Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News
Sponsored By
Analyst: Mass channel potential boon for UNFI
As mass retailers Target and Walmart look to further participate in the natural and organic foods trend, they represent the potential for more than a half a billion in new sales for supplier United Natural Foods, an analyst said Tuesday.
2 Min Read
As mass retailers Target and Walmart look to further participate in the natural and organic foods trend, they represent the potential for more than a half a billion in new sales for supplier United Natural Foods, an analyst said Tuesday.
In a report, Kelly Bania of BMO Capital Markets raised the stock price target of UNFI based on the possibility that it could expand partnership with Walmart "in a big way" given the evolution of food offerings underway at Walmart, including the previously reported launch of a Great Value organic brand and phasing out of the Wild Oats brand, and the establishment of a milk processing plant.
"These actions lead us to believe that the largest U.S. food retailer, which we believe has lagged catering to the mainstream shift towards natural and organics, is beginning to take drastic measures to better re-align the company’s offering in the U.S. grocery space, which we believe includes the possibility of partnering with a third party supplier such as UNFI in a bigger way," Bania said in the report. "We believe this also aligns with UNFI’s new focus on the mass channel."
The so-called "mainstreaming" of the natural/organic trend has caused recent chaos for Providence, R.I.-based UNFI as it works to better service independents that once dominated the industry, while direct-sourcing retailers like Kroger and Costco absorb much of the growth.
Follow @SN_News for updates throughout the day.
Bania said Walmart could represent $500 million to $600 million in new sales for UNFI, basing that figure on an assumption the relationship would provide half the sales-per-store UNFI realized as a result of its partnership with conventional retailer Safeway. Target, she added, could represent new sales of up to $188 million.
Given its capacity and scale, Bania added, UNFI is "well positioned" to capture new business in the channel.
| Suggested Categories | More from Supermarket News |
 | |
 | |
About the Author
You May Also Like
