PLEASANTON, CALIF. — Steve Burd, chairman and chief executive officer of Safeway, Inc., believes the Pleasanton-based supermarket chain “can own the wellness space” as it works toward becoming a wellness company selling food.
In an investor conference held March 6, Mr. Burd told participants wellness should be the highest growth piece of the company’s business for the next 10 years. A key part of achieving that growth will be through the company’s efforts in providing healthier foods, he said.
“We’ve increased our offering on healthy foods,” Mr. Burd said. “We’ve created a system called Simple Nutrition that calls out the basic feature of the product. That will soon be supported by a web site that will allow someone who’s been told to lower their sodium content — maybe they want to lower sodium, reduce fat, lower cholesterol — and they can go into that web site, maybe in a month or two, and they can design a whole new dietary program for them that will be integrated to what you see in the store.”
Delving deeper into Safeway’s health and wellness initiatives, Diane Dietz, executive vice-president and chief marketing officer, pointed to three big brands appealing to different target shoppers: Open Nature, O Organics and Eating Right. In 2012, the three brands represented more than $750 million in sales, she said.
The newest of the three brands, Open Nature, features more than 180 products in 36 different categories, including fresh meats, pasta, cereal and ice cream. Sales in the brand, which was launched in 2011, grew 50% in 2012.
“We’re so proud of the ingredients in this brand that we put them on the front of the package,” Ms. Dietz said. “Because often, you read ingredients and you don’t even know what’s in your product. This is an all-natural product. We’ve had outstanding sales.”
Ms. Dietz said Open Nature was the highest growth rate brand among the top 100 in Safeway in 2012, and the company plans to expand to 11 new categories in 2013.
Introduced in 2006, Safeway’s O Organics is a U.S. Department of Agriculture-certified line of more than 300 products. Although the brand has been on the market for several years, Ms. Dietz said Safeway continues to innovate because it brings awareness back to the brand.
“There’s power and efficiency in doing that, because as you launch new brands, as you market the new brands, the entire brand rises,” she said.
In 2012, Safeway expanded the O Organics line in three key categories: dairy, baby and produce. The supermarket chain added shelf-stable milk in the dairy category, pouches in the baby sector, and pre-made salad kits in the produce department.
“We had one of the top five organic brands in America at almost $400 million in sales,” she said. “And that’s pretty amazing when you think about our footprint. We’re the No. 2 organic brand, and obviously we’re not in every state in the United States.”
The final “big brand” that Safeway is using to grow its health and wellness presence is Eating Right. Launched in 2007, Eating Right products include at least one “Spot Your Needs” dietary benefit, including high fiber, low sodium, low fat and multi-grain. Ms. Dietz said Safeway has conducted research and spent time with consumer targets and found there is an opportunity to evolve the brand and “make it a more powerful idea to the shopper.”She said the company has developed “intuitive packaging” that has helped tilt the brand toward the shopper. Examples include products that now more clearly point out protein, carbohydrate counts or gluten-free.