LOW PRICES GROW ON ORGANIC STORE LINES 2004-11-22 (2)

Matthew Enis

EDISON, N.J. -- As organic products become increasingly mainstream, several retailers have seized the opportunity to put their own face on the category. Competition among these emerging private-label brands is already leading to low prices for consumers in some regions.

In metro New York, ShopRite, Edison, N.J., and Stop & Shop, Quincy, Mass., were offering several of their newly launched natural and organic private-label items at aggressive price points in last week's circulars. Half gallons of ShopRite Organic Milk were two for $5; the retailer's organic apple juice was $1.49 per half gallon. Stop & Shop's variety of organic juices was priced higher, at $2.99, but the company's Nature's Promise brand organic soy milk and organic lemonade were both two for $5. The companies were offering private-label organic eggs for $2.99 per dozen. Stop & Shop also offered all-natural, cage-free eggs for $1.99. Finally, ShopRite had its private-label baby carrots on sale for $1.79 per pound.

Aggressive pricing is evident in other areas as well. In some Atlanta-area stores, for example, Cincinnati-based Kroger last week promoted bunches of organic broccoli and three-pound bags of organic russet potatoes both at two for $4 under its Naturally Preferred label.

Similarly, Sheboygan, Wis.-based Fresh Brands' Piggly Wiggly stores were offering all-natural pork chops at $2.88 per pound and all-natural, free-range roasting chickens at $1.08 per pound under the Full Circle brand developed by Topco Associates, Skokie, Ill.

As organic production increases, prices will inevitably fall, said Jay Jacobowitz, president of Brattleboro, Vt.-based Retail Insights. Also, many conventional supermarket chains have been closely watching Austin, Texas-based Whole Foods' success with its private-label lines, including the company's 365 everyday value brand.

On the one hand, Jacobowitz said, the low prices could help introduce new customers to the organic category. Yet on the other, he noted that "milk, apple juice and eggs are big-volume items. That's a power play to take top organic [stockkeeping units] and make door grabbers out of them.

"High cost often equals quality in the mind of consumers, so purely price-oriented SKUs could muddy the waters in a category that enjoys that perception of quality," he continued. "It's a delicate process -- that customers see prices coming down due to an increase in supply and acceptance, as opposed to viewing these private-label organics purely as discount brands."

Retailers, however, said the pricing strategy is consistent with their broader private-label portfolio. "Our private-label lines are always value-priced,"said ShopRite spokeswoman Karen Maleta. "But our standard is that the quality meet or exceed that of similar national brands." The company last week received two awards from the New York-based Private Label Manufacturers Association for its new Olive Oil and Vegetable Lasagna brands.

In addition, both chains seem to be positioning their stores and brands as healthy-food resources.

The retailers are attempting to simplify the label-reading process for shoppers. Stop & Shop's Nature's Promise brand, for example, utilizes a variety of simple icons on its packaging to help customers with specific dietary needs. At a glance, small graphics define which products are gluten-free, lactose-free, egg-free or nut-free. For customers who are monitoring their intake of salt, sugar, fats, trans fats or carbs, another set of text-based icons helps them quickly determine the food's content. Other icons indicate "heart healthy" foods, vegan foods and soy protein content.

Similarly, ShopRite is launching "Live Right with ShopRite" -- a color-coded shelf sign program that will help customers identify foods in various categories, such as organic, natural, low carb, sugar free, fat free, low fat, low sodium and wheat free/gluten free.

"There are a lot of customers who are specifically looking for items that are gluten free, low carb, natural or organic," said Maleta. "Since most of the products in our stores are in integrated sets, this gives those customers an easy way to find them."

In an earlier interview with SN Whole Health, Graham Mitchell, director of product development for Braintree, Mass.-based Ahold USA, parent company of Stop & Shop, said the Nature's Promise brand, and its icons, were part of the company's long-term approach to health and wellness, and that the company was working to give customers the tools they need to make better-informed food choices.