Whole Foods’ new store in the Village at the Peaks project in Longmont will be the latest local store for the nation’s largest natural and organic grocer. Image by Chris Wood

A basket of health: Natural, organic grocers thrive in region

Natural and Organic Grocers in Boulder Valley and Northern ColoradoThe market for organic and natural foods grew nearly 10 percent in 2015 to $43 billion in the United States alone, according to the Organic Trade Association, more than doubling its sales in the last decade.

Entrepreneurs launch new healthy-snack products, shoppers fill bags with local produce at Saturday morning farmers’ markets, and activists rail against chemically processed and genetically modified foods.

But perhaps the most visible manifestation of the trend is the grocery stores that wrap themselves in the “natural” and “organic” labels. And if that industry has a center, it would likely be health-conscious Colorado.

Alfalfa’s, Lucky’s Markets and Natural Grocers by Vitamin Cottage are among those with roots in the state, and Whole Foods, Sprouts and Trader Joe’s have strong presences here.

Given Colorado’s taste for all things healthy, that makes the competition hotter than a fresh ghost pepper. Perhaps nowhere in the region is that battle in sharper focus than in southwest Longmont, where a Sprouts that moved into a former Borders Bookstore location is girding for a challenge from Whole Foods Market, which plans to open a 40,000-square-foot store across Hover Street in Village at the Peaks in mid-December. And Lucky’s Market is barely a mile away.

Whole Foods (Nasdaq: WFM) is the undisputed big dog on the organic-grocery block. Boasting 435 stores in 42 U.S. states, Canada and the United Kingdom, the upscale grocer loved by its legions of fans and derided as “Whole Paycheck” by others ranks as the eighth largest food and drug retailer in the United States, and its $15.4 billion in sales in 2015 ranked it No. 218 on the Fortune 500.

The long wait for Whole Foods’ opening in Village at the Peaks is nearly over. Originally slated to open its upsized market in January, the chain delayed the store’s debut for 11 months. However, Allen Ginsborg, principal at shopping center developer Newmark Merrill Mountain States, said Whole Foods would open an office for job applications in mid-October adjacent to the store, which he expects to open in mid-December.

Whole Foods built its reputation on a sumptuous selection of fresh conventional and organic fruit and vegetables, prepared foods with healthy ingredients and clear labeling, grass-fed meats, organic and free-range chicken, nut and seed mixes and juice, coffee and salad bars.

Sprout’s operates stores throughout the Boulder Valley and Northern Colorado, including this recently opened store in Loveland. Image by Chris Wood
Sprout’s operates stores throughout the Boulder Valley and Northern Colorado, including this recently opened store in Loveland.
Image by Chris Wood

Across the street, Sprouts (Nasdaq: SFM plans just to continue doing what it feels it does best, said corporate communications manager Diego Romero. From a single fruit stand in San Diego to the first Sprouts in Chandler, Ariz., the chain has grown to 240 stores in 13 states. It acquired Sunflower Markets in 2012 and opened its newest location, a 25,000-square-foot store, in Loveland in June.

“We actually compete against conventional grocers,” Romero said. “We want to offer healthy food for the everyday shopper in terms of price. We’re highly promotional, and on any given day, one-third of our store is on sale.

“Ever notice the bigger crowds on Wednesdays? Those are our double ad days,” he said, explaining that Sprouts’ weekly sale circulars are good for eight days, so that the weekly sales overlap at midweek.

“We’ll continue to add the latest flavors and cuisines from around the world with special health attributes, and focus on value and quality,” Romero said. “I think that’s reflected in our product sets. We have more healthy offerings than a conventional store and different selections than specialty stores.”

As with most grocers with a natural and organic focus, Sprouts has visible community-outreach efforts, Romero said.

“Every store has a food rescue program – all unsold food goes to a Feeding America Food Bank affiliate,” he said. “We have lots of community events from health fairs to races, local school programs.”

The chain in October will officially launch its Sprouts Healthy Communities Foundation and its first round of grant recipients. Its vendors will be asked to contribute, and customers can donate at the checkout lane. Sprouts already has secured $1.6 million in funding commitments this year, Romero said.

“We’ll try to keep local dollars in neighborhoods,” he said. “We’ll be looking for causes what are health related.”

Fitness-conscious Boulder produced two icons in the natural-grocery sector.

What started as Pearl Street Market in 1979 became Alfalfa’s in 1983 at Broadway and Arapahoe Avenue. In its heyday it had 11 stores and a reputation as a community gathering place. It was acquired in 1996 by Wild Oats Markets, which in turn were merged into Whole Foods a few years later. A Federal Trade Commission antitrust challenge forced Whole Foods to sell off more than 30 stores, and Mark Retzloff, an original Alfalfa’s founder, acquired the original store at Broadway and Arapahoe along with three partners, and resurrected the Alfalfa’s name when it reopened on Earth Day 2011.

The reborn store has begun to grow again, adding a second location in Louisville, and director of communications Sonja Tuitele said more Alfalfa’s Markets may be on the horizon.

“We have no new leases signed, so any new openings would be sometime after 2017,” she said, “but we would look to expand in the greater Denver metro area.”

Trish and Bo Sharon opened their first Lucky’s Market on North Broadway in Boulder in 2003, with the idea of serving the natural-organic consumer while also introducing the sector to customers of more conventional grocers. Their product mix thus began as 5 percent natural foods and 95 percent conventional, but over the years evolved to a product mix that is nearly all natural and organic, said Ben Friedland, vice president for marketing.

Next has come rapid expansion, boosted by a collaboration with Cincinnati-based grocery giant Kroger (NYSE: KR), parent company of King Soopers and City Markets. Lucky’s — which bills itself as “Organic for the 99 Percent — opened seven new stores each in 2014 and 2015, moved corporate headquarters to Niwot and now boasts 24 stores in 11 states, many of them in college towns.

Its new 32,000-square-foot flagship store opened in south Boulder in August with a bacon-cutting ceremony, at which more than $30,000 in Impact Grant donations were made to three local organizations: School Food Project, Bridge House and Chef Ann Foundation. This month, 10 percent of one day’s sales went to the Boulder County AIDS Project.

The philosophy at Lakewood-based Natural Grocers by Vitamin Cottage (NYSE: NGVC) has been that you don’t have to be big to compete. Apparently it’s worked: the chain, founded in 1955, now boasts 124 stores in 19 states.

“One thing is, we don’t have a deli in our stores and we don’t have a meat counter. That helps us control our labor costs significantly,” said co-president Kemper Isely. “The smaller format allows our customers to come in and shop very efficiently and quickly, get in and out of our stores.

“One thing retailers have to do is make the shopping experience simpler for the customers,” he said. “I don’t think customers like to have as many choices as they have nowadays. I think that they would prefer to have fewer choices on the shelf. I think that making it simpler with better products will be one of the changes of the future.

“The grocery business is a lot more complicated than hard goods because of the perishable aspect,” Isely said. “You have milk, eggs, produce, fresh meat — and you have three days to a week to sell all that stuff. You have to be incredibly good at managing perishables in the grocery business. You can lose a lot of money quickly. That’s one of the reasons we’re not in the deli business. It’s a huge opportunity to lose money.”

A limited selection in a smaller space also has paid off for Trader Joe’s, which has more than 300 stores in 23 states and the District of Columbia, including retailers in Boulder and Fort Collins. Instead of mainstream brands, Trader Joes sells store-brand foods that contain no artificial flavors, colors, preservatives, MSG, trans fats or genetically modified ingredients.

The focus is on healthy. But then there’s also the cookie butter.

Dallas Heltzell can be reached at 303-868-6631 or dheltzell@bizwestmedia.com. Follow him on Twitter at @DallasHeltzell.

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