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Costco Has Dethroned Whole Foods as King of the Organic Grocers

Costco's most recent earnings call says yes.

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Bulk toilet paper wonderland Costco may have surpassed bourgeois market Whole Foods as the nation's biggest organic grocer. According to the Seattle Times, Costco's most recent earnings call included the tidbit that its sales of organic goods now exceed $4 billion annually. Conversely, industry analysts estimate that Whole Foods sells around $3.6 billion in organic products per year.

Annual organic food sales in the U.S. are estimated to be around $36 billion, which means that "more than 1 out of 10 dollars in organic food sales are made at a Costco." As the Seattle Times points out, "the numbers underscore how organic food, once the domain of alternative co-ops, farmer markets and specialty retailers, has become a mainstream phenomenon." While consumers' increasing thirst for organic produce has resulted in higher prices, that should be temporary as supply is eventually increased to keep up with demand.

Meanwhile, many organic farmers aren't too pleased with how their products are being treated by Whole Foods. The New York Times reports that some farmers believe "Whole Foods is quietly using its formidable marketing skills and its credibility with consumers to convey that conventionally grown produce is just as good — or even better — than their organically grown products."

Whole Foods has a program called Responsibly Grown that displays ratings of "good," "better," or "best" for items in its produce department; its stated purpose is to evaluate suppliers based on "sustainable farming practices" and environmental-friendliness. But "conventional growers can receive higher rankings than organic farmers by doing things like establishing a garbage recycling program, relying more on alternative energy sources, eliminating some pesticides and setting aside a portion of fields as a conservation area" — practices that can be cost-prohibitive for smaller organic operations.

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