Air Date: Week of December 6, 1996

Natural foods supermarkets with huge aisles of organic produce and nutritional guarantees are sprouting up all over. Living On Earth producer Kim Motylewski went to the openings of two grand scale new markets to see who these new ventures will be benefiting. Chances are, competition will be driving some prices down, and consumers will be faring better along with farmers and merchandisers.

Transcript

CURWOOD: Organic produce, juice-sweetened sodas, and free-range chickens. Once found only in small health food stores and coops, these items are getting easier to find all the time. The reason: natural foods supermarkets are sprouting up across the country at an unprecedented rate. Two of them just opened in the Boston area. We sent Living on Earth's Kim Motylewski to visit the new stores, and find out what the trend means for shoppers and grocers.

MAN 1: Need to sign off on hatch, need to get name badges and aprons if you're on the counter. If you're in the kitchen, you're all set.

MAN 2: Tomorrow's the day.

MOTYLEWSKI: It's the eve of the grand opening at Nature's Heartland, a natural food supermarket in the affluent Boston suburb of Bedford, Massachusetts. Workers are busy building colorful pyramids of produce and stocking shelves with jars of vitamins.

(Sound of bottles being placed on shelves)

MOTYLEWSKI: The smell of baking bread wafts across the big stylish store, and carpenters are making some last-minute changes.

(A drill runs)

MOTYLEWSKI: Nature's Heartland looks like a typical full-service supermarket, but what sets it apart is a strict set of standards for the food it sells. No artificial additives, preservatives, or sweeteners. No bleached flour, no MSG, no hydrogenated oils. The list goes on. Nature's Heartland is riding the crest of a new wave in the retail grocery industry, one that could change the inventories of most supermarkets.

EISOLD: This is the most exciting thing that I've seen in a long time...

MOTYLEWSKI: Brad Eisold is the main grocery buyer for Nature's Heartland. He's been in the natural foods business for 25 years. Eisold says the growing popularity of natural foods isn't just a fad. He says it's a consumer rejection of the chemical-intensive approach to food that developed after World War II.

EISOLD: So this is a natural evolution, coming back, eating clean, pure, wholesome food. Being concerned with the nutritional value and the flavor value as opposed to how long they can keep it sitting on the shelves. We're not hoping to have food on our shelves very long.

MOTYLEWSKI: Market analysts say consumer demands for freshness, convenience, and quality are helping move that food off the shelves. They also note that about 52% of the population wants to buy products that go easy on the Earth. Meanwhile, a growing number of shoppers are concerned about environmental health hazards.

WOMAN: We're sick of eating chemicals everywhere you go. Breathing them, eating them, living them. And I look for things that are organically grown. So I'm pregnant with twins, and so I'm also wanting to take good care of myself and my toddler.

MOTYLEWSKI: What's brought you in?

MAN: Because they grind up my cheese for me.

MOTYLEWSKI: It looks delicious.

MAN: It's not pre-ground. I bought the cheese and then I watched it being ground.

MOTYLEWSKI: And what do you like about that?

MAN: Fresher. I know it's fresh.

MOTYLEWSKI: And it tastes better.

MAN: Well, it's all in your mind but so much is. You know, it's like romance is in your mind, too, isn't it? Don't you find that true?

MOTYLEWSKI: The romance of natural foods and supplements has driven up sales nationally, more than 20% for the second year in a row. That's enormous growth given the conventional grocery business is inching up at about 3% a year. Toss in the higher profit margins on natural foods and you begin to understand why big health food stores are popping up left and right. It's where the money is. National grocery chains like Stop and Shop and Safeway are committing more and more shelf space to natural foods. Some estimates show 60 to 80% of them tapping into the market. In New England, the grocery giant Star Market has launched a whole new chain of natural food stores. Star Market Chairman Henry Nasella says the time is ripe.

NASELLA: Given all the resources that we can put behind it as a big company, we can be very successful and also at the same time do the right thing in expanding, if you will, this whole natural food industry to more and more people that otherwise wouldn't have been exposed to it.

MOTYLEWSKI: Mr. Nasella has added a new twist to the natural foods concept. He's created a hybrid store called Wild Harvest.

(Music on a PA system)

MOTYLEWSKI: Wild Harvest is less flashy than competitors like Nature's Heartland, or the natural foods leader, Whole Foods. Mr. Nasella has located his flagship store in the working class community of Medford. While most of the store's floor space is devoted to natural foods, Wild Harvest also stocks some conventional groceries in a separate section of the store. So under one roof you can pick up your sugar frosted flakes and the organic soy milk to pour over them. The reason, says Henry Nasella, is convenience. This is what he's heard from customers.

NASELLA: I like the quality, I like the ambiance of some of those stores, but I really have to shop more than one place and it's not convenient. You know, I like a Diet Coke or I want a Ben and Jerry's Ice Cream or I want whatever. But if in fact they were going to go to a second store anyway and going to buy those products, why not save them time? I mean, time is the currency of the year 2000.

MOTYLEWSKI: Mr. Nasella says he's planning to open 6 more Wild Harvest stores in the next year, and hopes to have 30 stores all over New England within 5 years. As it passes the $9 billion a year sales mark and successful little companies become big public ones, natural foods is becoming big business. Investment analysts say the changes we're seeing in the industry mirror those that transformed the conventional grocery business over the last 50 years. Matthew Patsky is with Adams, Harkness, and Hill.

PATSKY: You know, on the retail side we're seeing tremendous consolidation. We've seen consolidation going on among distributors. We're starting to see the beginnings of it in among manufacturers, and ultimately lower price points. So the consumer ultimately will benefit from the efficiencies.

MOTYLEWSKI: Mr. Patsky predicts that over the next 20 years, prices for natural foods will come down closer to prices of conventional groceries. And in the long run, he says most independent retailers and small food coops will disappear. It's a trade-off. A national market and more healthy food for more people, but at the price of the pioneers.

(A scoop gathers food)

HIGGINS: Well of course, there was always this kind of joke, you know, in the coop milieu in the, you know, in the 70s, that what are we going to do with ourselves if this mission is accomplished?

MOTYLEWSKI: John Higgins is general manager of Harvest Coop Supermarket in Cambridge. He admits that some consolidation is inevitable. But he argues there will always be a place for the well-run small natural foods business.

HIGGINS: The bigger the big boys are, the more incompetent they become at certain things that happen on a more local, more human level. Because there can be a level of service and a level of sort of comfort in the store. You don't have to be overwhelmed by a 40,000 square foot store. And there's more of a personal touch.

MOTYLEWSKI: Mr. Higgins says he doesn't want to overstate this local advantage, but at least one shopper I spoke to noticed the corporate atmosphere at one of these new natural foods superstores. She called to tell me about it.

POWERS: Hello, Kim, this is Pamela Bailey Powers. You interviewed me this morning at Nature's Heartland. I actually am a poet, and I had sat (laughs) watching the opening of Nature's Heartland, and I penned a quick poem, and I thought maybe you'd be interested. It's called Media Event. Free range chickens at grand opening of Nature's Heartland. The photographer in rain covers her Nikon with a plastic grocery bag. Managers strut in red blazers. A suede-heeled PR lady hangs a wreath mid-ribbon between hitching posts. Everyone grins. Off comes plastic. Flash, flash. A mother in white hugs her baby in white. A father lifts his child upon shoulders. Ribbon cut. Electric doors like slaughterhouse blade are timed perfectly as into the heartland they go.

MOTYLEWSKI: Pamela Bailey Powers lives in Lexington, Massachusetts, and shops at Nature's Heartland. For Living on Earth, I'm Kim Motylewski.