Whole Foods Market UK

Whole Foods Market UK

I Background

The landmark 80,000-square-foot flagship store, which opened this week in London, England, is the first Whole Foods Market in Europe and marks a major step in expanding the company's brand beyond North America. Whole Food Markets is UK's biggest chain of natural and organic food supermarkets. The products it sells are free of additives, (Declaration of Interdependence Whole Foods Market 2007) colorings, preservatives, pesticides, hormones, antibiotics and any genetically modified ingredients.

The global organic food industry has been growing at over 20% per annum along with an increase in accessibility . The world market was calculated to be worth over £14.4B in 1999. The largest markets of organic food exists in the UK, (The Boston Globe 2003) with sales of £6.5B, Germany £2.4B and Japan £1.4B. Buyers of organic food are affluent, better educated, in the age bracket of 18-34 or 45-54. They live in small households and have low confidence in food safety regulation. Products range from baby food, meat, dairy, non-dairy beverages, bakery, produce to Ready to Go Meals. (Langlois 2008)

In UK, the retail sales of natural products grew to over £18.3B in 2003, an 8% growth compared to prior year compared to a relatively flat growth in the traditional grocery industry. This growth reflects a broadening of the natural products consumer base. While the UK organic market is still growing in absolute terms, the market is predicted to drop slightly as the industry matures and consolidates over the next 5 years. (Mitchell 2007)

Europe accounted for 45-50% of global organic food sales . Food fears such as Mad Cow disease, industry-related promotions and government subsidy programs have been the main driver of the industry in Europe. For most of the last decade, Europe had the largest market however it has been overtaken by North UK. Market growth slowed to 7% in 2002. (Annual Report Whole Foods Market 2007) The German market was hit by the Nitrofen food scandal and growth rates in countries like the UK are slowing. Slowing growth rates are causing the organic meat & dairy sectors to suffer from over-capacity in some countries. The industry has organized many campaigns against biotechnology and genetically modified foods, trying to create another wave of growth for the industry. Nevertheless, organic food sales continue to rise at a healthy rate in some European countries like Italy and Switzerland.

Australian organic production for domestic retail and exports has been doubled between 1995 and 1999. Currently, it is valued at approximately £250M and growing fast at 25% per year . In Asia, with the exception of Japan, Korea and Turkey, the growth of the population and technology has driven the once-mainstream organic agricultural industry to a declining stage. Inorganic and mass agricultural practices have mostly replaced organic practices. The recent prosperity in China has reinvigorated the cycle to early "introduction".(Renton 2007)

It is important to note that while organic food is the fastest growing segment of food sales in many countries it still represents only 1-2% of ...