Safeway here said yesterday it has formed Better Living Brands Alliance to market its O Organics and Eating Right brands to other retail channels in the U.S. The alliance's mission, Safeway said, "is to provide health and wellness food and beverage solutions via two proven multi-category brands." Steve Burd, Safeway's chairman, president and chief executive officer, said in a conference call last week O Organics recorded 2007 sales of $310 million and is expected to do $400 million
"with ease" this year, with sales in the first quarter alone up 50%.
The company said last week the Better Living Brands Alliance includes manufacturing, marketing and distribution companies as brand licensees; co-pack and distribution partners to provide a supply chain network; and support from EMAK Worldwide, a group of marketing agencies based in Los Angeles, for communications with consumers, and Crossmark, a professional services company for consumer goods based in Plano, Texas, for communications with retailers.
The company said last week the Better Living Brands Alliance includes manufacturing, marketing and distribution companies as brand licensees; co-pack and distribution partners to provide a supply chain network; and support from EMAK Worldwide, a group of marketing agencies based in Los Angeles, for communications with consumers, and Crossmark, a professional services company for consumer goods based in Plano, Texas, for communications with retailers.
Our take:
Sure, they're doing it "to provide health and wellness food and beverage solutions" for the betterment of mankind, right? Probably not. Health foods are a hot submarket right now, and one of the few things that people are expected to continued splurging on even as the economy tanks. Additionally, while Safeway has margins that would be considered high in the grocery industry, the simple fact is that their private-label items likely carry far, far higher margins than items supplied by 3rd parties, so if they've already spent for the R&D and production of these items, and there are other retailers willing to carry (and therefore further) the brand in a growing market, it makes perfect sense to do so.
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