WHOLE FOODS ROLLS OUT NUTRITIONAL SUPPLEMENTS

CHAPIN CLARK

AUSTIN, Texas -- Whole Food Market here is nearing completion of the first wave of a planned expansion of its new line of private-label nutritional supplements.

Forty-five new Whole Foods-brand supplements are due in stores next month, when the 60 products that currently make up the line, now in about half of the retailer's 85 stores, also will be rolled out chainwide, according to Steve Ramirez, marketing manager of the Brand Partners division of Amrion, Boulder, Colo.

Amrion, a wholly owned subsidiary of Whole Foods, is the chain's private-label nutritional-supplement supplier.

Eighty more Whole Foods-brand supplements will be rolled out to stores in September, for a total of 185 in the line.

Ramirez declined to be specific about the kinds of products in the pipeline and how price points will compare to premium brands'.

"Most of the first 100 are going to be proprietary formulations, with our most cutting-edge ingredients," Ramirez said. After that the natural food retailer will introduce more single-ingredient items to "help fill out the diversity of our line."

Also in September, Whole Foods will introduce the first vitamins and supplements in its "365" line, which in other categories offers everyday low prices 15% to 20% below those of premium brands. Initially, up to two dozen stockkeeping units of "365" supplements will be made available, Ramirez said.

"The extent of the "365" line won't be as broad and as deep [as the higher-end store-brand line]. It's targeted for a different consumer, and the requirements are different," he said.

The "365" line will feature "value-priced, commodity-type products" like ginseng and a multivitamin, he said.

"We expect the movement to be significant. Unless a product can produce a certain turn, it's not going to qualify for the "365" line."

Labels on Whole Foods-brand supplements will list all active and inactive ingredients, as well as the quantities of active ingredients, to satisfy Food and Drug Administration requirements that take effect in March of next year.

"We're having to raise the bar in how sophisticated we are in approaching this," Ramirez said. "We want to be ahead of the curve."

Speaking before an audience of investors and analysts at a conference in San Francisco last fall, Peter Roy, president of Whole Foods, said the company expects its private-label nutritional supplements to generate $25 million in sales over the next three years. The category provides higher margins than any other Whole Foods department, he said.

Taking advantage of the low level of brand recognition in the natural-products industry, Whole Foods hopes eventually to rival General Nutrition Centers, Pittsburgh, for market share in the category, Roy said.

Amrion, acquired by Whole Foods in a fourth-quarter 1997 stock swap worth about $146 million, is also helping the retailer develop a mail-order catalog and an Internet sales division. The catalog is due out sometime next year.

In addition, Amrion is working with Whole Foods to redesign its nutritional supplement departments and to train its sales staff. The chain is relying on its staff, or "team members," to promote the store brands.

"Employees at conventional supermarkets have virtually no impact on what the consumer buys," Roy said at the San Francisco conference. "At natural-foods supermarkets, it's the opposite."