WhiteWave Foods has big plans for Earthbound Farm, and it should be no surprise given that WhiteWave invested $600 million to acquire the organic produce processor. Those plans include not only further growth in produce but also potential extensions into the beverage and food healthy snacks.
Earthbound currently has a leading position in the organic packaged salad category, with approximately a 45% market share, said Kevin Yost, the newly-appointed president of Earthbound Farm. Mr. Yost made his comments Feb. 20 during the Consumer Analyst Group of New York conference in Boca Raton.
“That share jumps to 55% when you look at the branded organic packaged greens category,” he said. “And that is nearly three times the size of the next closest branded competitor.”
Over the past several years, increased consumer demand for fresh, premium and organic items has driven organic packaged greens’ growth, Mr. Yost added.
“It has a 5-year compounded annual growth rate of 16%, and this rate has been accelerating recently,” he said. “In addition, organic packaged salad as a percentage of the total salad category continues to grow, reaching 23% at the end of 2013. And it is expected this conversion from conventional salad to organic and premium salad will continue at about 1 to 2 points per year, in line with the historic conversion.”
Within packaged salads, Earthbound will target innovation toward more category segmentation, moving from core packaged salads like baby spinach to items like kale.
“To further take advantage of the interesting pipeline of innovation that exists in Earthbound, we are also moving into the organic bowl salad kit and the single-serve ready-to-eat salad kit rather aggressively,” Mr. Yost said. “But we don’t just want to pursue superfluous new product development. We want to be a focused, disciplined, product developer and launcher.
“And now with a WhiteWave lens and broader capabilities, we also see the opportunity and potential for brand extensions like juices, like healthy snacks, as well as other adjacent categories. And we will be pursuing those in the future.”
With regard to production capacity, Mr. Yost said Earthbound’s processing plant in San Juan Bautista, Calif., meets WhiteWave’s current needs.
“It is a state-of-the-art facility,” he said. “So it is not about any big changes there. It's really about bringing our operating know-how into that facility and then looking at future expansion to keep up with the growth.”
