How Kroger built a $1 billion threat to Whole Foods in only 2 years
In just two years, Simple Truth products reached $1 billion in annual sales, becoming a major threat to Whole Foods.
"Simple Truth has been our most successful brand launch ever, reaching billion-dollar brand status in less than two short years," said Mike Ellis, president and chief operating officer of Kroger, during a March 5 call with financial analysts.
"During the year, more than 20 million households bought one or more of our 2,688 Simple Truth or Simple Truth Organic items. The brand continues to earn double-digit unit and sales growth, which we don't see ending anytime soon," he said.
A study by the Organic Trade Associate shows that 78% of organic buyers say they typically shop at conventional food stores and supermarkets.
Whole Foods has been working to attract a wide audience by launching lower-priced stores in 2016.
Kroger is thriving in a difficult market for grocery stores.
The supermarket chain is expected to surpass Whole Foods Market within two years and become the nation's top seller of organic and natural food, according to a recent report by JPMorgan.
Kroger's strategy of offering more specialty and organic food is helping it overtake other chains despite an industry-wide trend away from supermarkets, JPMorgan analysts write.
Traditional supermarkets have been losing market share to high-end grocers, warehouse chains, and dollar stores because customers are seeking either specialty assortments or greatvalue, according to a recent report by the real estate investment firm JLL.
"Millennials and Boomers alike are focusing more on healthy eating choices and creatively prepared meals," the analysts write.
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