Costco Becomes Largest Organic Food Grocer In US: Whole Foods At Second Position

By @diplomatist10 on
Walmart
Tasha heads to checkout at a Walmart Store in Chicago, November 23, 2012. Black Friday, the day following the Thanksgiving Day holiday, has traditionally been the busiest shopping day in the United States. Reuters/Stringer

Costco Wholesale has overtaken Whole Foods in the United States as the biggest organic grocer, according to analysts. Costcos’ Chief financial officer Richard Galanti recently announced that the sale of its organic products exceeded $4 billion annually, up from a previous $3 billion-plus estimate of 2014. The claim was also endorsed by analysts from BMO Capital Markets who said the discount chain Costco is “possibly now already eclipsing” the industry leader “Whole Foods” which was ahead with its $3.6 billion in organic sale every year.

Referring to Costco’s buoyant trade in organic foodstuffs, Galanti said, “it started small” and grew without foods having conventional chemical pesticides or food from animals raised with antibiotics or growth hormones. “It’s still small, relative but growing faster. There is certainly more supply of out there,” he said.

Supply Chain Focus

The U.S. Department of Agriculture has forecast that demand for organic foodstuffs will be growing at double-digit rates. The arrival of Big-box stores’ as channels of organic food has left high pressure on the supply of organic products. But players like Costco are expected way to strengthen that supply chain.

Galanti says supply situation is better as “more organic supply and producers are doing it. And we’re pretty good at getting out there and working with suppliers both here and around the world to commit more to it, whether it’s raising eggs or ground beef processing or produce.” The Organic Trade Association, the lobby group for the industry also estimates that total organic-food sales in the U.S is around $36 billion. The numbers underscore how organic food has become a mainstream phenomenon among the younger demographic that prefers warehouse clubs like Costco. The trade group also noted that 30 percent of organic-food buyers are now buying the products at a warehouse club, showing a 10 percentage-point jump compared to 2014.

Walmart’s Offerings

Meanwhile, the organic opportunity has enthused industry leader Wal-Mart, which is also pushing hard in the segment. In an earnings call in May, its CEO said the retail giant has increased its organic offerings by 20 percent since the start of 2015 as the segment is very important to "various demographic groups, including millennials.”

Walmart now offers 1,600 organic grocery items with a line of packaged goods from the Wild Oats brand. Walmart spokesperson Molly Blakeman noted, “we don't think people should have to pay more to put organic on the table.” The Wild Oats brand is popular in 3,800 of Walmart stores where at least 30 Wild Oats products are in stock. Already 2,200 of its stores have more than 70 of that Wild Oats on shelves, Blakeman noted.

(For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)

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