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How Organic Food Market Giants are Dealing with Amazon-Whole Foods

Fears of a great Amazon led disruption seem bleak and organic food market players tinker with their internal systems as they prepare themselves to challenge the big players

As Whole Foods-Amazon deal succeeds in disrupting the organic food market, major market players are making smart moves to try and beat Amazon in what they consider their playground. Thousands of lines may have been written about the dismal performance of the Blue Apron IPO post the Amazon-Whole Foods acquisition, but there are signs that players embedded in the market are hunkering down and reworking their strategies.

TechSci Research has been actively tracking the organic food market to keep you updated on the various goings on that have market the great Amazon disruption. TechSci experts give you the lowdown:

Lean and Mean: Optimizing Supply Chains

General Mills, one of the biggest players in the organic food market, recently delivered some unexpected cheer via their quarterly report, beating expectations. Much more than expansion of revenues, companies such as General Mills are streamlining their supply side by cutting overheads and restructuring.

General Mills has been cutting back on promotions, particularly on high-margin products, even at the cost of losing some sales revenues; selling and other expenses fell by around 10% and advertising expenses fell by some 17%. The results are for all to see: even though the company's net sales fell 3.1% to $3.81 billion, net attributable income rose to $408.9 million, up from $379.6 million a year back.

TechSci Research report Global Organic Food Market, Competition Forecast and Opportunities, 2011 – 2021” points out at the time the growing trend of aggressive advertising in the organic food market at the time.

Given, however, the Amazon disruption, companies have started to correct themselves by cutting the advertising budgets and focusing on consolidating their own market shares rather than expanding just for the sake of it. Many companies are expected to follow the General Mills pattern and cut back on expansion and refocus on cutting unnecessary expenses.

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Seeking Fresh Pastures: APAC

As per the same TechSci Research report, Europe and North America are the biggest demand generators for organic food. However, given the intense competition in the region, several companies are looking intensely for other markets where they can expand, and which perhaps are not quite as competitive as the aforementioned regions.

APAC region is densely populated, with rising prosperity levels and nations that are slowly shifting from the traditional savings model to consumption based ones. India and China offer two cases in point, with rising per capita GDP, high growth rates, a decline in savings rate and increase in consumption, and with an underdeveloped organic food market.

Amy’s Kitchen, a major market player is planning to open shop in India, in a move that has drawn considerable interest among Indian consumers. Amy’s Kitchen will launch a select range of 14 products in the country starting with Delhi and NCR in mid-September across select Modern Trade outlets, with plans to expand to Mumbai as well.

A successful launch may see further interest by other companies in APAC, with the region providing a considerable buffer to the uncertainties faced in the North America and Europe organic food market.

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Relevant Reports

Global Organic Food Market By Product Type (Organic Meat, Poultry and Dairy; Organic Fruits and Vegetables; Organic Processed Food; etc.), By Region (Europe, North America, Asia-Pacific, etc.), Competition Forecast and Opportunities,

Consumer Goods and Retail | Feb, 2024

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