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GOURMET NEWS APRIL 2019 www.gourmetnews.com Retailer News RETAILER NEWS 8 BRIEFS Online Grocer Expands Subscription Program Online grocer Farmstead is expanding its popular Refill & Save program that makes ordering groceries online cheaper than going to the store. Initially, Farmstead offered 25 top grocery staples through Refill & Save: now that number is over 300. Farmstead's Refill & Save provides customers with recurring orders with significant discounts on certain staples, including milk, eggs, fresh fruit, fresh vegetables and bread. "Online grocers and grocery delivery companies have traditionally struggled with profit margins," said Pradeep Elankumaran, co-Founder and Chief Executive Officer of Farmstead. "Farmstead changed the entire business model with custom-built AI [artificial intelligence]- powered software for predicting demand, stocking precisely, and sourcing directly with brands to get the lowest prices. Our technology has enabled Farmstead to provide customers with low prices while still optimizing profitability so we can grow the business." Farmstead made the announcement from Shoptalk 2019, which took place March 3-6, 2019. Kroger Announces Second Division to Stop Accepting Visa Credit Cards Smith's Food & Drug Stores division will be The Kroger Company's second banner to stop accepting Visa credit cards as a form of payment, beginning April 3, 2019. Smith's will continue to accept all other forms of payment. Visa's fees are the highest of any credit cards accepted in Smith's and exceed grocery store margins in the highly competitive food retail industry. Smith's is the second Kroger banner to decline acceptance of Visa credit cards. It follows Foods Co. Supermarkets in California, which stopped accepting Visa credit cards in August 2018. While no other Kroger banners are presently affected by this announcement, Kroger continues to explore options to reduce the cost of accepting credit cards in order to keep prices low for customers. Smith's stores will continue to accept all other forms of payment, including major credit cards such as Mastercard, Discover, and American Express; cash and checks; electronic benefit transfer cards from SNAP and WIC programs; and MasterCard and Visa debit cards both with and without PIN and health savings account cards. PackIt Enters Meal Kit and Grocery Delivery Industry PackIt's new line of three commercial totes – Freezable Ultra Tote, Delivery Tote and Ready Tote (patents are pending) was designed to offer meal kit and grocery delivery companies a sustainable, reusable solution for their customers. Each tote features PackIt's patented Ecofreeze™ technology – freezable gel built into the walls of the bag. The totes collapse flat to freeze in commercial freezers overnight – no ice packs needed, ever! PackIt's new sturdy Freezable Ultra and Delivery Totes replace boxed delivery packaging and have a cooling time span of 12 to 24 hours. The Freezable Ready Tote cools between 8 and 12 hours and is designed to replace soft-sided meal delivery totes. Mother's Market & Kitchen Opens New Los Angeles Location Mother's Market & Kitchen, a natural and organic foods retailer, opened a new store in Manhattan Beach, Cali- fornia. The 16,000 square foot grocery store and café will feature the expansive and fresh pro- duce selec- tion for which the brand has been known for more than 40 years. At the heart of the store will be fresh pro- duce that is always the highest grade and organic unless seasonally unavailable and always 100 percent non-GMO — delivered six days a week and warehoused, only when necessary to ripen. In addition, the store will offer a juice and coffee bar, full- service café, local beer and wine offerings, and will include many organic, biodynamic and sustainable options as well as vitamin, herb, mineral and sports nutrition selec- tions. "Mother's Market & Kitchen selected Manhattan Beach as its next Los Angeles area location because the community is fo- cused on health, quality of life and relationships," said Deborah Rubino, Chief Integration Officer at Mother's Market & Kitchen and daughter of one of the original 1978 founders. "We look for- ward to providing our new South Bay neighbors the highest quality or- ganic produce, delicious and healthy prepared meals and a wide se- lection of sup- plements and specialty items to meet the needs of a vari- ety of healthy diets." The new Mother's Mar- ket Manhattan Beach store will also include a number of new products first to market in the Los Angeles area like The Positive Cookie, which is a Los Angeles-based cookie com- pany that is vegan, gluten-free and has a positive affirmation in each package. Mother's Market & Kitchen's café honors produce with a plant-based menu and also serves selections of sustainable seafood, certified organic and certified humane chicken and features an al fresco patio for dining. Signature dishes will in- clude a Seared Cauliflower Steak with Mushroom Ragu, Chickpea Potato Cakes and breakfast favorites served all day. On- line ordering for pickup for both the restaurant and juice bar will be available to customers through ChowNow and the Mother's Market web- site. The grand opening celebration was held on Saturday, March 16. Furthering the Mother's commitment to sustainability, ex- cess produce and food will be donated to The Los Angeles Re- gional Food Bank. GN Specialty Foods Continued from PAGE 1 Wholesale Grocers. "That's a huge num- ber," he said. "Here's a generation that's just coming into the category and they're enter- ing the category at almost 80 percent." The specialty food industry is now a $140 billion business and it's growing at a rate from 12 to 18 percent – and that's not because of price increases, according to Phil Kafarakis, President of the Specialty Food Association. "This is going to be a $2 billion business in the next four years," he said. There's no longer a consumer who only buys conventional product, and any con- sumer is likely to buy a specialty product sometimes, said Stephen Corradini, Chief Merchandising Officer for Kings Food Mar- kets and Balducci's Food Lovers Market. That applies particularly to the shopper who's buying for other members of the household as well as for himself, he added. "The intent of the purchase occasion is something to be mindful of..... Maybe they're willing to try something new, or maybe they'll keep two in the refrigerator." Funk urged the grocers in his audience during the National Grocers Association's NGA Show to venture into the specialty foods space by picking five to eight cate- gories that could be deployed in underused or underperforming space. "Think of spe- cialty, natural and organic for your store as a key to growth," he said. "While it's com- ing from a smaller base, this is one of the only areas in the store where there's been consistent growth year over year for multi- ple years in a row, and it's an area that, in many instances, is undersized in our stores." Growing ethnic diversity and consumer concerns about their health and wellness are helping to drive growth in the specialty foods category, Funk said. "Food is really becoming medicine," he added. "The self- care side of the business is critically impor- tant." Consumers are demanding ethnic foods, clean ingredient decks and the organic label, Funk said: "Organic has always been a staple of this category.... If you're going to land in this space, and specialty food is going to have space in your store, organic is a key and a core staple." About 75 per- cent of specialty food categories have some organic offerings. "It's a $50 billion busi- ness," he said, adding that 82 percent of households purchased something organic over the course of the past year, and 14 per- cent of fresh produce sales are for organic products. There are other areas of growth within the specialty foods category. Over the last several years, the appearance of multiple refrigerated items have really driven the overall category growth. Dairy and frozen products are a good insulator from the on- line threat, Funk said. "Think of dairy and frozen as a competitive advantage to that e- commerce channel. It's extremely expen- sive; nobody's figured it out, and there's high share and high growth in these areas." Ethnic categories, plant-based categories and products that appeal to the health-fo- cused consumers who are practicing spe- cial diet regimens also offer potential. "These would be major areas in the store that you would be looking at planning for remodels and adjustments of size and space in the store in the coming years," Funk said. The biggest sales categories within spe- cialty food include cheese; frozen meat products; snacks and chips; various differ- ent types of confectionery products; and yogurt, kefir and frozen desserts, Funk said. Yogurt, frozen desserts and refriger- ated entrees, with 40 percent growth, are big categories. Water and solution-based water beverages as well as protein snacks are also experiencing very high growth. With respect to the meat snacks, the nor- mal average ring is anywhere between $5 and $15, Funk said. "Most of those items are generating over a 30 margin, and most of those items are highly impulsive," he added. "Protein snacks and a lot of these refrigerated items are a great opportunity for you to build basket." GN

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