|As part of its local strategy, Kroger partnered with Paqui Tortillas, an upstart in Austin, Texas, to develop products exclusively for Kroger stores in southwest markets.|
CINCINNATI — Local has become a buzzword in the food business, as consumers increasingly show preference for ingredients and brands produced close to home. For a grocery retailer with a large national footprint, achieving local relevance may seem like a challenge, but the Kroger Co. has made it a priority.
“People want to see, customers want to see products that pick up on their local food trends,” said Jill McIntosh, vice-president of human resources, Fred Meyer Division, during the company’s October 29 investor conference. “They also want to support the local community and a local product has less of a carbon footprint.”
As part of its local strategy, Kroger partnered with Paqui Tortillas, an upstart in Austin, Texas, to develop products exclusively for Kroger stores in southwest markets. Items include hatch chile and ghost pepper varieties of tortilla chips. Additionally, Kroger sells local produce and certain regional products where available.
“I was recently in some of our stores in Roanoke and they were giving me Virginia apples, local grown apples,” said Mike Ellis, president and chief operating officer. “And I can go to the state of Washington and have Wenatchee grown apples. So we are really working to make sure that we stay relevant and local. It doesn’t matter where you go within Kroger Co., the geographies we’re in, that you will not find local. Think about coffee; there is coffee roasted in just about every M.S.A. we’re in. And for those of you who like beer, there is beer literally (brewed) in every community that we are in across the country.”
The company identified local and specialty foods as one of four leading trends in the natural and organic segment. Kroger said two out of five households purchase natural and organic foods.
“Customers are increasingly switching out their everyday needs with an organic or natural equivalent,” Ms. McIntosh said. “We’re seeing that with canned goods, we are seeing that with fitness bars, we are seeing that the most in our dairy category. They are switching out their conventional milk for organic milk, they are buying eggs, cage free eggs, natural eggs and yogurt, natural and organic yogurt. So, these are mainstream customers that just want to eat better and they want simple ingredients.”
Kombucha, kefir and other drinks with digestive benefits represent another trend gaining traction in the natural category.
“It used to be that people would take this in a supplement,” Ms. McIntosh said. “Now more and more they are switching to beverage to consume their probiotics.”
Snacks positioned as raw or Paleo-friendly, such as raw cacao nibs and beef jerky, also are on the rise.
“So, raw meaning that it is cooked under a certain degree to preserve certain nutrients; the degree depends on what category you are talking about,” Ms. McIntosh said. “And paleo has also been referred to as the caveman diet. So this is going native, right. So a lot of beef jerky, a lot of protein, some vegetables and fruits, no dairy, no gluten.”
And from yogurt to ribeye, products derived from grass-fed or pasture-raised animals, too, are driving growth in the category.“This is about treating the animal humanely as well as getting extra nutrients from that animal grazing on the grass and omega-3s, extra omega-3s that might be in the product,” Ms. McIntosh said.