Strategic Plan for Woolworths/Macro Wholefoods

6.2 Diversification strategy: New product line

Along with greater social responsibility, it is our view that health consciousness, specifically, aversion to pesticides and other chemicals, has increased significantly over recent years. Macro wholefoods are currently offering approximately 100 items (Woolworths Limited, 2011) and Woolworths intends to further expand these organic product lines. In line with growing health consciousness, it is our view that baby food and dog food should be a focus of this expansion. It is believed that this strategy will assist Woolworths in maintaining and enhancing its brand image as ‘fresh food people' converting into ‘whole food people’.

Baby Food Product Line

Demand for organic baby food products has grown strongly. Indeed, sales increased by 25% alone in 2006 to over $400 million dollars (mumzone, 2008), moving many countries in the direction of a near 100% organic baby food range coverage (Shepherd, Gunner, & Brown, 2003).

According to the Organic Baby Food Company Pty Ltd (as cited in momzone, 2008), 88% of Australian parents are concerned about what they feed their babies and are willing to pay premium prices for organic food. This is because jars, cans and long-life chilled pouches, which destroy their nutritional value, particularly vitamin B and C, and also texture and taste deteriorates (mumzone, 2008), are preserved by UHT (Ultra Heat Treatment) to prolong their shelf-life. The concern for the welfare of their children and the increased nutritional value of organic foods are thus a key driver of their growth.

There are several organic baby food companies that market their products in Australia, such as Bellamy's Organic Farms, Babynat, Holle, Organic Bubs and Heinz (see Appendix B for more information). These companies, however, are usually local small entities serving only limited areas or selling online. No supermarket chain has ever focused on organic lines for babies in particular or developing their own private label as a core competency. Therefore, organic baby food must be considered a new product line to expand for Woolworths.