Kroger’s share of natural and organic foods is growing faster than the category nationwide, company officials said Wednesday, citing responsiveness to changing consumer tastes and an expanding selection.
Kroger supermarkets stock some 17,000 to 20,000 natural and organic SKUs (of 70,000 overall) today. As the category has gone “mainstream” Kroger has been changing shelf tags so as to point out product attributes like GMO Free and USDA Organic that are helping to drive the growth, Jill McIntosh, VP of natural foods for Kroger, said in a presentation at the retailer’s investor conference in Cincinnati, Wednesday.
“It used to be that people looked at the nutritional panel to see if a product was good for them,” McIntosh said. “Now, more and more, consumers are looking at the ingredient list to see if its short, simple and actually inludes things they can pronounce before they want to eat it. This is a food revolution driven by the millennial customer.”
Mike Donnelly, SVP of merchandising for Kroger, said customer data indicates that two of every five households buys natural foods today. And though their level of engagement varies, “through insight we can see that journey, and that gives us the opportunity to take targeted offers and really refine them to those customers’ needs as they go forward.”
Customers, Donnelly added, “believe they can manage their health through proper nutrition, and that has a lot of ramifications at the shelf.” This is particularly evident in Kroger’s natural and organic private brand, Simple Truth, which is riding customer demand for ingredient simplicity to explosive growth, Donnelly said.
Gil Phipps, Kroger’s VP of corporate brands, in a separate presentation said the brand had growth by 30.7% in unit sales through the first half of the fiscal year behind 97 new items. He said the brand is on-track to reach $1 billion in sales this year, less than two years from its founding.
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