Kroger CEO sees organics as ‘billion dollar brand’

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Tom Uhlman | Courier

Kroger Co. CEO Rodney McMullen talked to analysts and investors on Wednesday.

Steve Watkins

Staff Reporter- Cincinnati Business Courier

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Kroger Co. is already huge, so how can it keep growing? Organic and natural foods feature the biggest opportunity for growth, Kroger executives told analysts and major investors on Wednesday.

"It was introduced two years ago, and this year it will be a billion dollar brand," CEO Rodney McMullen said of Kroger's Simple Truth natural and organic brand. "When you think about a brand reaching that level in its second full year, not many companies can say that."

Cincinnati-based Kroger, the nation's largest operator of traditional supermarkets, rolled out its Simple Truth line of organic and natural food in 2012 in response to customers pushing for more healthy eating options. Organic foods make up about 10 percent of all food sales in the U.S., totaling about $80 billion in sales.

It's been, as McMullen told analysts last year, "a huge home run."

Kroger expects that segment to keep growing at a breakneck pace.

"We believe we can double this brand's volume in the next few years," Mike Donnelley, Kroger's senior vice president in charge of merchandising, told about 50 analysts and investors at the company's annual investor conference that was held this year at the METS Center in Erlanger. "We believe there's a lot of upside."

Customers and analysts alike have been impressed with Kroger's rapidly expanding offerings, which now total nearly 20,000 natural foods items.

Watkins covers banking and finance, insurance and sports business