Amazon’s purchase of Whole Foods Market marks the beginning of a new growth phase for the organic and sustainable products market, says ethical products industry analysts Ecovia Intelligence in a new commentary released ahead of its upcoming Sustainable Food Summit.
Documenting the shift in distribution of sustainable foods and natural cosmetics – from their original home in the independent health food channel to widespread uptake among mass market retailers (with private label increasingly dominating shelf space – Ecovia Intelligence predicts that the next growth spurt will come from mobile apps linked to delivery services.
“Sprouts Farmer’s Markets, one of the largest natural food retailers in the US, has just partnered with Instacart for same day delivery of its grocery products. Starting in Phoenix, Tuscon, and Arizona, the home delivery scheme will be extended to other areas. Target and Wal-Mart have already partnered with Google to set up similar delivery services.
“Since acquiring Whole Foods Market, its 365 Everyday Value brand has become the number two selling private label on Amazon. The online retailer is reported to have sold US $10 million in Whole Foods snacks, canned foods, and frozen fruits and vegetables in the first few months. The private label is projected to show over US $40 million sales from Amazon this year.
“Sprouts Farmer’s Markets and other natural food retailers are looking to actively market their private label ranges via home delivery schemes. Organic foods marketed under private labels are attractive to consumers as they typically have lower prices; they also generate higher margins for retailers.”
“Most of the demand demand for organic & sustainable products is coming from Millennials. They are the fastest growing buyers of organic foods in the US, generating over half of total sales. They are also digital consumers, buying 40% of their groceries online. Research also shows that 58% of Millennials say they will shop at a store because of their private label ranges. Amazon is capitalizing on these trends in North America.”
Ecovia Intelligence believes Amazon will find it more difficult to build the same footprint in Europe. “The organic food & natural cosmetic markets are highly fragmented, with large retailers having the most successful private labels. Whole Foods Market has just seven stores in the UK. Whilst there are over 20 chains of organic food shops in Europe, none have a regional presence. Amazon would have to acquire and integrate several retail chains if it is to have a similar impact in Europe.
“With the ubiquitous use of mobile devices and growing influence of Millennials, the next growth phase for sustainable products is likely to be with online retailing. The question is how will brands compete in the digital marketplace? Whole Foods Market is already showing signs of moving away from small producers, as it focuses on private labels and high volume items. The future maybe digital, however will it be sustainable for small producers?”
Upcoming Sustainability Summits
Sustainable Foods Summit North America (30-31 January, San Francisco)
Sustainable Cosmetics Summit North America (16-18 May, New York)
Sustainable Foods Summit Europe (14-15 June, Amsterdam
To find out more about the Sustainable Foods Summits visit www.sustainablefoodssummit.com
To find out more about the Sustainable Cosmetics Summits visit www.sustainablecosmeticssummit.com
11 hours ago