Grocery Channel: Premium is the New Mass Market

In the food industry, success stories like Greek yogurt booming when the overall yogurt market is flat or gluten-free baked goods rising while bakeries are not growing stem from a playbook that identifies and capitalizes on favorable consumer trends. The latest example is the “premium grocery” channel, which is expanding approximately 15% annually, while the broader grocery market is flat.

Premium retailers like Whole Foods, Natural Grocers, Sprouts and The Fresh Market are known for providing a unique shopping experience that consumers love – the difference now is that they’ve gone from just an interesting niche to a strong growth engine for the food industry. In the coming year, this channel will double and even triple its footprint, requiring increased attention from a number of market participants.

In this Executive Insights, L.E.K. Managing Directors Alex Evans and Manny Picciola and Senior Manager Rob Wilson examine the growth trajectory of the premium grocery channel and present strategic options for its retailers, as well as traditional grocery retailers, and food and nutraceutical brands to consider.