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Every grocery chain seeking to thrive in the modern world must provide organic kale alongside the Hot Pockets and Fritos.
That point was driven home by merger talks in recent weeks between Albertsons Cos., the second-largest U.S. supermarket chain, and Sprouts Farmers Market Inc., whose 250-odd stores are known for fresh produce and organic offerings. The preliminary discussions may not lead to a deal, according to people with knowledge of the matter.
For Albertsons, which may be beefing up ahead of an initial public offering, taking Sprouts private and adding it to the portfolio would mean a deeper push into foods that appeal to a growing segment of shoppers.
Longtime staples like cereal and canned soup have struggled as health-conscious consumers pursue less-processed options. That’s pushed organics into the mainstream, with the likes of Wal-Mart Stores and Kroger expanding into a market long dominated by Whole Foods Market Inc. and other niche stores. Albertsons seems ready to jump deeper into the lettuce patch.
“They’re looking to add some sex appeal,” said Roger Davidson, an industry consultant. “A lot of their stores tend to be boring, standard supermarkets. If they don’t do something, they’re going to continue to struggle.”
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