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United Natural Foods, Inc. Message Board

  • wooglin_kai wooglin_kai Nov 13, 2007 2:25 PM Flag

    Woodstock Farms Milk

    While shopping at Stop & Shop yesterday, I checked the Woodstock Farms (should there be quote marks around the word "Farms"???) organic milk offerings and what did I find? The only milk that had been segregated has been desegregated! It is now on the same shelf as the ususal suspects of organic milk offerings AND very close to Stop & Shop's private label, "Nature's Promise". As posted before, both Woodstock "Farms" and Nature's Promise half gallon paper carton's tops look identical--same font and size lettering/numbering for "factory" code and exp date. Pretty obvious they come from the same source. The big difference is the retail price; why should I pay more for the same product? I don't and I buy Nature's Promise for about 15% less.
    Am I missing something here? Flag: any comments?

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    • Wooglin that's correct. Private label offers better margins and captures market share that is just starting to blossom. Thus, since UNFI is the primary carrier of all organic and natural foods, UNFI will make out very well on not only their own PV line but all the others they carry. Guess who is doing all the private label for the individual retailers:-)? Ever hear of Tesco?

      I think we have a fish on the line here. How many shares are borrowed in the float? One in 5 shares is now borrowed. 7.47 million all told even after the bounce from the low $24's.

    • Woodstock Farms is produced specifically for United Natural Foods. The more products UNFI carries, the more money they will make. Very simple.

      As for the big agribusiness companies, they can by acquistions but they cannot buy farmers. There's a big difference there. That means no vertical integration. If you buy manufacturers, it is not the same as sourcing product.

    • Wooglin, Woodstock Farms is a respected brand and and label. It is made specifically for UNFI and of course the labeling is done north of the border.

    • Woodstock is a Private label item for UNFI, Stop and Shop buys their private label from same producer as UNFI and can afford to sell it cheaper because they bypass UNFI's mark up. This is pretty much the way Mass Market Natural Foods are going to go. They will private label the 20% of the items that make up 80% of the sales and allow UNFI to sell them the 80% that only contribute 20% of sales. I see a contracting market and margin for UNFI as more retailers go Private Label and the big players go direct with Manufacturers

      • 3 Replies to flaglerwrangler
      • This process of moving to private label acutally is not reducing margin for UNFI at all. Just for the record, all the Private Label under the "Woodstock Brand" is produced by a company called Hershey Imports (not the chocolate company), which is owned by UNFI. So they are controlling the entire supply chain. Which they actually make more margin on. The cost of a product is only 20% of the retail the rest of the margin is fluff...marketing, slotting, etc. Private label is cheaper at the retail store becauses the flush out all the marketing money and also producers that they are partnering with many times are producing the product to simply reduce overhead costs.

        Hope this helps.

      • flagwrangler, that doesn't make sense. If more retailers are going into private label foods as we know they are, UNFI will be the one to carry them. Thus, the more good and services sold overall, the greater the overall earnings. Having their own private label brand is more like icing on the cake and not the be all, end all scenario you make it out to be. Being the main distributor for organic and natural foods is huge and as more and more retailers get into the natural, organic and private label market, UNFI is going to see a tremendous amount of business and not the contraction of market and margins you suggest.

      • flag, thanks for your reply. Toss in HAIN's desire to use distributors (UNFI?) less frequently in the future and where does all this leave UNFI (you already answered this question!).

        Again, I appreciate the general private label argument, but I think some items are more of a commodity, such as organic milk, and conducive to private label copycats. Other items, while they indeed are knocked off, still hold some cache and attaction. Now that the big boys have really warmed up to the organic/healthy sector, and they have the bucks to support "new" brands, it may become tough sledding for the smaller food companies. I bought a couple Kashi frozen pizzas (way different/better than frozen pizza a generation ago) and a Kashi cereal. (No HAIN products) I think Kashi is a brand that has some strength and while some of their products will be "privatized", I think the brand has legs; again, it doesn't hurt having Kellogg's deep pockets to help with any short term pricing competition. Where does this leave HAIN? Kellogg's also owns Morningstar Farms which I believe makes similar offerings as HAIN. Once in awhile I hear that HAIN could be considered a takeover candidate by one of the larger food companies. Time will tell.

 
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