Digging into data and working to stay innovative helped the nation’s second-largest conventional grocery chain realize that demand for natural and organic foods was growing well beyond niche status.
Although Albertsons Cos. continues to see good demand for traditional fresh foods, deli goods and consumer packaged goods, the natural and organic segment has been contributing more to total revenues lately, Intermountain Division President John Colgrove told a Larry Branen Idaho Ag Summit audience Feb. 19 in Boise.
Branen is a retired dean of the University of Idaho College of Agricultural and Life Sciences.
Colgrove said the annual revenue that Boise-based Albertsons generates from natural and organic foods has been growing by more than 10 percent per year for the past seven years. At the same time, revenue from consumer packaged goods remains a big contributor, but has been flat or in slight decline collectively.
Nationwide spending on natural and organic foods combined is expected to amount to 11 percent of total food spending by next year, he said, up from low single-digit percentages earlier this decade.
“We see that those trends in our stores are consistently running slightly higher than the national average,” Colgrove said.
Albertsons, in new and existing stores, is devoting more shelf space to natural and organic foods. In surveys, 61 percent of customers say they want more locally produced foods — especially produce, meat and dairy, he said.
But staying innovative while following and even anticipating trends benefits production agriculture as well as the retail side of the food industry, Colgrove said.
“We are in a business that is changing fast and is driven primarily by the new millennial (generation) shopper,” he said.
“It is changing at a rate of speed that is unprecedented. As producers, manufacturers and retailers, we need to make sure we are taking care of this fast-changing trend.”
Customers want a good buying experience “and are often willing to pay more for the experience,” Colgrove said.
Millennials generally demand less processed and packaged foods than older generations, and are willing to pay more for local, organic, natural and ethnic foods, he said. They “potentially could change the food system forever” in part by teaching their children to eat differently.
The big consumer packed-goods companies have been using more natural ingredients, Colgrove said.
“The world is changing, and we need to change with it,” he said.