Grocers Bet on David and Not Goliath

Well-known national food conglomerates are seeing smaller, scrappier brands eating away at their revenues. Across the country, demand for natural and organic products from smaller and upstart producers is on the rise. Consumers are asking for more, and grocers are doing whatever they can to give it to them.

Amy’s Kitchen, for example, was founded in 1988 and now has over $225 million in sales—which are up 24% since 2009. Meanwhile, Banquet, a ConAgra brand, which had sales of $636 million last year, has seen a 17.5% decrease since 2009. Amy’s isn’t the only success story:

Kroger Co., the largest conventional grocery chain, mentored an upstart pancake mix company from Colorado last year helping with package size, marketing strategy, and flavors. The brand, FlapJacked, is now in more than 500 stores nationwide. “Our customers are increasingly telling us that buying local or buying from boutique producers is something they want, and we are working even harder to provide it,” said a Kroger spokesman.

Kind granola bars and Chobani greek yogurt have seen explosive growth in the last few years, and this trend is expanding, but not without hiccups. Granola and granola bars brand 18Rabbits hit a speedbump when the company tried to use an outside manufacturer that ended up being unable to deliver. “Since we didn’t have our own production capabilities, that almost killed us as a company,” said Alison Bailey Vercruysse, founder and chief executive of 18Rabbits.

Similarly, Amy’s just recalled 74,000 cases of lasagna, enchiladas, and other meals due to a potential listeria problem with its spinach supplier. This isn’t far from Kraft’s recent woes in recalling its Mac n Cheese for possible metal contaminants.

The reputation is what counts above all, and those companies with the small-time feel are currently winning race through the aisles.  To read more, please click here.