The Battle for the Organic Food Market-Case

Many retail stores began to focuses on selling organic foods starting in the late 1990s. The market for organics food really grew after Whole Foods started to expand. Whole Foods began, as a small Austin based retailer that focused on selling natural products in the 1980s. It gradually developed and spread through the purchase of other smaller organic food retailers. Now, it is a nationally known retailer with a strong focus on selling natural foods to an upscale target market.   Wholes Foods has successfully positioned itself as the premium organic retailer based on its commitment to offering superior products. It created many innovated ways to promote the concept of organic, natural foods to young professionals and eco-friendly consumers. As the middle class grew, the market demand for organic foods has increased.

Organic products are typically priced higher than regular products in retail stores. Sometimes the price differences may be 30 to 40% higher depending on the retailer. Organic fruits and vegetables are grown with little or no pesticides which can be harmful to people and the environment. Meats and dairy products are sourced from farms that follow strict guidelines that limit the use of growth hormones on animals, and pesticides on animal feed. Because of the way that the products are produced, organic and natural products result in higher production costs.

The government has developed guidelines which determine whether a product can be labeled as organic. Companies selling these products must follow these guidelines or face negative consequences from the government or consumer groups.

The success in the organic market has not gone unnoticed as larger retail chains have begun to offer extensive organic product lines to appeal to the same customers. HEB (major TX retailer) and Kroger now have wide-ranging organic product lines in their produce, selected meat and general grocery sections. For HEB and Kroger, the organic products are just alternative product lines because the regular nonorganic products can be purchased at a lower price. Their expansion into organic products is an example of retailers responding to market changes.

Questions

After reviewing this case answer the following questions

1. Explain at least 4 major environmental variables which have affected the organic food market.

2. If economic conditions worsen and unemployment rate increases significantly, which retailer(s) will suffer the most in terms of sales and profits? Please explain your rationale.

3. Should Whole Foods consider selling non organic products as a way to expand its sales? Please explain