Mainstream organic food hurts specialty grocers

Two years after going public as a fund managers’ favorite, New York City-area specialty grocer Fairway Group Holdings Corp (FWM.O) now sees its shares selling for less than a pack of organic gum.

At around 70 cents per share, the company is down 94 percent from its April 2013 initial public offering price and is in danger of being delisted from the Nasdaq for trading below $1 for 30 consecutive days.

Yet Fairway, even with its deep wounds, is just the extreme illustration of a trend that is hurting competitors such as Whole Foods Market Inc (WFM.O), Sprouts Farmer’s Market Inc (SFM.O) and Natural Grocers By Vitamin Cottage Inc (NGVC.N) as well.

As middle-income outlets like Costco Wholesale Corp (COST.O), Wal Mart Stores Inc (WMT.N) and Target Corp (TGT.N) expand their organic offerings, the companies that pioneered the trend are being left behind. The number of organic items now available in traditional grocery stores is up between 35 percent and 50 percent over the last year, according to estimates from investment bank Piper Jaffray. Overall, the U.S. organic food market should top $45 billion in 2015, a compound annual growth rate of 14 percent from 2013, according to TechSci Research. read more –