Topco and Wild Oats: A Theory

Bob Vosburgh March 17th, 2010

Topco Associates’ pitch for the dormant Wild Oats brand name seems — at first blush — like an odd move. What would a company that already offers a pretty successful private-label natural/organic brand called Full Circle want with a retail name that hasn’t been seen on shelves for three years?

Or, more to the point: Why would Topco want it?

First, the background: The Wild Oats brand name has been for sale since Whole Foods Market acquired Wild Oats in 2007. A messy antitrust battle with federal regulators ensued, and ended only after Whole Foods agreed to sell off 32 Wild Oats units, along with the brand (to date, three stores have actually been sold).

Fast forward three years. According to papers filed with the Federal Trade Commission, Topco and Luberski Inc., a Fullerton, Calif.-based food-product supplier, are both bidding for the Wild Oats rights. A source familiar with Topco tells me that Topco has been interested in the name since the acquisition.

Why? The current thinking is that Topco will position the Wild Oats name as a “better-for-you” brand that complements the existing Full Circle natural/organic line, similar to what Safeway has done with its “O” Organics and Eating Right brands.

Adding a lesser-evil tier will allow retailers who pull from Topco to offer an additional line, with different price points and product attributes, to mainstream customers who might otherwise simply buy conventional products if given only a natural/organic option.

For example, take ketchup. Conventional brands might use high fructose corn syrup as the first ingredient; organic ketchup might replace that with organic cane sugar. What about consumers looking for something with less sugar or HFCS?

That’s where a Wild Oats-tiered product would come in. It could claim the first ingredient as organic tomatoes, say, and bump the sweetener down the list of ingredients.

There are more synergies here. Topco, which launched the NuVal nutrition rating system in supermarkets in 2008 (Kroger Co. is the latest and largest to sign on), could conceivably offer tie-ins with the system, offering two distinct lines that garner different NuVal scores. That equals maximum choice and broader consumer appeal.

Could this be why Topco hired Glenn Backus this week? Mark Hamstra, our vigilant Retail editor at SN, pointed out that Backus was named senior vice president, innovation. It’s a curiously worded, new title at Topco, where he will be responsible for “overseeing all facets of innovation in product, packaging and branding.” He comes from H.E. Butt Grocery, where he was director of marketing and strategy, and spent 14 years at Trader Joe’s, that private-label emporium.

The Wild Oats brand does have a history outside of its namesake stores. Just months before the Whole Foods merger, the chain began distributing a wide selection of own-brand products to non-competing supermarket chains. But that deal ended 9 months later, when Whole Foods moved in.

This is all supposition. Topco has not commented on its plans for the Wild Oats name, and Luberski Inc. might eventually outbid it to win the rights, making all this a mute point. But it’s fun to pick apart the clues and wonder, What if?

(Photo credit: stlbites.com)

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2 Comments to “Topco and Wild Oats: A Theory”

Mary Mulry Says:

March 24th, 2010 at 10:41 am

If Topco acquires the Wild Oats brand, they obviously may do whatever they want with the brand. However, to downgrade the brand to a “better for you” brand like Safeway’s Eating Right would be to destroy most of the original equity that the brand may have. Why not just create a new “better for you” brand? Why buy an existing brand that played in the natural and organic space?

We worked hard at Wild Oats to make sure that the brand stood for the highest natural and organic standards in the industry. The Wild Oats consumer came to rely and expect that the brand was the most trusted name in natural and organic. I would hope that Topco be a steward of the brand and honor its history in some way. I know that they have the Full Circle brand that already competes in that space, but I would surmise that in markets where consumers were familiar with Wild Oats, it would carry more brand equity than the Full Circle brand.
Bob Vosburgh Says:

March 24th, 2010 at 1:21 pm

Thanks for your heartfelt comments, Mary. I take it you were a Wild Oats team member! The piece I wrote mentions only one possibility — that Topco would use the Wild Oats brand to strengthen its portfolio of health and wellness products. Going the “better-for-you” route isn’t necessarily a bad thing. In terms of market exposure, these types of products have a mainstream cache that even natural/organic doesn’t enjoy. Many of your average consumers still have preconceived notions about organic foods; indeed, there are some who still don’t really comprehend what the ideal means.

That said, there is a second scenario that my source mentioned, one that isn’t as compelling, but just as valid: Topco is simply looking to revitalize a dormant brand with the goal of making it a premium complement to its already-established Full Circle line. If Topco does win the bid, and follows this path, it would go a long way to addressing your concerns about maintaining the Wild Oats’ legacy.