America’s slow 21st-century war on preservatives, additives, and sweeteners continues, and today there are more than 20,000 natural-food stores across the United States and organic products on the shelves of almost three out of every four standard supermarkets, according to the United States Department of Agriculture. Healthy grocer Sprouts Farmers Market got in on the ground floor of the movement, launching with one store in Chandler, Arizona, in 2002 and springboarding from there into 10 states and more than 190 locations over the past 13 years. It’s a pace of growth that’s kept Ted Frumkin, the company’s senior vice president of business development, on his toes—and he’s expecting more of the same because of Sprouts’ focus on healthy living for less.
“I truly believe we sit at the intersection of two of the biggest trends in America today: health and value,” he says. “Interest in healthy eating, increased focus on preventative-health measures, and rising health-care costs have driven significant growth in natural- and organic-food consumption. But, the biggest barrier to entry when it comes to eating healthier is price.”
Sprouts is working to change that, drawing first-time buyers to the store with low produce prices achieved through wholesale purchases directly from growers and a self-distribution process. “Over time, people shop more of the store,” Frumkin says. “They see the meat department, an old-time butcher shop offering hand-crafted cuts and all-natural, never-frozen USDA Choice meat. From there, they go into the grocery aisles, and the next thing you know, they’re shopping [for] many of our other fresh, natural, and organic items, including vitamins and supplements.” The business model is excelling, and it’s allowing the company to continue expanding methodically while making each Sprouts location as conscious of nature as the products on sale inside of it.
“We’re extremely careful about where we put stores,” Frumkin says. “We know who our core customer is. We analyze each potential market demographically by plotting people on maps to find the densest concentration of our core customers. Once we’ve chosen a trade area within a market, we look for real estate that offers the best access and visibility to our core customers. Sprouts has a proprietary in-house sales model that takes numerous variables into account in order to project sales at that location in that market.”
During the first eight years of its existence, Sprouts expanded primarily through organic growth, reaching 56 locations by 2010. Then, two opportunities arose: the acquisition of the Henry’s Farmers Market and Sun Harvest Market brands from Smart & Final Stores Inc. in 2011, which took Sprouts’ store count to 101, and the acquisition of the Sunflower Farmers Market brand in 2012, which expanded Sprouts to 146 locations. In 2014, the company became bicoastal, opening its first stores in Atlanta, and it anticipates 27 more openings in 2015.
As they add stores and maintain established ones, Frumkin and his team are striving to be as sustainable possible. In 2010, for example, they began replacing R22 refrigerant (also known as chlorodifluoromethane, or HCFC-22) at each location with non-ozone-depleting HFC refrigerant DuPont Suva 407A (or, R-407A, for short), and they have just 18 more stores to retrofit in 2015 to get Sprouts out of the R22 business altogether. More recently, when opening a second Atlanta store in Dunwoody, Georgia, they installed a unique carbon-dioxide-based, hydrofluorocarbon-free supermarket refrigeration system manufactured by Hillphoenix. The Dunwoody store is only the fourth supermarket in the United States to use the technology, and it’s also the southernmost one to do so, given the challenges of CO2-based refrigeration in warm-weather climes. In total, more than 25 Sprouts stores are GreenChill-certified by the Environmental Protection Agency, and the company earned its second GreenChill Achievement Award in as many years for having the most certified stores among food retailers in 2014.
Despite the business’s growth and a staff that now comprises more than 18,000 people, Frumkin doesn’t think Sprouts’ culture has changed. “We’re a big company that acts small,” he says. “My team’s job is to get stores open on time, on budget, and with the smallest impact to our environment, and I do that because I believe in what we’re doing. I want to help our customers live healthy for less, and I’m sure that everyone, at every level of the organization, shares that passion.”
Ted Frumkin Explains Hydrofluorocarbons
“Hydrofluorocarbons, HFCs, damage the earth’s protective ozone layer and contribute to global warming. One pound of HFCs leaked into the environment can cause more global warming than 2,000–4,000 pounds of carbon dioxide, CO2. More and more food retailers are trying to move to CO2-, glycol-, and ammonia-based systems, which are more natural, so if they leak, there’s no ozone depletion. Hillphoenix, for example, manufactures a sustainable refrigeration system called the Advansor transcritical CO2 booster system. The challenge is that CO2 is only stable in cooler climates. Until recently, Hillphoenix’s southernmost Advansor system was located in Chicago. In July of this year, with the opening of our Dunwoody store in Atlanta, we changed that by bringing the first CO2-based, HFC-free supermarket refrigeration system to a warm-weather market in North America. The key to the success of the system in a warm-weather market is a proprietary TrilliumSeries hybrid evaporative condenser designed for Hillphoenix by Baltimore [Aircoil Company]. Due to the system’s reduction of refrigerant risks, in turn reducing the store’s carbon footprint, the EPA awarded the store a GreenChill platinum-level store certification, which is the highest honor achievable under its GreenChill Partnership Program.”