by Mitchell Clute
On Sept. 25, Safeway rolled out a new line of certified organic supplements, announcing the 12 SKUs as "the latest step in the evolution of the O Organics brand." O Organics, Safeway's house organic brand, launched in 2005 and has since grown to include more than 300 product offerings.
The product launch comes at a time of vast economic uncertainty and raises the larger question of whether consumers will continue to think of organic purchases as essential items instead of discretionary purchases, but the O Organics brand offers two potential selling points—a comparatively lower cost, and the convenience of one-stop shopping.
"With Whole Foods struggling, Safeway perceives a chance to come in and set up organic not as a premium offering per se, but as a house brand," said Loren Israelsen, president of LDI Group, Inc., a natural products industry consulting firm. "In Safeway's mind, the long-term trend is that more consumers will buy organic products if they're at a lower price. Consumers now may say, 'I can get most of what I need at a better price [by shopping mainstream markets].' The convenience factor is the tipping point."
As for the 12 initial offerings in the line, Israelsen said they're a mixed bag. The O Organics line launched with vitamin C, calcium, iron, cranberry, echinacea, echinacea/goldenseal, garlic, ginseng, St. Johns wort, ginkgo biloba, saw palmetto and green tea.
"Cranberry and green tea are the two that stand out as obvious consumer winners," Israelsen said. "Ginkgo and St. Johns wort are no longer top 10 sellers, and with both saw palmetto and ginkgo, you need a standardized extract for effectiveness, but I'm not sure you can do a standardized extract as a certified organic product. As for organic iron and calcium, I've never heard of them, and I'm not sure where you'd get them."
Though the current economic news may make this a bad time to launch any new line, the value proposition may make lower-cost organic offerings more tempting for shoppers committed to buying organic. "The bubble has burst big time, and people conscious about a healthy diet will feel challenged to manage their food budget and keep the quality they're looking for," Israelsen said. "The supplements industry is in the midst of a debate on what effect the economic collapse will have on supplements in general, but anybody launching a new product right now is probably wishing they hadn't."