Organic Food: Costco Trumps Whole Foods
June 5, 2015
Is it really surprising that a discount store surpasses an upper end grocer in sales of organic food? Not in a country where everyone wants everything at the lowest price possible. Faced with the choice of buying pesticide-free, gmo-free foods from the whole paycheck store or the cost cutter store, even the most discerning shopper will choose the quality discount store every time – unless they’re strapped for time and the expensive store is more convenient.
Whole Foods is no longer king of organic grocer mountain. Costco outsold them at $4 million to Whole Food’s $3.6 million tally for the past year, according to data reported by BMO Capital Markets. It wasn’t a slow, creep to the front runner position either. Costco sales of organic goods skyrocketed in the past 9 months, with a jump of $3 million.
Yes, the merchandise display at Whole Foods may be prettier, but nothing sways the consumer like getting the same thing for less. And then there are those who want to eat better, but simply can’t afford to on the prices the whole paycheck store commands. While organic food costs more to grow or raise, larger bulk buyers will always get a better wholesale price than boutique stores. It’s just the way the retail world works.
WalMart is also doing a brisk business in organic food, both fresh and processed, though certain markets have a wider variety on the shelves for shoppers than other locations that the chain resides in. And then we have Target, who also sells a good number of organic foods with plans of grand expansion of said goods over the next 5 years.
But what does this all mean to you? It’s unlikely that the organic food sold at Costco is locally grown… buying in such huge quantities from local farms is probably close to impossible. While WalMart does a good deal of business with regional farmers, here again is that problem with logistics. How many organic lettuce growers exist within 100 miles of the closest Costco store to your home?
While the news blazes headlines about the phenomenal growth in organic food in the mainstream market, you’ll note that this announcement is geared to alerting the investor. It will push more big ag producers into growing without pesticides, but it will not decrease the carbon footprint of your food. This is all about the Big Food reign. And there’s always the GMO issue when it comes to many foods the organic shopper would want to buy. Big Food wants big production for huge wholesale supply, and genetically modified crops do not all require Roundup, or another brand of non-selective herbicide to grow.
“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.” — International Business Times, Australia
It’s still the wiser choice to purchase locally grown in season foods from small organic growers. They care about what they produce, while Big Food only cares about production numbers per quarter, and ultimately impressive profits. Because without their board members and investors happily collecting dividends – they wouldn’t be the giant companies they have grown to be. Just a couple years ago, Costco CFO Richard Galanti viewed organic food as a fad that would quickly fad. Now he’s combing the world to find a never-ending supply of cheap organic products he can sell off of pallets.
And last, but not least, how ‘fresh’ do you think that produce is when it’s been shipped from all over the world? You’re farther ahead in sustainability, and healthier eating if you purchase locally grown food in season from area farmers markets. The faster you get it off the vine, the more beneficial value it has. Well traveled food is lacking in a lot of antioxidants and phytonutrients. And then there’s this issue…
And 30% of Americans who buy organic food are shopping at warehouse clubs like Costco, and Sam’s Club for it. Costco is definitely importing what they cannot buy in the US… the largest seller of organic food in the country. You might want to read that Forbes article on the link above.
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