Boulder at center of organic food fight

Joyzelle Davis, Rocky Mountain News

Saturday, July 28, 2007

BOULDER - Perhaps nowhere in the country do Whole Foods and Wilds Oats butt heads harder than in Boulder, Wild Oats' home base.

The health-conscious town of about 95,000 residents is home to two Wild Oats, a Wild Oats- owned Ideal Market and what Whole Foods calls one of its strongest stores in the nation.

On top of that, Boulder natural foods aficionados can pick among a twice-weekly seasonal farmer's market, a Vitamin Cottage, Safeway's Lifestyle store and - until a couple of weeks ago - a co-operative market.

"Boulder is ground zero for the natural-foods market," said Sam Fromartz, author of the book Organic Inc.

Austin, Texas-based Whole Foods and Wild Oats, the two largest natural-food chains in the U.S., have tussled in Boulder since 1998. That's when Whole Foods built a 39,000-square-foot store in its rival's backyard. The competition was poised to intensify when Wild Oats planned to open a new 40,000-square-foot flagship store in the Twenty Ninth Street mall, barely a mile from Whole Foods' outpost.

Wild Oats originally planned to open the store in March but has since postponed it because of design and construction problems.

Whole Foods executives worried that Wild Oats' new store would result in $150,000 in lost revenue per week for their company and planned to respond with a major store renovation, according to the Federal Trade Commission's complaint. Whole Foods also contemplated special deals, such as a 10 percent discount for customers who brought in a Wild Oats bag to recycle, according to e-mails cited by the FTC.

By buying Wild Oats, Whole Foods will "avoid nasty price wars in Portland (both Oregon and Maine), Boulder, Nashville (Tenn.) and several other cities," Whole Foods CEO John Mackey said in an e-mail to his board. The FTC cites the e-mail in the first page of its lawsuit seeking to block the deal.

But price generally isn't the first consideration for Boulder shoppers, according to interviews with customers at Safeway, Wild Oats and Whole Foods.

"If I'm on my bike, I come here," said Paul Thompson, 35, a Boulder resident, as he left Wild Oats' Broadway store. "If I have my car, it's Costco or Safeway."

Thompson avoids Whole Foods but not because he finds the products too pricey - a common knock that Whole Foods disputes. It's the parking lot.

"It's all-hours crazy," Thompson said.

Most Boulder shoppers interviewed last week similarly shop at various grocers around town, hitting whichever store is most convenient and stocks their favorite items.

Barb Kostanick, 51, of Boulder, said she shops at Whole Foods weekly for breads, fish and specialty meats, and at King Soopers and Safeway to fill the rest of her pantry.

"Safeway's organic produce is actually pretty good," she said as she loaded groceries into her car outside Safeway's Lifestyle on 28th Street. "They're trying. It's a new concept, so sometimes they're still working out the kinks."

The Lifestyle store, which opened in February 2006, initially carved about $30,000 from Whole Foods' weekly sales, according to court papers. But after three months, Whole Foods rebounded to previous levels.

Safeway doesn't break out results for its individual stores, but CEO Steven Burd said in a conference call this month that the Lifestyle stores "continue to perform famously" and that the company has converted nearly half of its conventional stores to the format.

That indicates that consumer demand for premium natural foods and organics products is expanding as the products become available in more conventional grocery stores, Fromartz said.

Organic food sales nationwide soared 22 percent last year to nearly $17 billion, according to the Organic Trade Association. That's a 3 percent share of all food and beverage sales, up from 1.9 percent in 2003.

Boulder resident Jennifer Wilds shops primarily at Wild Oats to buy organic foods and says she won't go to Whole Foods under any circumstance. If Whole Foods is allowed to purchase Wild Oats, she'd go to King Soopers or Safeway first.

"Whole Foods is just a madhouse," she said. "And most of the time, it's more expensive."

Boulder grocery market

• Whole Foods stores: 1

• Wild Oats stores: 3 (Two Wild Oats stores, one Ideal Market) and an unopened Twenty Ninth Street mall store

• Vitamin Cottage stores: 1

davisj@RockyMountainNews.com or 303-954-2514