RALPHS ROLLS OUT NEW ORGANIC LINE UNDER OWN LABEL.

Byline: Brent Hopkins  Staff Writer

Seeking to capitalize on Americans' growing health consciousness, Ralphs wants some organic sales growth.

The grocer's corporate parent, Kroger Co., announced its own organic and natural foods line on Monday, adding 140 items to its line under the Naturally Preferred label. From baby food to soy milk, the line lands Ralphs and its subsidiary Food 4 Less in the fastest-growing industry segment, an $11 billion market growing at 20 percent each year.

``When you see the whole supermarket industry struggling to find growth, this is something that's a no-brainer,'' said Jason Whitmer, an analyst with Midwest Research who follows the supermarket business. ``This is a space you want to be in, because you get more customers, more sales, better margins and more customer loyalty.''

Ralphs' new products, which will be first promoted in this Wednesday's advertisements, will account for a small chunk of the chain's 40,000-item assortment. But in a business where customer loyalty hinges on penny price differences and tastes shift rapidly, the chain can ill-afford to ignore growing consumer demand.

``Today's consumers are more health-conscious,'' said Terry O'Neil, a Ralphs spokesman. ``There's a significant percentage who are looking at what they eat and choosing natural and organic items over others. A lot of the national manufacturers have these lines, which were selling quite well, so it seemed natural that we get into the natural and organic business.''

He had no specifics on which U.S. Department of Agriculture category the organic products would fall into. Under stringent standards enacted last fall, food products must meet very specific criteria to earn the label, depending on their contents. Natural foods have somewhat more leeway, requiring no artificial additives, but they are not held to the same scrutiny of organics.

Both cost more, with organic goods garnering a 20- to 30-percent premium, according to Whitmer's research. Though O'Neil didn't offer specifics on prices, he said Ralphs would be more affordable than its national organic brand competition. The greater exposure a private label offers could also boost demand, eventually leading to lower prices.

``It may extend (exposure) and make it possible for people who don't have as much money to buy organic,'' said Barbara Haumann, a senior writer for the Organic Trade Association. ``You have a sizable amount of people with fairly low income, who are young and interested in organic. This could encourage people who thought they couldn't afford it try it.''

Ralphs isn't the first to try adding the goods. Vons has sold a limited variety under its Safeway Select line for two years, and upscalers Whole Foods has several lines exclusively devoted to natural and organic products. While Whole Foods' organic-only private label still costs more, its natural goods, sold under the name 365, compete with regularly priced products.

``We've seen the price come down over the years,'' said Elizabeth Carovillano, Whole Foods' regional marketing director. ``We feel as pioneers, we helped that happen. Looking at the receipts, you can shop organic without paying too much more overall.''

While the announcement puts the spotlight on Ralphs and other chains, Ryan Lewin, grocery manager of Canoga Park's landmark Follow Your Heart Natural Foods, isn't sweating. His shop on Sherman Way has 31 years of experience and fiercely loyal customers, so he doesn't fear an encroachment by the giants on his territory.

``I don't want to say they couldn't come up with a good-tasting line, but they're so big, it would be very hard for them,'' he said. ``We can get everything so fresh and so small, we can make it all right away. I can't see myself saying, Oh, I'll go to Ralphs instead. We've got a pretty loyal customer base, so this doesn't scare me.''