Navigating Rising Food Prices: Market Dynamics, Retailer Strategies & the Resilient Demand for Better-for-You Food

This article first appeared in the October issue of Presence Marketing’s newsletter.

By Steven Hoffman

Grocery prices in U.S. cities have surged by approximately 33% since 2019, according to federal government data analyzed and reported by AP News. This dramatic jump represents the largest seven-year escalation in food-at-home costs in nearly 50 years. By comparison, grocery costs rose by just 6.4% in the seven and a half years leading up to 2019.

This historic rise in household food expenditures has placed immense pressure on consumer budgets nationwide. While the initial price shocks were triggered by the COVID-19 pandemic, the upward trajectory has been sustained and exacerbated by compounding macroeconomic pressures across the supply chain. Extreme weather events linked to climate change, lingering labor shortages, escalating fuel costs as a result of the war with Iran—particularly for diesel transport, as detailed by Axios—and shifting tariff policies have all contributed to rising input and distribution costs. Furthermore, heightened food safety concerns and supply chain disruptions, also reported by Axios, have added layers of compliance, testing, and shrinkage expenses that ultimately ripple down to the retail shelf.

Unsplash. Photo by Victoriano Izquierdo

The natural, organic, and specialty food channels have by no means been immune to these inflationary pressures. Core staples—from organic produce and dairy to packaged specialty goods—have seen notable retail price increases. Yet, as conventional grocers struggle with declining unit volumes and resort to aggressive pricing countermeasures, the natural products sector is demonstrating remarkable structural resilience. While shoppers are adjusting their habits by leaning into store brands, hunting for promotional sales, and eliminating household food waste, they are not abandoning their core health and environmental values.

To understand how both the conventional and natural channels are navigating this high-cost landscape, Presence News examined current market research, evaluated industry data, and spoke with leading executives, analysts, distributors, and independent grocers across the country.

Channel Performance: Total Food vs. Better-for-You Resilience
While broader consumer sentiment remains anxious regarding cost-of-living pressures—with grocery prices remaining a top concern for Americans, according to coverage by ABC News—spending patterns reveal a sharp divergence between conventional packaged goods and health-focused categories.

According to retail measurement data from market research firm NIQ, total food and beverage sales grew 2.8% in dollar volume over the 52 weeks ending Aug. 8, 2026. However, total unit volume contracted by 0.4%, demonstrating that conventional market growth was driven almost entirely by price inflation rather than by increased consumer demand.

In contrast, the "Better-for-You" sector delivered robust outperformance. Dollar sales for Better-for-You products jumped 8.9%, accompanied by a 5% increase in unit volume. This unit growth occurred despite Better-for-You items carrying a significantly higher average unit price ($5.14) compared to the broader market average ($3.92), as well as a slightly faster price appreciation (3.7% vs. 3.2%).

"The combination of higher prices and growing unit demand suggests consumers view the benefits offered by Better-for-You products as worth the investment," Chris Costagli, Vice President of Thought Leadership, Food & Non-Alcoholic Beverage Insights at NIQ, told Presence News. “Rather than simply chasing the lowest price, consumers are becoming more selective in how they spend, reserving budget for products that deliver clear value through health benefits, ingredient quality, functionality, or trust.”

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           MARKET PERFORMANCE COMPARISON (L52 WEEKS ENDING AUG 2026)
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  Category Dollar Growth Unit Growth Avg. Unit Price

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  Total Food & Beverage +2.8% -0.4% $3.92
  Better-for-You +8.9% +5.0% $5.14
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  Source: NIQ RMS, Powered by Label Insights

Data from industry research firm SPINS reflects a similar pattern across retail channels. Over the 52 weeks ending Aug. 9, 2026, natural products grew 6.9% in dollar sales in the Natural Expanded channel and 7.8% in Regional and Independent Grocery (RIG) stores. Specialty and wellness products posted 6.3% growth in Natural Expanded and 4.2% in RIG stores. Meanwhile, conventional products in Multi-Outlet (MULO) channels declined 2.4% in unit terms, even as average retail prices rose 6.2%.

This ongoing commitment to natural and organic food amid elevated living costs is further supported by an industry report released in July 2026 by strategic firm Socha, titled The End of Cheap Food. The report notes that while U.S. household spending on food declined from roughly 18% of income in the 1960s to 10–11% today, healthcare spending has skyrocketed from $100 billion in 1970 to nearly $5 trillion. With diet-related chronic disease accounting for an estimated 85% of healthcare expenditures, consumers increasingly view high-quality, minimally processed food not as a discretionary luxury, but as a primary health investment.

"The market no longer rewards cheap, convenient calories alone," stated Kristine Root, Chief Strategist and CEO of Socha, in the report. "Health has become a co-shopper with consumers. ... When quality is visible and trusted, price sensitivity declines."

As reported by Marketplace, many consumers view buying organic as an essential safeguard for family wellness, choosing to trim expenditures on dining out or apparel before cutting back on organic produce and clean-label staples.

The Selective Shopper: 'Trading Up and Trading Down'
While health-conscious shoppers continue to prioritize wellness, the 33% cumulative price increase has fundamentally altered daily shopping mechanics. Consumers are planning meals more carefully, utilizing digital coupons, comparing store prices, and actively cutting back on food waste.

A study highlighted by The Packer reveals that rising food prices have driven a measurable reduction in household food waste, with consumers buying more mindfully, making better use of leftovers, and freezing perishables to stretch their grocery dollars. Furthermore, as noted by NPR and CNBC, shoppers are increasingly splitting their baskets across multiple retail banners—purchasing core pantry staples at value or discount outlets while visiting independent natural stores or specialty markets for fresh organic produce, pasture-raised meats, and functional supplements.

According to consumer sentiment analysis published by McKinsey & Company, shoppers across all demographics are heavily engaged in trade-offs, prioritizing value and actively changing their purchasing habits. As Yahoo Finance reported, U.S. shoppers are reacting to elevated prices simply by buying fewer items per trip, putting immense pressure on conventional retail volume.

As Inkl reported and Money Talks News highlighted, discount grocers such as Aldi and WinCo have gained serious traction among former high-end supermarket shoppers by aggressively competing on price. Meanwhile, analyses from The Sacramento Bee and FinanceBuzz emphasize the growing price disparity that is making traditional regional grocery chains "not worth it" for many shoppers, accelerating the flight to value. However, when discount grocers fail to deliver clean ingredients, ethical sourcing, or specific dietary attributes, shoppers readily return to the natural channel.

This behavioral shift is changing how analysts evaluate brand loyalty. Rather than observing a linear "trade-down" to cheaper goods, market researchers see a nuanced approach to basket management. “The story is less about a wholesale trade-down and more about consumers becoming increasingly selective about where they choose to spend. Shoppers are often trading up and trading down within the same basket, moving fluidly between premium and value-seeking behaviors depending on the category, occasion, and perceived benefit,” Chris Costagli of NIQ told Presence News.

As Dawn Thilmany, an economics  professor at Colorado State University, noted in an analysis published by Forbes, consumers are evaluating value through a broader lens that balances sticker price against nutritional density, meal versatility, and personal wellness goals.

Yet, polarization is evident across demographics. Lower-income households are facing acute financial strain, as detailed in reports by the St. Louis American regarding access to healthy food in marginalized communities, and by the CapRadio Grocery Report on low-income family budgets. At the same time, middle- and higher-income households are reallocating funds to maintain their dietary preferences while seeking smart value wherever possible.

Mainstream Grocery Pivots: Rollbacks, Rewards, and Regulatory Heat
While independent natural retailers rely on margin flexibility and local sourcing, the nation's largest conventional grocers are deploying aggressive, large-scale counterstrategies to defend their market share. Chains like Publix and Kroger are facing acute pricing scrutiny, with The Street reporting significant consumer pushback against premium regional pricing, a dynamic actively changing shopping habits in states like Florida.

To recapture these value-seeking households, retail giants are rolling out widespread price cuts and enhanced loyalty perks. In its second quarter of fiscal 2027, Walmart announced it had implemented temporary price cuts, or "rollbacks," on more than 11,000 items, as reported by Grocery Dive and Fast Company. This massive rollback strategy is designed specifically to drive high-income market share gains at the expense of regional grocers.

Other conventional players are targeting specific consumer pain points: fuel and prepared meals. Albertsons recently expanded a high-profile partnership with Chevron, as detailed by Grocery Dive, allowing shoppers to combine their grocery loyalty points with Chevron's rewards program to save up to $1.50 per gallon at the pump. Meanwhile, East Coast supermarket chain The Giant Company recently slashed the price of its in-store hot bar by 10% in a direct bid to provide more affordable prepared food alternatives to budget-conscious families.

However, the massive scale of conventional grocers has also attracted intense federal scrutiny. As reported by 29News, the Department of Justice’s antitrust division has officially added major retailers—including Walmart, Publix, Kroger, and Amazon—to an ongoing federal investigation regarding potential collusion and pricing practices in the beef sector. While independent natural food retailers like Simple Foods Market in Del Norte, Colorado, have insulated themselves from national meat volatility by sourcing directly from local ranchers, the conventional meat supply chain remains in the regulatory crosshairs.

The Evolution of Private Label: From Value Option to Premium Driver
One of the most structural impacts of the current inflationary environment is the rapid evolution and acceptance of private label, or store-brand, products. Once viewed as a bland, budget-driven substitute, private label has transformed into a primary driver of innovation, quality, and consumer loyalty across the grocery landscape.

According to SPINS panel research, the private label market reached $201 billion across MULO and Natural channels for the 52 weeks ending June 14, 2026, holding a 22% dollar share of the total store and posting a 3.1% two-year Compound Annual Growth Rate (CAGR) compared to 1.7% for national brands.

Crucially, private label adoption is no longer restricted to traditional value-seeking households. SPINS consumer survey data indicates that 43% of households earning over $150,000 annually increased their private label purchases in 2026, alongside 37% of households earning $75,000–$150,000. Younger demographics are spearheading this shift: Gen Z and Millennial shoppers contributed 81% of total year-over-year private label dollar growth, despite accounting for just 17% of total store shoppers.

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               PRIVATE LABEL ADOPTION BY DEMOGRAPHIC (SPINS 2026)
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  Demographic Group                  % Increasing Private Label Purchases
  --------------------------------------------------------------------
  Younger Millennials 46%
  Gen X 39%
  Older Millennials 35%
  Gen Z 33%
  Boomers 21%
  --------------------------------------------------------------------
  Income > $150,000 43%
  Income $75,000 - $150,000 37%
  Income < $75,000 25%
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  Source: SPINS Trilens Panel & Consumer Survey Data

"We have recent data showing that 95% of consumers are purchasing private label products," said Ben Friedland, Executive Director of Exclusive Brands at KeHE Distributors, in an interview with Presence News. "And 94% of those consumers say that even when prices eventually moderate, they intend to stay with private label. Shoppers have realized they don't have to sacrifice taste or quality when making the trade. It’s a win-win scenario that helps them meet their budgets while enjoying great-tasting, clean-label food."

For independent natural products retailers, private label strategy has become a crucial tool for store survival and basket building, says Friedland. KeHE’s CADIA brand—a private label program offered exclusively to independent retailers—serves as a primary example.

“The mission of CADIA is to provide a private label solution exclusively for independent retailers so they can be competitive in an increasingly price-sensitive market. Independent grocers don't have the volume to produce their own private label lines. By aggregating volume across our independent network, we can partner with co-manufacturers to bring a high-quality, competitively priced product to market. This empowers neighborhood stores so their customers don't have to leave to shop at a big-box chain,” Friedland said.

Friedland noted that CADIA comprises roughly 300 SKUs across 40 center-store categories—including organic beans, canned tomatoes, pasta sauces, olive oils, and frozen fruits—with approximately 95% of the portfolio holding USDA Organic certification. To further address consumer demand for premium, sustainable attributes, KeHE launched a revitalized Wild Oats brand in spring 2026, focusing on Regenerative Organic Certified (ROC) products. The line includes the category's first ROC-certified juices packaged in glass bottles, as well as ROC pasture-raised eggs sourced in partnership with New Barn Organics.

"Wild Oats speaks to consumers who care about the highest level of attribution," Friedland explained. "While CADIA provides everyday core staple value, Wild Oats brings accessible regenerative organic products to the shelf, proving that food can serve as a force for good even in challenging economic times."

Independent Retailer Strategies: Margin Discipline, EDLP, and Local Sourcing
On the front lines of grocery retail, independent store owners are employing creative strategies to cushion their customers against rising costs while maintaining operational viability. Rather than passing every wholesale price increase directly to the consumer, many independent grocers are shaving retail margins on price-sensitive staples, leveraging promotional calendars, and strengthening local farm relationships.

Case Study 1: Simple Foods Market, Del Norte, Colorado
At Simple Foods Market, a 2,000-square-foot independent natural food store in Colorado's San Luis Valley, owner Ian Walker has seen consumer shopping habits shift markedly toward value-driven choices. "Customers are becoming much less brand-oriented and far more sales- and value-oriented," he said.

Walker attributes much of his store's price competitiveness to his membership in the Independent Natural Food Retailers Association (INFRA) and its partnership with KeHE’s Everyday Low Price (EDLP) program. "Having organic beans on the shelf for $1.79 allows us to compete directly with Safeway or Walmart," Walker noted. "It changes the community perception from being an expensive specialty store to an accessible, health-focused market."

Walker also uses strategic margin absorption to protect his customer base from severe wholesale volatility. "A few weeks ago, wholesale tomato prices spiked to a level that would have required a $7 or $8 per pound retail price under our standard margin," Walker explained. "We chose to eat part of our margin to keep prices reasonable because extreme sticker shock frightens shoppers away. Simultaneously, we reached out to local growers in our valley and sourced beautiful regional tomatoes at a much lower cost. It supported local agriculture, kept our prices down, and our customers loved the quality."

Sourcing locally has also provided an inflation hedge. "The eggs on our shelves come exclusively from local San Luis Valley farms," Walker added. "While national egg prices swung wildly over the past two years, our local farm prices stayed completely stable. Local supply chains help insulate us from national freight and diesel spikes."

Case Study 2: Rising Tide Natural Market, Glen Cove, New York
On Long Island in New York, Jerry Farrell, owner of Rising Tide Natural Market, is celebrating 50 years of independent retail operation. Farrell, who was among the founding members of INFRA, calculated his store’s internal food inflation rate at approximately 3% over the past year—matching broader national baseline averages.

"INFRA membership has been vital to our cost of goods," Farrell told Presence News. "Through the CADIA program, we voluntarily cap our retail markup at 27%—well below our standard 38% store margin—on essential staples like organic pasta, beans, broths, and paper goods. Being able to offer organic pasta for $1.99 gives our shoppers everyday value they can count on."

To reward core shoppers and encourage larger basket sizes, Rising Tide implemented an automated, tiered loyalty program using ECRS Catapult point-of-sale software. Dubbed the "Grateful Card," the system tracks customer spending over two-month windows. Shoppers who spend $200 receive a 10% storewide coupon; spending $600 earns a 15% coupon; and spending $1,000 or more generates a 20% discount.

"We have about 12,000 members in the program, and when shoppers receive that 20% coupon, their average basket size triples," Farrell reported. "Customers save up their shopping trips to buy high-ticket items, supplements, pasture-raised meats, and specialty goods. They might spend $800 or $1,000 in a single visit and walk out saving $200. It creates immense goodwill, drives inventory velocity, and keeps our store top of mind."

Farrell also manages pricing competitiveness by auditing top-selling national SKUs against local conventional grocers and online outlets. "Retailers must stay sharp on highly visible benchmark items—eggs, milk, bread, butter, bananas, and avocados," Farrell emphasized. "If your prices on benchmark items are fair, consumers trust that the rest of your store is priced fairly, too. For secondary categories like cereal or snacks, we focus on unique, up-and-coming brands discovered through SPINS data that adhere strictly to non-GMO and organic standards, where direct price comparisons don't exist."

Industry Outlook: Building Resilience in a High-Cost Era
Looking ahead through late 2026 and into 2027, industry analysts predict that grocery prices will remain elevated rather than undergo deflation. According to forecasts summarized by Yahoo Finance and economic reports from the Pacific Research Institute, structural input costs—including labor, agricultural inputs, freight, and energy—will keep baseline food prices firm.

Furthermore, large wholesale distributors are actively recalibrating their operational models. In its Q4 2026 earnings report, covered by Grocery Dive, United Natural Foods Inc. (UNFI) outlined ongoing efforts to streamline distribution networks, optimize inventory efficiency, and adjust wholesale pricing structures to maintain profitability amid shifting retail demand.

At the same time, specific commodity markets continue to face supply-side volatility. A survey published by Food & Beverage Outlook highlights that rising beef prices and cattle herd contractions are reshaping protein purchasing across both conventional and natural channels, pushing consumers toward alternative animal proteins, canned seafood, and high-protein legumes.

To thrive in this higher-priced environment, manufacturers, distributors, and retailers are adopting three core strategies:

• Differentiating Through Radical Transparency: As conventional manufacturers attempt to pass along price increases without improving product quality, natural brands can win by clearly communicating ingredient integrity, nutrient density, and ethical sourcing. As Socha's The End of Cheap Food report emphasizes, when a product's health and environmental benefits are tangible and verified, price elasticity decreases.

• Elevating Private Label Portfolios: Store brands are no longer just defensive margin plays; they are strategic assets. Retailers and distributors are expanding organic and regenerative private label options to capture cost-conscious Gen Z and Millennial shoppers who demand clean labels at accessible price points.

• Strengthening Independent Supply Chains: Independent grocers are leveraging buying groups like INFRA and partnering with regional and local distributors to bypass centralized logistics bottlenecks and reduce exposure to freight volatility.

While the 33% cumulative increase in grocery costs has undeniably strained household budgets and forced new shopping behaviors, it has also highlighted the enduring value of the natural products channel. Consumers are not surrendering their desire for clean, healthy, and sustainably produced food. Instead, they are shopping smarter, demanding real quality for their money, and aligning with brands and retailers that deliver genuine value.

As KeHE’s Ben Friedland summarized: "During challenging economic times, it is more important than ever for brands and retailers to double down on who they are and what they stand for. Our industry exists to make food a force for good. By sticking to our core mission, supporting independent grocers, and delivering authentic quality, we ensure that clean, healthy food remains accessible to our communities for the long haul."

Steven Hoffman is Founder and Managing Director of Compass Natural Marketing, a communications and brand marketing agency serving the natural, organic, and regenerative products industries. He has written extensively on food policy, agricultural sustainability, and market trends for Presence News for over a decade.

Food Inflation in the U.S.: A Strategic Reckoning for Food Sector Leaders

This article first appeared in the September 2025 issue of Presence Marketing’s newsletter.

By Steven Hoffman

In 2025, food inflation in the United States has transformed from a passing concern into a defining business challenge—and opportunity—for leaders across the food ecosystem. A 3% year-over‑year increase in overall food prices, including 2.4% for groceries and 3.8% for restaurant meals, may seem modest. Yet beneath those figures lie sharper, more disruptive trends: surging prices in staples such as coffee, ground beef, and eggs; strategic responses from consumers and retailers; and structural pressures that demand both resilience and reimagining. Business strategists in the food sector must now lead with insight, not just facts.

A Collision of Climate, Cost, and Policy
Climate volatility continues to drag on food supply and costs. Extreme drought in U.S. cattle belts, heat waves in crop regions, and pest outbreaks such as avian flu have propelled food inflation beyond headline figures. Coffee is up 13.4%, ground beef 10.3%, while eggs have spiked 27.3%, putting extraordinary strain on manufacturers and squeezing household budgets (Axios).

Adding to the upward pressure are sweeping tariffs introduced by the Trump administration, with tariffs on imports from Brazil and India reaching 50%. The tariffs are already working their way into the cost of everything from meat and produce to metals used in cans and packaging (The Washington Post). According to the Yale Budget Lab’s estimates as of August 7, 2025, consumers face an overall average effective tariff rate of 18.6% – the highest since 1933 – and the impact is projected to cost U.S. households an extra $2,400 per year.

Meanwhile, immigration enforcement over the past several months has destabilized farm labor. In California’s Oxnard region, intensified ICE activity has slashed agricultural labor by 20-40%, leading to $3-7 billion in crop losses and driving produce prices up 5% to 12%, according to research published in August 2025 from Cornell University. Simultaneously, cuts in SNAP and other supports have strained both consumer access and farm revenue—especially for smaller producers—plus, grocers in rural communities and elsewhere that depend on SNAP programs feel that impact much harder (Climate and Capital Media).

Beyond cost drivers, the retail margin picture is fraught. Analysis from the White House Council of Economic Advisers showed grocers’ profit margins rising 2 percentage points since before the pandemic—reaching two-decade highs—while “shrinkflation” and package downsizing quietly preserve profitability (Grocery Dive).

FMI—The Food Industry Association’s study released in July 2025, “The Food Retailing Industry Speaks 2025,” reveals an industry struggling to navigate challenging economic conditions, largely due to policies implemented during the Trump administration. According to FMI, about 80% of both retailers and suppliers anticipate that trade policies and tariffs will continue to affect pricing and disrupt supply chains. Most grocers expect operating costs to remain high (Supermarket News).

Consumers Are Stressed About Rising Prices
Recent polling reveals that nearly 90% of U.S. adults are stressed about grocery prices—with half calling it a major stressor. As a result, Americans are responding to these pressures with pragmatic and inventive shifts. Consumers across income levels are tightening the belt, leveraging buy-now-pay-later options, getting creative with savings, and turning to food banks when they must (AInvest).

Shopping behavior reflects this anxiety—and innovation. RDSolutions reports that 86% of consumers now buy private-label products, with price cited as the primary decision factor; 42% opt for cheaper alternatives; while 20% skip items altogether. Data from The Feedback Group shows 61% of supermarket shoppers use sale-driven habits—buying on promotion, eating more at home, and choosing store brands over national names (Progressive Grocer). Meanwhile, many households lean on grocery hacks such as careful list-making, midweek shopping, loyalty programs, and bulk purchases to maximize savings (Times of India).

Even amid tightening budgets, shoppers haven’t completely abandoned pleasure, however. KCI’s “stress index” reveals that consumers crave “affordable luxuries” and product discovery—seeking balance between taste and value. In fact, 68% of consumers surveyed prioritize taste over price, while one-third still prioritize lowest-priced options (Food Dive).

In a fresh produce market reeling from the effects of inflation and immigration enforcement, one consumer trend remains strong: Health continues to drive purchases of fresh fruits and vegetables. According to The Packer Fresh Trends 2025 report, published in August 2025, 72% of shoppers say their primary reason for buying produce is to support a healthy lifestyle. However, price pressures loom larger than ever, with 44% of consumers now saying that cost is the top factor in deciding what to buy, up from 39% last year. As households juggle tighter budgets, they’re opting for familiar staples over experimenting with newer or higher-priced options (Farm Journal).

For lower income individuals and families, higher food prices are resulting in less consumption of healthier food options, with the result that Americans are not eating enough fruits, vegetables, and other nutrient-dense foods. Instead, they are choosing sugary and ultra-processed foods, which tend to be cheaper and last longer.

"There's evidence that inflation continues to shape food choices, particularly for low-income Americans who prioritize price over healthfulness," Constance Brown-Riggs, a registered nurse and nutritionist specializing in diabetes care, told Northwell Health. "These results highlight the disparity in how income influences food priorities," she continued, adding that higher food prices often increase food insecurity. "These shifts increase the risk of chronic diseases such as diabetes, heart disease and obesity."

Even so, there is some opportunity on the horizon. The Packer Fresh Trends 2025 report shared some bright spots, including the fact that Millennials and Gen Z are leading the way on trying new products, exploring organic options, and prioritizing convenience, including prepped veggies and grab-and-go fruit packs. In addition, interest in organic remains strong, with 22% of consumers purchasing organic always or most of the time, particularly among younger and higher-income households.

Grocers, Brands, and Manufacturers Corral Cost Pressures
The reaction from retailers and manufacturers has been tactical and dynamic. Major chains are reevaluating supplier cost increase requests, pushing back aggressively against inflation on branded items. Meanwhile, grocers are ramping up private-label assortments (Investopedia).

Businesses like Aldi are demonstrating how cost leadership can go viral: A summer discount campaign across 2,550 stores marked down 400 items by up to 33%, estimated to save shoppers $100 million. Fast-food chains are responding with value menu bundles—their way of catering to cash-strapped consumers without sacrificing frequency (The Wall Street Journal).

In the natural channel, retailers such as Natural Grocers are emphasizing value, loyalty programs and sales to draw shoppers. For its 70th anniversary in August, Natural Grocers leveraged deep discounts across its nearly 170 stores in 21 states—up to 60% off on more than 500 products—to tap into consumer demand for affordability and quality. According to AInvest, the campaign “sets a benchmark for value-driven retail” by blending “nostalgia, discounts and loyalty incentives to boost sales and customer retention.”

As demand for better-for-you foods remains strong among health-conscious consumers, Jay Jacobowitz, president and founder of Retail Insights, told Supermarket News that many retailers in the natural and independent space experienced a strengthened second half of 2024 and first quarter of 2025, as less price-sensitive consumers make personal health and wellness a priority. Smaller retailers “are going to have increased (economic) pressure, but it’s not pressure that they’re unfamiliar with dealing with,” he said.

Manufacturers are similarly pressured. They face rising raw material, labor, and energy costs, yet retailers limit how much of that inflation they pass through. Many are resorting to smaller or reformulated packaging, trimming promotions, and optimizing sourcing strategies to protect shelf placement (Columbus CEO).

Yet even in the last few weeks, food makers are succumbing to the need to raise prices as the longer-term effects of tariffs, economic policies, and supply chain disruption kick in. On Aug. 7, 2025, Forager Project co-founders Stephen Williamson and John-Charles Hanley announced the following on Instagram:

“Like many food makers, we’ve been feeling the effects of rising ingredient costs—especially for our beloved cashews (up 52%) and coconuts (up 113%). We’ve held off as long as we could, but to keep making food the right way, a price increase was necessary. What hasn’t changed? Organic ingredients, ethical sourcing, planet-healthy practices.”

At the agricultural level, the disconnect is acute. Farmers receive only about 16 cents back from every retail food dollar spent—and that fraction must cover skyrocketing seed, fertilizer, and machinery costs (Washington Post). Some farmers still support tariffs, believing they will yield long-term trade gains; others see them as a short‑term hit to margins (Investigate Midwest).

Strategy: Adaptation, Advocacy, and Resilience
Current forecasts from the USDA suggest moderate gains: food-at-home prices rising around 2.2% for 2025 and restaurant prices about 4%. But the structural challenges—climate, policy, labor, and pricing power—carry implications far richer and more urgent than those figures alone (Food & Wine).

For food-sector professionals, the directive is clear: Strategies must be multidimensional.

1. Reinvent Pricing & Perceived Value
Offer tiered, smaller, or private-label packaging; highlight affordable luxuries and discovery moments in-store and online. Aldi’s shelf reset, Sprouts Farmers Market’s value-based positioning, and Natural Grocers’ emphasis on savings and its frequent buyer program demonstrate ways to drive loyalty and savings.

2. Strengthen Supply Chain Flexibility
Diversify sourcing, invest in climate-resilient inputs, and forecast for volatility. Manufacturers need contingency plans for both weather and trade disruptions.

3. Align Expectations & Margins
Increase analytics around cost impacts and pass-through capabilities. Supplier–retailer partnerships should define fair margin boundaries and shared value strategies for inflation periods.

4. Advocate for Systemic Support
Engage policymakers to safeguard labor stability—through H-2A visa expansions or by regularizing undocumented workers—and to secure tariff relief for food essentials and farm inputs.

5. Build Resilient Retail Formats
Simplify offerings to reduce shopper anxiety and stock-outs. Grocery models like Aldi or Sprouts’ curated “innovation centers” help drive discovery while managing complexity.

A New Epoch for Food-Business Leadership
Food inflation in 2025 is less an anecdote than a wake-up call. When climate shocks strike, tariffs bite, and labor becomes unstable overnight, businesses that only react are left behind. But those that blend adaptive execution, strategic policymaking, and bold market positioning are building enduring advantage.

Consumers may feel squeezed, but they’re still looking for experiences that feel smart, authentic, and human. Retailers, suppliers, processors, and farmers must each meet them there—delivering value, stability, and insight. Because in this new era, food-sector leadership is not just about pricing; it’s about crafting trust in uncertain times—and reshaping food systems to weather today’s storms and make the most of tomorrow’s opportunities.

Steven Hoffman is Managing Director of Compass Natural Marketing, a strategic communications and brand development agency serving the natural and organic products industry. Learn more at www.compassnatural.com.

Can Publicly Run Grocery Stores Solve Food Deserts — and Deliver on Nutrition Equity?

As New York and Chicago explore city-run supermarkets, new models — public, nonprofit and cooperative — are reshaping the business of feeding underserved communities.

This article first appeared in the August 2025 issue of Presence Marketing’s newsletter.

By Steven Hoffman

When New York Assembly member and mayoral candidate Zohran Mamdani proposed opening five city-run grocery stores—one in each borough—he reignited a debate that cuts to the heart of capitalism, food justice, and municipal responsibility. Critics labeled it a socialist fantasy. Proponents called it long overdue. But behind the political theater lies a legitimate question: Can publicly operated grocery stores succeed where the private market has failed?

Across America, millions live in low income, low access (LILA) markets—communities without easy access to affordable, nutritious food, or what many in the media refer to as food deserts. In these neighborhoods, fast-food outlets and corner stores predominate, while supermarkets are few and far between. For decades, policy solutions have focused on tax incentives or subsidies to lure grocery chains into underserved areas. Often, those stores don’t last. Mamdani’s proposal dares to flip the script: If the private sector won’t meet the need, let the public sector step in.

Pixabay.com

It’s not an entirely new idea. In small towns and major cities alike, experiments in publicly owned, nonprofit, or cooperative grocery models have taken root. Some have succeeded. Others have shuttered. Together, they paint a nuanced picture of what it takes to make public grocery stores work—and where they can go wrong.

The Rural Proof-of-Concept
With corporate consolidation leading to fewer grocery store options as food prices soar, “people are clamoring for solutions, and that’s leading to creative thinking on what might work,” Ganesh Sitaraman, Director of the Vanderbilt Policy Accelerator, told the Food and Environment Reporting Network. Sitaraman recently published a report, Public Grocery Stores: A Guide for Policymakers.

In St. Paul in rural southeastern Kansas, a town with a population of 600, a municipal grocery store has been in operation since 2013. After the town’s last private grocer had closed, residents faced a 30-minute drive to the nearest supermarket. Rather than accept that future, the city council voted to open its own store. St. Paul’s model is humble, offering a basic selection of staples, fresh produce, and frozen goods. It doesn’t need to generate big profits—just enough to keep the doors open. In that way, it functions like any other public utility: not glamorous, but essential. More than a decade later, it remains in business.

Not every rural experiment has succeeded. In 2019, the town of Baldwin, Florida, opened a city-run grocery store, but by 2024, it had closed its doors. The reasons? Low foot traffic, challenges sourcing competitively priced goods, and the gravitational pull of the nearby Walmart. The lesson: Public stores face the same economic headwinds as private ones, and without a clear strategy and strong local buy-in, they may struggle.

A City of Contradictions
Chicago offers a case study in both the fragility of private grocery models and the resilience of community-driven alternatives. Between 2013 and 2021, the city lost at least 20 full-service grocery stores, many in predominantly Black and Latino neighborhoods on the South and West Sides. In 2022, Whole Foods Market closed its Englewood store just six years after opening with $10.7 million in city subsidies. For residents, the closure felt like a betrayal and a confirmation that public-private partnerships may not always prioritize community needs (Block Club Chicago).

But even as chains exit, grassroots solutions are emerging. The Go Green Community Fresh Market, launched in Englewood in 2022, is a nonprofit market developed in partnership with local organizations and institutions. It offers fresh produce, pantry staples, and prepared foods in a space designed to reflect community needs.

According to a report in Next City, the store is part of a broader movement toward community-led food infrastructure. Unlike traditional grocers, these models often blend retail with education, workforce development, and health services. They’re small but mighty—and in many cases, they’re succeeding where big box stores have failed.

Chicago’s city government has taken notice. In 2023, the city commissioned a study on the feasibility of municipal grocery stores. The findings, published in 2024, estimated that opening three stores would cost around $26.7 million (Chicago Sun-Times). Critics balked at the price tag. Advocates pointed out that the city has spent far more on failed economic development deals.

Mayor Brandon Johnson has voiced support for continued exploration. His administration sees food access as part of a broader public health and equity strategy—one that requires thinking beyond the boundaries of traditional retail.

New York’s Big Swing
In New York, Mamdani’s plan has drawn national attention. His proposal envisions five city-operated grocery stores with a focus on affordability, accessibility, and cultural relevance. The goal is not just to provide food, but to provide good food—including fresh produce, whole grains, and organic staples—at prices families can afford.

The backlash has been swift. Billionaire grocery executives and conservative commentators warn of government inefficiency, cost overruns, and mission creep. The Wall Street Journal editorial board argued that the plan would replicate “all the flaws of a Soviet commissary.” Mark Cuban quipped, “None of that s*** has a chance.”

But Mamdani remains undeterred. “We treat food like a luxury when it should be a public good,” he told Bloomberg. He sees the city-run grocery model as a form of infrastructure—akin to schools or libraries—that delivers long-term social ROI, not quarterly profits.

Public support appears strong, especially in districts hit hardest by inflation and store closures. In a city where the average grocery markup can exceed 25% in low-income neighborhoods, the idea of subsidized pricing resonates—and aligns with Mamdani’s broader political platform centered on economic justice (NBC New York).

Natural and Organic for Everyone?
One of the most compelling aspects of publicly operated groceries is their potential to democratize access to natural, organic, and specialty foods. In most food deserts, such items are virtually nonexistent. For households managing diabetes, allergies, or autoimmune conditions, the absence of unprocessed, nutrient-dense food isn’t just inconvenient—it could be dangerous.

Public stores, especially those not beholden to shareholder profits, could prioritize clean-label foods, support regional regenerative farms, and offer bulk bins, zero-waste options, and plant-based products typically confined to high-end co-ops. By participating in programs like Double Up Food Bucks or SNAP Match, these stores can extend purchasing power for low-income shoppers (Axios).

Imagine walking into a municipal grocery where you can use your EBT card to buy organic lentils, fresh kale, or local mushrooms—and receive a discount for doing so. That’s not just a policy victory; it’s potentially a public health breakthrough. Cities like Madison, Wisconsin, and Atlanta are already exploring similar models, indicating a growing appetite to align food equity with climate and nutrition goals.

Co-ops and Nonprofits: Lessons from the Field
In the space between private retail and public provision lies another model: the food cooperative. Owned and operated by members, co-ops have long served as alternatives to corporate grocery chains. But historically, they’ve skewed toward affluent, mostly white communities.

That’s changing. The Cooperative Development Institute (CDI) has worked to support co-ops in low-income and BIPOC communities across the Northeast. According to CDI, co-ops in food deserts thrive when they reflect local culture, offer accessible membership structures, and receive early technical and financial support.

In the majority Black-led community in Detroit’s North End, the Detroit People’s Food Co-op celebrated one year in business this past May, making fresh produce and products from locally sourced farms and producers more accessible to more than 4,000 co-op members. The term “food desert” doesn’t sit well with co-op general manager Akil Talley ― a desert, he said, is naturally occurring: “We like to call it 'food apartheid,' because a lot of it was intentional," he told the Detroit Free Press. The co-op was founded by the Detroit Black Community Food Sovereignty Network, a nonprofit organization dedicated to teaching residents about the importance of fresh food that is also behind a number of other food sovereignty initiatives. 

In Chattanooga, Tennessee, the nonprofit Chattanooga Food Center strives to create a food system that offers affordable and convenient access to healthy food, bridging the gap between producers and consumers. The organization partners with farms located within 150 miles of the city to source fresh produce, meat, eggs and dairy products. Its retail store, Gaining Ground Grocery, located in the Highland Park neighborhood of the city, an area previously bereft of fresh food options, offers discounted groceries alongside nutrition education. All proceeds from the store support the continuing mission of the Chattanooga Food Center. Customers can pay for groceries via a SNAP Electronic Benefits Transfer card, and the store also participates in the Double Up Food Bucks program established by the Fair Food Network which doubles the value of SNAP dollars for fresh local produce.

In Dayton, Ohio, the Gem City Market—a Black-led co-op—was launched in 2021 after a successful community investment campaign with more than 3,200 members. Both serve as proof points that with the right support, co-ops can thrive in marginalized neighborhoods and for many communities, municipal or hybrid public/nonprofit models may offer a more sustainable path.

Yet co-ops and nonprofits face unique challenges: they often require significant volunteer labor, complex governance, and ongoing grant support. Stores in low income areas also rely on such government programs as the Supplemental Nutrition Assistance Program (SNAP), which serves 42 million Americans as a defense against hunger.

For example, Gem City Market is committed to making sure food is readily available to local residents of all income levels, with programs like their “WeGotchu” sale, where they match EBT/SNAP-eligible purchases at 50%. However, the SNAP program is facing the biggest funding cuts in its history with the passage of the 2025 reconciliation bill, aka the One Big Beautiful Bill Act, which could undermine the ability for low income families to access SNAP.

What Failure Teaches Us
Every closure is a lesson. Florida’s Baldwin Market closed because it couldn’t compete on price. Whole Foods Market left Englewood because it didn’t meet its margin targets. Even Rise Community Market in Cairo, Illinois, launched with fanfare, has struggled to maintain sales volume (New Republic).

These failures underscore the importance of three factors: management expertise, community trust, and economic patience. A grocery store is an operations-intensive business. Success depends on efficient procurement, cold chain management, labor stability, and pricing strategy.

Public or nonprofit ownership doesn’t remove those challenges. It only changes the priorities. Profit may not be the goal—but solvency is still essential. As one food policy analyst put it: “You can’t build equity on empty shelves.”

The Case for Investment
Despite the risks, many argue the benefits of public grocery stores outweigh the costs. The returns may not show up in balance sheets, but in reduced health care spending, increased employment, better school performance, and stronger local economies.

Public stores can act as anchor tenants, revitalizing commercial corridors and attracting additional services like clinics, pharmacies, or credit unions. They can train and employ local residents at living wages. And they can reinvest revenue into community priorities.

As Mamdani frames it: “We’re not just opening stores. We’re opening a future where no New Yorker has to choose between dinner and dignity.”

A New Chapter in Food Access
The feasibility of publicly operated grocery stores isn’t a yes-or-no question. It’s a matter of design, context, and political will. Done poorly, they risk inefficiency and failure. Done well, they can transform food systems.

What’s clear is that the private market alone will not solve food apartheid. After decades of disinvestment and unmet promises, communities are demanding something different. Whether through municipal markets, nonprofits, or co-ops, the movement is growing. And it’s not just about access. It’s about what kind of food system we want—and who it serves.

If cities like New York and Chicago can make public groceries work, they may set a new precedent: that good food is not a luxury, but a right. And that sometimes, the best way to feed the people—is to own the store.

Steven Hoffman is Managing Director of Compass Natural Marketing, a strategic communications and brand development agency serving the natural and organic products industry. Learn more at www.compassnatural.com.