Graphic Evidence: Corporate Organics - 2013




Changing
sector involves expansions, acquisitions and concentration


PEPSI AMONG THE TOP CORPORATIONS GETTING INTO
ORGANIC FOOD





Devon G.
Peña | Seattle, WA | February 23, 2014


Professor
Phil Howard of
Michigan State University has been tracking the growth of corporate organics
since 1997 and most recently by creating diagrams of the structure of the
organic industry. These diagrams are based on the acquisitions by the top 30
food processors in the United States. Comparing the trajectory from 2003
through 2013, a very interesting set of patterns emerges from Howard’s
diagrams.  There are obvious changes like
the addition of Pepsico (a.k.a. Pepsi), the nation’s largest food and beverage
processor. Pepsi’s direct presence in the organics market appears to have been
initiated in November 2006 with the acquisition of Naked Juice; compare the 2003 and 2013 diagrams immediately
below.




Diagram 1. Structure of Corporate Organics (2003)





 


Diagram 2. Structure of Corporate Organics (August 2013)



However,
there is another interesting pattern with noting here. It emerges if you
compare Howard’s 2007 and 2013 diagrams. Both figures really are versions of
the Venn Diagram and so they depict the companies as hubs with network
connections to other smaller nodes, in this case the organic companies subject
to acquisition. Seen in this manner, the 2007 and 2013 diagrams reveal that
Hain Celestial has remained the most active in terms of acquisitions. Hain also
moved up from #85 ranking to #82 as a measure of size of sales and did so by
increasing the number of acquisitions.


But two
other things happened to Hain that may be easily overlooked and Howard catches
these in the fine print. First, Heinz (ranked #27) acquired a large interest in
Hain Celestial.  The second thing is that
Hain grew through multiple acquisitions of regional label, producers, and
processors.


Another
pattern to note is the rise of in-house or private labels for organic products.
The number of food retail and/or wholesale grocery chain companies getting into
private label organic lines includes Walmart (ranked #1 in retail sales), Krogers
(#2), Costco (#3), Safeway (#4), Publix (#8), and of course Trader Joe’s (#27)
and Whole Foods (#23); see diagram 3, Private
Label Brands.


 


Diagram 3. Private organic labels (2007)





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