- Kroger's Simple Truth natural food brand has grown at a double-digit rate in the three years since its launch with expected annual sales of $1.5 billion by 2015's end. These numbers make Simple Truth the largest natural food brand in the country, according to Kroger CFO Michael Schlotman.
- Kroger created the brand in response to consumers' shift to natural and organic foods, which the retailer discovered in its own analytics four years ago. Natural and organic foods accounted for $11 billion over the past 12 months, so taking into account Kroger's 2014 annual sales of $108 billion, those segments comprise about 10% of Kroger's total sales.
- Retailers' private label brands like Simple Truth, Wal-Mart Stores' Wild Oats, and Safeway's O Organics could challenge the continued growth of smaller natural and organic food companies looking to break into those retailers.
Part of the appeal of private label natural and organic brands for consumers is that oftentimes, retailers can offer their private label products at competitive prices, or even a cheaper price than conventional brands.
With this level of pricing to contend with, natural and organic food companies may have to strategize how to lower prices themselves to compete, which could mean cutting into profits or driving efficiency and other cost-cutting measures to maintain profits even at a product's lower price.
The more consumers choose value products in the natural and organic segments, the more smaller manufacturers may have to look again to specialty retailers like Whole Foods Market, which has its own private label brand, for sufficient shelf space. This would not be ideal for all small manufacturers, as many have been looking for ways to break into the more mainstream grocery retailers and would rather not be confined to specialty health food stores.