As the popularity of organics grows, Wal-Mart jumps in

Correction:A story comparing prices for organic groceries in this week's Food section gave a profit margin of 14 percent to 18 percent for Whole Foods, based on information from an editor of a trade publication. In fact, public records show that the profit margins for Whole Foods in recent years ranged from 2.9 percent to 3.7 percent.

Eugenia Knight and Allison Pinkham do their grocery shopping on the South Shore. Knight, a 32-year-old social worker from Milton, proudly says she went organic ‘‘before it was trendy.’’ She shops at Whole Foods Market in Hingham. Pinkham, 43, the manager of a Plymouth beauty salon, shops at Wal-Mart in that town. She’s a more casual consumer of organic fruits and vegetables. ‘‘I buy whatever produce looks better,’’ she says.

The two don’t appear to have much in common. To the nation’s grocers, however, they’re customers worth watching. They represent consumers who are buying from the fast-growing organic market. While still a tiny fraction of all US grocery sales, organic foods and beverages accounted for $13.8 billion in sales last year, according to the Greenfield-based Organic Trade Association. Spokeswoman Barbara Haumann estimates that 2006 sales will be nearly $16 billion.

With double-digit price premiums over conventional goods, organics make up one of the most profitable segments of the highly competitive supermarket industry. Stop & Shop launched its Nature’s Promise line two years ago. Shaw’s sells Wild Harvest organics in dozens of local stores. Now Wal-Mart is adding more organic goods to the aisles of its supercenters and neighborhood markets nationwide, a move supermarket analysts say will make organic food more widely available and at lower prices. The Plymouth location is one of five Wal-Marts near Boston that have doubled the number of organic products they offer since March. ‘‘It signifies the growing mainstream interest of American consumers for organic foods,’’ says Robert Vosburgh, an editor at Supermarket News, a New York-based industry newspaper.

‘‘Wal-Mart is going to sell organics in such a way that will show that the average casual-use shopper can buy them,’’ says Vosburgh, who predicts the low-price king will narrow today’s 10 to 15 percent price differential between certified organic and conventionally produced goods. ‘‘You are going to see that margin really shrink and get more competitive.’’

Organic Trade’s Haumann says it will ‘‘lead to more acreage devoted to organic produce.’’

For years Wal-Mart has sold organic milk and a few other products that meet federal organic certification standards, which prohibit the use of chemical fertilizers and pesticides, among other things. With its latest move, Wal-Mart spokeswoman Karen A. Burk wrote in an e-mail, the company is trying to offer shoppers what they need so they don’t have to stop at more organic-centric stores. ‘‘Our goal continues in being the low-price leader, and that will also include organic selections,’’ she wrote.

The Plymouth Wal-Mart is already hammering Whole Foods on price, according to a comparison conducted by the Globe on April 26th at the store and Whole Foods Market in Hingham. While Whole Foods carried a bigger selection of brand names and wider array of products, Wal-Mart prices beat Whole Foods on everything but tofu and commercially made chicken, beef, and vegetable broths among about a dozen products compared. Wal-Mart was pennies cheaper on organic x milk, but on other items, the difference was dramatic. A 19-once can of hearty tomato soup by Muir Glen, for instance, is $2.89 at Whole Foods; at Wal-Mart it’s $2.14. Amy’s frozen cheese enchiladas, meanwhile, sell for $2.94 at Wal-Mart. The same product costs over a dollar more at Whole Foods.

David Doctorow, vice president of Whole Foods’ North Atlantic region, says that this comparison is hardly apt, given that Wal-Mart reported $312.4 billion in net sales for fiscal 2005, while Whole Foods posted $4.7 billion for the same year. ‘‘Wal-Mart is an extreme example. They are all about price,’’ he says. ‘‘It’s definitely our mission to lower the price for the consumer.’’ In exchange for better prices at Wal-Mart, he says, ‘‘You don’t get good selection. You don’t get good customer service.’’

While it doesn’t compare in size with Wal-Mart, Whole Foods dwarfs the rest of the industry on profits. The company’s profit margin averages 14 to 18 percent a year, compared to the supermarket industry average of 1 or 2.percent, Vosburgh says. The company is building bigger stores and has branched out into a new organic clothing line, two strategies vaguely similar to Wal-Mart’s approach.

Vosburgh agrees that given their different philosophies, the two chains are hard to compare. Whole Foods, he says, is ‘‘growing in ways that Wal-Mart wouldn’t even think of in 100 years.’’ He points out Whole Foods’s meat, poultry, and seafood, which meet strict production and sustainability standards, and the use of wind power to offset electricity costs, and other environmentally friendly policies. ‘‘They stand for something,’’ he says. ‘‘In the minds of today’s consumers it does count for something. So they are trying to bolster that.’’

In contrast, Wal-Mart’s move to beef up its organic offerings and adopt other ecologically friendly policies is in part an effort to repair its image after controversies regarding the company’s labor practices and impact on the local communities, where its stores often dominate the retail landscape. ‘‘They are using organics not only to respond to consumer needs,’’ says Vosburgh, ‘‘but to soften their image.’’

Regardless of motives, Wal-Mart’s new strategy is expected to encourage more farmers to convert to organic farming — but not without a few growing pains. ‘‘It seems consumers are eager to buy organics,’’ says Haumann of Organic Trade. ‘‘The bigger hurdle is encouraging more farmers to transition to organic.’’

It can take three years of farming without prohibited materials to meet the federal organic certification, according to the US Department of Agriculture. Once more farmland is converted, analysts say the organic prices are likely to fall. But short-term shortages may first lead to price spikes.

‘‘Wal-Mart is such a behemoth of a company. They can suck up a lot of supply,’’ Doctorow says. ‘‘But it’s great. Over time there is going to be so much more organic food available, for a lot more people.’’

That’s good news for Knight, the Hingham shopper, who converted to organic food eight years ago after developing digestive problems that prompted her doctor to put her on prescription drugs. By changing her diet, she was able to discontinue the medication. But her grocery bills went up. She has already noticed prices coming way down in the last few years.

Now at Whole Foods she says, ‘‘It’s like night and day.’’ As for shopping at Wal-Mart, she’ll consider it. But only if she can find the same quality and brand names.