Natural growth

Last month, a federal appeals court upheld a lower-court ruling blocking the Federal Trade Commission’s efforts to stop the merger of two natural-foods giants: Whole Foods Markets and Wild Oats Markets.

The fruits of success: From humble beginnings, Asheville-based natural-foods store Earth Fare now boasts 12 stores in four states and plans a major expansion over the next few years. Above, the Westgate shopping center location. photo by Jonathan Welch

This might seem a matter of indifference to area residents, since neither of those chains operates in Asheville or anywhere else in Western North Carolina. But Asheville’s own Earth Fare has emerged from the corporate shuffle as the nation’s second-largest natural- and organic-foods operation, with stores in the Carolinas, Georgia and Tennessee.

“It’s the most insane thing that’s ever happened,” says Troy DeGroff, the company’s director of sales and marketing, talking about the whole legal drama that preceded the merger. But his comment applies equally well to the fact that from its humble beginnings as a funky alternative grocery in Asheville, Earth Fare has now become an increasingly significant player in the burgeoning natural- and organic-foods sector (see sidebar, “Earth Fare Milestones”). And far from standing pat, the company is planning an ambitious expansion in the coming years, seeking to solidify its position as the premier organics retailer in the Southeast.

True, an enormous gap still separates Earth Fare from the newly created mega-chain. As of Aug. 31, Whole Foods and Wild Oats had a combined 304 stores and $6.8 billion in gross revenues, versus 12 stores and about $100 million in revenues for Earth Fare. But the Asheville-based business hopes to see its holdings more than double in the next two years, says DeGroff.

Ahead of the curve: Earth Fare executive Troy DeGroff, shown here at the company’s Fletcher headquarters, says the chain remains committed to defending the integrity of the organic movement as it moves into the mainstream. photo by Jon Elliston

“There is an amazing opportunity for us, and now is the time,” DeGroff proclaims. “Right now our plans are to open, starting in 2008, four to eight stores a year. Either we do it now or you just fade into obscurity,” he adds, citing plans by Publix—a major, Florida-based conventional grocer—to open a chain of standalone organic supermarkets beginning this year.

“When that happens, it’ll just be a very different place,” says DeGroff. “At that point, the companies that were the original stewards of what it means to be a natural and organic supermarket start to lose hold of it. One of the worries I would have as a natural-foods consumer … is that the concept would get watered down.”

Already, Wal-Mart and Kroger—the nation’s two biggest food retailers—are peddling organic foods and products. So is the Black Mountain-based Ingles and numerous other grocers.

It’s no mystery what has piqued these conventional grocers’ interest in what was once seen as a niche or fringe market. According to industry data presented during the Whole Foods court proceedings, the demand for organic milk has increased by 20 to 30 percent annually over the past five years; for organic fruits and vegetables, 10 to 20 percent a year; for organic meat, poultry and fish, a whopping 32 to 120 percent a year; and for organic snack foods, 15 to 30 percent per year.

But there’s more than just money at stake here. For Earth Fare, DeGroff maintains, the real bottom line is preserving the tenets of the organic movement. The business, he notes, has a long history of standing up for organic purity. “We’ve always been pushing the envelope on what it means to be natural, and how you can be better at giving people a high-quality product. And I don’t think we always get credit for that.” According to DeGroff, Earth Fare was one of the first grocers in the nation to ban products containing partially hydrogenated oils, the artifical sweetener sucralose, and high-fructose corn syrup from its shelves.

“We set the standards a lot of times, and we’ve pushed things in the industry ahead of the curve, because it’s the right thing to do. Even if you hurt your business short term, it’s going to pay off in the long run.”