to raise prices for organic ingredients, which are already going up because of fast-growing consumer demand. Organic food accounted for $29 billion in United States sales in 2012, according to the most recent data, the Organic Trade Association said. Ten years earlier, its sales were $8 billion.

Eager to tap into that demand, Target, one of Walmart’s primary competitors, said on Tuesday that it would expand the presence of organic products in its stores. At Walmart, internal company research found that 91 percent of customers said they would buy “affordable” organic products if they were available, executives said.

While organically produced grains do not necessarily cost more to grow than other types, Lynn Clarkson, founder of the Clarkson Grain, which processes and sells organic and conventional wheat, soy, corn and other grains, said they commanded a huge premium because they were scarce.

“Right now, there is so much demand and competition for supplies that the price is very high, and I cannot imagine that changing anytime soon,” Mr. Clarkson said.

He estimated that farmers in the United States were producing about six million bushels of organic soybeans, for example, when some 20 million bushels are needed to meet current needs. Organic soy is selling for $25 to $30 a bushel, Mr. Clarkson said, or about twice the price of regular soy beans.

The amount of land devoted to organic farming has grown, according to the Agriculture Department, but not nearly enough to address growing consumer demand.

“Younger people are much more interested in the chemistry of their lives, and so for them the issue of pesticides is a troubling one,” Mr. Clarkson said.

Ultimately, however, Walmart’s move could increase the supply, and eventually bring prices down.

The online grocery retailer Fresh Direct has an extensive selection of organic products among its overall merchandise mix. A five-pound bag of conventional russet potatoes was selling for $3.99, while its organic counterpart was $5.99. A box of Driscoll’s organic strawberries is usually a dollar more than its conventional brethren.

“We offer both, but more often than not I try to push people into the organic because I think it’s better,” said David McInerney, a founder of Fresh Direct. “You can compress the margins on organic to make it more attractive.”

Mr. McInerney said he did that in hopes of building the scale of organic products. “Prices can and will come down with scale,” he said. “We’ve already seen that as demand for organic products has grown.”

He said an increasing number of farmers he dealt with were considering switching at least a portion of their conventional production to organic, attracted by the premiums.

But even if a farmer decided to turn to organic production today, various restrictions mean that it would be three years before any crop could receive the federally approved organic seal.

A version of this article appears in print on April 10, 2014, on page B9 of the New York edition with the headline: Walmart to Offer Organic Line of Food at Discount Prices.

http://www.nytimes.com/2014/04/10/business/walmart-to-offer-organic-line-of-food-at-cut-rate-prices.html?hp

Glocal - domestic mangos and croissants -

Croissants and a baguette from Catania Bakery






And domestic mangos....... I was quick to notice this mango at Whole Foods - grown in California and organic too. As can be seen from the prominent CA Grown label, that the the mango is from the US is a big part of the marketing.








American mangos and croissants twists concepts of foreign / local / global cuisine. So what is global when it becomes local? Glocal?

Organic Is Mainstream Now!!!!!

I was at a conference in the mid 1990's sponsored by Americans For Safe Food which was a project of the Center For Science In The Public Interest. There was a speaker from Whole Foods who declared in her talk that "We are the mainstream!". Now it is official - the government says so too! As Bob Marley has said, "Babylon paper say so......". Glad to know that time is catching up to me! Now if we can get through all the green wash....... http://earth911.com/blog/2009/09/23/usda-reports-organic-food-now-mainstream/ published on September 23rd, 2009 USDA Reports Organic Food Now Mainstream by Lori Brown In a recently updated Organic Market Overview, the U.S. Department of Agriculture (USDA) reports the market for organic foods is now "mainstream," with organic sales accounting for more than 3 percent of total U.S. food sales. Three percent may seem like a small piece of the pie, but that small piece resulted in $21.1 billion of sales in 2008 alone and is estimated to reach $23 billion in 2009, according to the Nutrition Business Journal. Organic food is sold to consumers via three main venues in the U.S.: To receive the USDA stamp of approval, the National Organic Program requires three years without the application of prohibited pesticides and synthetic fertilizers. Photo: Amanda Wills, Earth911.com Conventional grocery stores- Nearly three of every four conventional grocery stores offer organic food products for sale. Natural food stores- Approximately 20,000 natural food stores offer organic products for sale in the U.S. Direct-to-consumer markets- This includes farmers' markets, foodservice and marketing channels other than retail stores. The Organic Trade Association (OTA) estimates 93 percent of all organic food sales occur through conventional and natural food supermarkets and chains. A few common themes have occurred in various studies conducted by researchers in the public and private sectors regarding the buying habits and demographics of consumers of organic foods. Consumers often prefer organic food products because of concerns regarding health, the environment and animal welfare and are willing to pay the price premiums associated with the products. As stated in the overview, "organic products have shifted from being a lifestyle choice for a small share of consumers to being consumed at least occasionally by a majority of Americans." American food producers struggle to meet the demand of an increasing consumer base. Though certified organic acreage has doubled in the U.S. since 1997, organic food sales have grown much faster, increasing from 3.6 billion to 21.1 in the same period.

A View of Whole Foods in August 2008

In August 2008 Sham Gad thought very highly of Whole Foods stock. Now that Whole Foods (WFMI) stock has reached a share price that is almost a 10 year low I am curious what Mr. Sham Gad thinks of the stock.
This is Mr. Sham's article:

Whole Foods Is Worth a Whole Lot More
By Sham Gad
RealMoney.com Contributor
8/20/2008 12:59 PM EDT
URL: http://www.thestreet.com/p/rmoney/investing/10434043.html

One of my favorite investors once remarked, "You pay an expensive price for a cheery consensus." Indeed. When is the last time you found bargain investments among today's popular investment groups? It rarely ever happens. The commodities sector is case in point. While I believe the long-term outlook for commodities is strong, that doesn't mean I would go out and quickly invest in the industry. Anyone with a pulse knows that oil prices have soared and pushed up the prices of gasoline, diesel fuel and heating oil. Largely hidden from view, however, have been steep and continuing price increases across a basket of commodities. Coal sold for about $30 a ton during 2003, and hit $139 in 2008 before slipping back a bit, tripling in 12 months. Copper went from 82 cents a pound in July 2003 to $3.72 by the end of last month, an increase of 350% over five years. The price of steel has climbed from under $240 a ton for hot-rolled steel in 2003 to $1,125 a ton last month, a fourfold rise in five years. Grain prices are no exception. U.S. corn prices jumped from $3.01 a bushel in July 2007 to $5.37 one year later. Wheat doubled from $3.05 a bushel to $6.02 over the past two years. The old adage, "what has risen shall fall and what has fallen shall again rise" rings very true in investing. Blindly investing in commodities today can lead to some very quick and painful results. Just look at a few oil companies' equity prices over the past few weeks as oil has fallen from $147 to $113 a barrel. They have fallen just as quickly. Believe it or not, some of the best opportunities today lie outside the commodities and in areas where many investors frown upon.
The Economic Case
When demand is high, prices rise; conversely when demand softens, prices fall. This principle also applies to stock prices. Right now, energy and commodity businesses are the hot topics. Unfortunately, the real money was made a few years ago when corn, wheat and coal were considered boring topics, and patient investors were picking up businesses on the cheap. Enterprising investors would be well served to look in today's orphaned sectors. Hundreds of businesses have lost 50% or more of their market valuations over the past year or two. Understand, however, that a cheap stock does not equate to an undervalued investment opportunity, and an undervalued business is not necessarily characterized by a cheap stock price. A wonderful example is Whole Foods (WFMI) .
Pricey Food, Affordable Stock
For years, I have been a big admirer of Whole Foods. The quality of the business of is evident the minute you step inside one of its stores. For years, Whole Foods was the darling of Wall Street. Between 2002 and 2006, shares leapt from $18 to nearly $80 a share, and the average annual P/E ratio was over 35. During this time, the company traded for as high as seven times book. Now, with consumers cutting back, the grocer has felt the pain. The most recent quarter's results indicate choppy waters ahead. The company lost nearly 18% of its value in a single day. Make no mistake, Whole Foods is experiencing a very tough operating environment. Management indicated as much when they announced that they would be reducing expansion plans for the rest of the year. But now, with the stock at $18, the P/E is 18, and the company sells for less than two times book value, investors are avoiding it. Yet Whole Foods is a business with a wonderful economic moat. With the sticky acquisition of Wild Oats behind it, Whole Foods has eliminated its biggest competitor. Even Wal-Mart (WMT) , with its might, has yet to do anything to damage the Whole Foods brand. As a value investor, what has me so excited about Whole Foods at the current prices is simply this: to any potential buyer, Whole Foods is worth a whole lot more than its current market value of $2.65 billion. The exact figure, no one knows; but the company's assets, brand recognition, market dominance and growth prospects all add up to something more than $3 billion. Just think of how long and expensive it would be for Wal-Mart or Kroger (KR) to build a 270-store organic food chain in some of the country's top real estate locations -- and then spending the marketing dollars to achieve the image and recognition that Whole Foods has. It won't happen for $2.65 billion. In the organic and natural foods industry, Whole Foods is the Coca-Cola (KO) : it owns the market. Markets environments like today reward the investor who can anticipate what is to come. Under a tough consumer environment, Whole Food's pricier fare looks like a suckers bet. Yet, many of its customers view their food habits as a lifestyle necessity, and are more tolerant of price changes. Besides, if conventional food prices continue to rise, the value of natural foods may look better. If you are expecting results next month or next quarter, you might not like the ones you get. But if you can analyze a business through the looking glass of a multi-year period, now is a good time to look at some quality unpopular businesses. As famed investor Shelby Davis aptly remarked, "You make your best money in bear markets, you just don't know it at the time."

At the time of publication, Gad had no positions in the stocks mentioned, although positions may change at any time. Sham Gad is the managing partner of the Gad Partners Fund, a value-centric investment partnership modeled after the original 1950s' Buffett Partnerships. Previously, Gad was a writer for The Motley Fool and a securities analyst for UAS Asset Management, a small, value-focused fund in New York City. Gad also runs a value investing blog inspired by the teachings of Benjamin Graham and Warren Buffett. Gad is working on a value investing book (title forthcoming) to be published by John Wiley and Sons in the summer of 2009. Reach Gad at sham@gadcapital.com.