sexta-feira, março 29, 2013

The whole scenario for Whole Foods Market

Organic giant Whole Foods Market has raised the flag. In five years’ time, the company will prompt suppliers to disclosure the use of Genetic Modified Organisms (GMOs) in all the products sold in its North American stores.

The announcement, made on March 8th during the Natural Foods Expo West in Anaheim, California, showed that WFM is on the same page as some organic consumers and also with protest NGOs like and Food and Water Watch. All of them want the labels on the products as soon as possible.

The question has emerged to public opinion once more because of Food and Drug Administration (FDA)’s decision to authorise or not the sale of genetic modified salmon.

In the 1990s, FDA announced that there was no difference between genetic engineered (GE) crops and non-GE crops. Since then, protesters critic the lobbying power of chemical companies such as Monsanto, Dow and DuPont over politics and the lack of transparency of food producers on informing if a product has GMOs in it.

Since 2009, WFM in North America has utilised the services of a third-party organization to offer over 3,000 non-GMOs labeled-products to consumers.

Whole Foods Market already deals with the GMOs’ topic in the United Kingdom, where food-labeling laws follows the rules used in the European Union. Other countries with GMOs labeling laws are Japan, Australia, Brazil, Russia and China.

"We are stepping up our support of certified organic agriculture, where GMOs are not allowed, and we are working together with our supplier partners to grow our non-GMO supply chain," declared WFM co-CEO Walter Robb in a statement. On the company’s blog, he said the decision shows “full transparency” and that will develop “additional supply choices for the years ahead”.    

Escritório da Whole Foods Market, em Austin, Texas  (Foto: Aspersions / Wikimedia Commons)

Good for the consumer and for the investor
Whole Foods Market’s decision over GMOs labeling reflects the company’s philosophy and also shows a great understanding of its consumers’ desires.

The organic products retailer started in the 1980’s in Austin, Texas, with 19 members. Today, it is a public-owned 50,000-employee retailer with 346 stores in USA, Canada and the UK. According to Forbes, its market cap is $15.5 billion.

The company is listed as the second greenest retailer in the USA, according to a ranking of the Environment Protection Agency (EPA). 100% of its energy comes from renewable sources such as solar and wind.

WHM’s values of selling organic products, creating partnerships and growing wealth through profits in a way that leads to good things for consumers, company and the planet are “a conscious form of capitalism”, in the words co-CEO John Mackey.

Its marketing strategy is to promote the idea of a healthier life and also to “teach” potential consumers the value of organics in their lives. But WFM also sells non-organic products in its shops.

The company’s 1,2 million Facebook fans are fed with posts about cooking tips, offers and sustainability ideals. Recently, the company partnered with organizations linked with the First Lady Michelle Obama to promote healthy meals to children.

Even so, WFM has been nicknamed “Whole Paycheck”, in allusion to its high prices (20 to 25% above normal food prices, the company declared). Mr Mackey said the Wall Street Journal that part of the population doesn’t want junk food, “and they’re willing to pay up for it.”

But all these efforts to promote health might be flawed at least in organics’ main flagship –nutritional benefits. A study released by Stanford University last year showed that there is no substantial difference between organics and conventional food.

But co-CEO Walter Robb said to the Daily Ticker program that characteristics like organics being more sustainable and having fewer pesticides (also disclosed in the study) still justify the purchase of these products.

Despite the controversy, market specialists suggest that Whole Foods’ shares can be a “nutritive” addition to investors portfolios. The company’s last quarterly report showed a net income of $146 million, a result 22,7% more than the same period of 2011 ($119 million). 

In March 22nd, WHM shares in Nasdaq were quoted at $87.78. In one year, they reached a peak of $101.86 and a lowest of $80.81.

In February, Mr Robb revealed in an interview for Bloomberg plans to triple the number of stores in the USA. The chain is to open a health resort in Austin in three years.

Whole Foods Market’s assets include distribution facilities, seafood-processing plant, bakehouse facilities, meat and produce procurement centres, etc.

The company’s revenue for 2013 is expected to be $3,86 billion, 13.8% higher than of 2012 ($3,391 billion).

But the fight for a chunk of the $30 billion organic market in the USA is ferocious, and WFM has fierce competitors like Walmart. The retail-store giant operates over 28 countries and has a market cap of over $ 208 billion, according to Forbes.

The number 24 in Forbes World’s Most Powerful Brands’ list was also the biggest organics seller in 2011, according to the Organic Trade Association. Whole Foods was placed sixth.

But the reason to this is simply numeric, since the other companies have more stores across the United States. Costco has about 600, Supertarget and Safeway about 1,750, Kroger has 2,500 and Walmart more than 9,500 stores under different banners.

Even by having only 4% of its energy consumption coming from green sources, Walmart is just behind Whole Foods in the EPA green companies’ list.

Overseeing the overseas
Whole Foods entered the British market in 2004. It has currently seven grocer shops over London, Glasgow and Gloucestershire.

Unlikely in the USA, the organics market in the UK doesn’t seem to be expanding. According to a Soil Association report, sales have fallen by 1.5% in 2012 and by 3.7% in 2011. The trend goes back until 2008.

WFM is still a humble premium food seller in UK when facing big ones Tesco and Waitrose (which has a similar high end customer roll just as WFM) – in the fight for a parcel of the organics market.

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