Case Study on Whole Food
John Mackey, the company’s expounder and CEO, said that throughout its rapid growth Whole Foods Market had “remained a uniquely mission-driven company? highly selective about what we sell, dedicated to our core values and stringent quality standards and committed to sustainable agriculture. ” The company’s stated mission was “to improve the health, well-being, and healing of both people and the planet”?a mission captured in the company’s slogan ‘Whole Foods, Whole People, Whole Planet” (see Exhibit 1).
In pursuit of this mission, the company’s strategic plan was to intention to expand Its retail operations to offer the highest quality and most nutritious foods to more and more customers, helping them to live healthier and more vital lives.
During its arrear history, Whole Foods Market had been a leader in natural and organic foods movement across the united States, helping the industry gain acceptance among growing numbers of consumers. The company’s long-term objectives were to have 400 stores and sales of $10 billion by 2010.
John Mackey’s vision was for Whole Foods to become a national brand and be regarded as the best food retailer in every community it served. The Natural and Organic Foods Industry The combined sales of natural and organic foods?about $34 billion in 2001? represented about 5 percent of the roughly $685 billion In total U. S.
Grocery store sales. Natural foods are defined as foods that are minimally processed; largely or completely free of artificial Ingredients, preservatives, and other non-naturally occurring chemicals: and as near to their whole, natural state as possible.
We empower them to make their own decisions, creating a respectful workplace where people are treated fairly and are highly motivated to succeed. We look for people who are passionate about food. Our team members are also well-rounded human beings. They play a critical role in helping build the store into a profitable and beneficial part of its community.
Whole Planet We believe companies, like individuals, must assume their share of responsibility as tenants of Planet Earth. On a global basis we actively support organic farming?the best method for promoting sustainable agriculture and protecting the environment and the farm workers.
On a local basis, we are actively involved in our communities by supporting food banks, sponsoring neighborhood events, compensating our team members for community service work, and intriguing at least five percent of total net profits to not-for-profit organizations. Source: www. Holidaymakers.
Com, December 7, 2002. Grown slowed to 83 percent In 2001 Ana was running In ten Selene Loll’s In Even so, this was considerably higher than the flat 1-2 percent sales growth at conventional supermarket chains.
The fastest-growing categories in Natural Foods Merchandiser’s annual market survey were nutrition bars (21 percent); in-store food service?deli, restaurant, and Juice bars (16 percent); other beverages, excluding beer, wine, coffee, tea, and dairy (12 percent); and snack foods (10 percent). Organic odds included fresh fruits and vegetables, meats, and processed foods produced using: Agricultural management practices that promoted a healthy and renewable ecosystem that used no genetically engineered seeds or crops, sewage sludge, lambasting pesticides, herbicides, or fungicides.
Livestock management practices that involved organically grown feed, fresh air, and outdoor access for the animals, and no use of antibiotics or growth hormones.
Food processing practices that protected the integrity of the organic product and did not involve the use of radiation, genetically modified organisms, or synthetic preservatives. In 1990, passage of the Organic Food Production Act started the process of establishing national standards for organically grown products in the United States, a movement that included farmers, food activists, conventional food producers, and consumer groups.
In October 2002, the U. S. Department of Agriculture (USDA) officially established labeling standards for organic products, overriding both the patchwork of inconsistent state regulations for what could be labeled as organic and the different CASE 1 rules of some 43 agencies for certifying organic products. The new USDA regulations established four categories of food with organic ingredients, with varying levels of organic purity: 1.
00 percent organic products: Such products were usually whole foods, such as fresh fruits and vegetables, grown by organic methods?which meant that the product had been grown without the use of synthetic pesticides or sewage- based fertilizers, had not been subjected to irradiation, and had not been genetically modified or injected with bioengineering organisms, growth hormones, or antibiotics. Products that were 100 percent organic could carry the green USDA organic ratification seal, provided the merchant could document that the food product had Eden organically grown (usually Dye a cartel organic producer). 2. Organic products Such products, often processed, had to have at least 95 percent organically certified ingredients. These could also carry the green USDA organic certification seal.
3. Made with organic ingredients: Such products had to have at least 70 percent organic ingredients; they could be labeled “made with organic ingredients” but could not display the USDA seal. 4. All other products with organic ingredients: Products with sees than 70 percent organic ingredients could not use the word organic on the front of a package, but organic ingredients could be listed among other ingredients in a less prominent part of the package.
An official with the National Organic Program, commenting on the appropriateness and need for the new USDA regulations, said, “For the first time, when consumers see the word organic on a package, it will have consistent meaning. “l The new labeling program was not intended as a health or safety program (organic products have not been shown to be more nutritious than inflectionally grown products, according to the American Dietetic Association), but rather as a marketing solution.
An organic label has long been a selling point for shoppers wanting to avoid pesticides or to support environmentally friendly agricultural practices.
However, the new regulations required additional documentation on the part of growers, processors, exporters, importers, shippers, and merchants to verify that they were certified to grow, process, or handle organic products carrying the Sad’s organic seal. Sales of organics were an estimated $9- $11 billion in 2001, up from $1 billion in 1990, and were growing ATA 20-24 percent annual rate. The Organic Trade Association estimated that sales of organic food products would reach $20 billion in 2005. In 2002, organic products were sold in about 20,000 natural foods stores and about 70 percent of conventional supermarkets.
According to the USDA, 2000 was the first year in which more organic food was sold in conventional U.
S. Supermarkets than in the nation’s 20,000 natural foods stores. In the past several years, most mainstream supermarkets had been expanding their selections of natural and organic products, which ranged from potato chips to fresh produce to wines. Fresh produce was the most popular organic reduce?in 2001, 5 percent of the lettuce and 3 percent of the apples produced in the United States were organically grown.
Meat, dairy, and convenience foods were among the fastest growing organic product categories. A number of supermarket chains had added natural foods sections to their stores; Kroger had special sections for natural foods and organics in almost half of its 2,400 stores in 2002, and the number was growing.
Wall-Mart’s newest retail division, the smaller-format Neighborhood Markets, had a special “healthy-living” section that included organic foods; Costs Wholesale was experimenting with a Costs Fresh store focused on gourmet foods and wine. – Eleven had begun selling organic cookies at 600 stores in California. A few grocery chains, including upscale Harris Teeter in the southeastern United States and Whole Foods Market, had launched their own private-label brands of organics. Most industry observers expected that, as demand for natural and organic foods expanded, conventional supermarkets would continue to expand their offerings and selection. Leading food processors were showing greater interest in organics as well.
Heinz had recently introduced an organic ketchup and owned a 19 percent stake in Hahn Celestial Group, one of the largest organic and natural foods producers. Cutbacks, Green Mountain Coffee, and several other premium coffee marketers had introduced a number of organically grown coffees; Dollar Juices were organic; and Tyson Foods had introduced a line of organic chicken products. Elite House organic salad dressings had recently been added to the shelves of several mainstream supermarkets.
Major food processing companies like Kraft, General Mills, Grouper Deanne (the parent of Daemon Yogurt), Dean Foods, and Kellogg had all purchased organic food producers in an effort to capitalize on sales-growth opportunities for lately foods that taste good. Dean Foods’ CEO, explaining the company’s acquisition of organic soy producer White Wave for $204 million in May 2002, said, “We believe that the trend toward organics is in its infancy. ” Organic farmland in the United States was estimated at 2.
4 million acres.
An estimated 12,200 mostly small-scale farmers were growing organic products in 2002, and the number was increasing about 12 percent annually. The amount of certified organic cropland doubled between 1997 and 2001, and livestock pastures increased at an even faster rate. However, less than 1 percent of U. S.
Armband was certified organic in 2002. Several factors had combined to transform natural foods retailing, once a niche market, into the fastest-growing segment of U. S. Food sales: Healthier eating patterns on the part of a populace that was becoming better educated about foods, nutrition, and good eating habits.
Among those most interested in organic products were aging affluent people concerned about health and better-you foods. Increasing consumer concerns over the purity and safety of food due to the presence of pesticide residues, growth hormones, artificial ingredients and other chemicals, and unethically engineered ingredients.
Environmental concerns due to the degradation of water and soil quality. A “wellness,” or health-consciousness, trend among people of many ages and ethnic groups. The Nutrition Business Journal estimated in 2001 that 0. 3 percent of U.