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Market Overview

Organic Food Goes Mainstream

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Organic Food Goes Mainstream

Consumer preferences have shifted significantly over the past few years as more and more people opt for all-natural, healthy food options.

Healthy food used to make up just a small isle of little known brands in the supermarket, but the niche has made its way into popular culture and now even big brands are hopping on the organic food bandwagon.

Supermarkets

Whole Foods Market (NASDAQ: WFM) is a heavy-hitter when it comes to the natural foods space. The company has grown into a well known brand where health nuts pay a premium for the best ingredients and most natural foods. However, as interest in health foods grew, so did the number of competitors.

Other specialty grocers like Sprouts (NASDAQ: SFM) and Natural Grocers (NYSE: NGVC) are expanding quickly and looking to increase their slice of the organic pie.

New Entrants

While new entrants in the organic foods business used to be mom and pop businesses that were working their way up, today's natural foods isle is filled with products backed by big name companies who are shifting their approach in order to attract health-conscious consumers.

Tyson Foods (NYSE: TSN) promised to stop using chicken that had been treated with antibiotics and Kraft Foods (NASDAQ: KRFT) has removed artificial dyes from its well-known Mac & Cheese in an effort to appeal to the organic-obsessed public.

Bigger Not Always Better

However, the big brands aren't always able to appeal to health nuts the way smaller brands are. After Kellogg Company (NYSE: K) acquired the Kashi brand in 2000, the healthy cereal maker went steadily downhill.

Customers discovered that Kellogg was using genetically modified ingredients and a social media campaign against the brand ensued. Now, Kellogg is working to restore Kashi's image with innovative new cereals and a new marketing approach, but it is likely to be a rocky road back into consumers' good graces.

 

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