While WFM has made no bones about its international pretensions, saying that the British acquisition was simply the first step in a wider European rollout, Bryan Roberts, analyst at M+M Planet Retail, stressed that making the UK business work in the short term would not necessarily be an easy task.
"This is a brave move, but a necessarily modest and cautious initiative, that could be the first step in WFM becoming a genuinely international player," Roberts said. "As the company has correctly pointed out, acquisition is clearly the best approach to have taken in entering the UK, with WFM using F&W as an initial vantage point to gauge the scope and nature of the UK organics market before embarking on either a vigorous rollout of the F&W chain and/or the opening of larger WFM stores."
He said that WFM would also benefit from F&W's brand equity and existing loyal customer base. Without this, it would have been obliged to open stores under its own name, recognised only by American ex-patriots and UK tourists who have visited WFM while in the US.
"Longer-term, WFM should be able to improve F&W's performance through the benefits of its vastly superior buying power and also through its impressive private label portfolio that could be transplanted into the UK with some success," Roberts said.
Despite his enthusiastic assessment of WFM's move, Roberts also sounded a note of caution. "Fresh & Wild is a loss-making business. In the year to 31 March 2003, it generated sales of £16.6 million but posted losses of more than £1 million and has yet to register a profit in its short history. Its losses were down from £1.6 million in the previous year, so there is a trend of improvement, but there is still a risk that F&W might be a drain - albeit a fairly immaterial one - on WFM's resources."
But if WFM should be able to swallow F&W's losses in the short term, it will clearly need to turn the company around as quickly as possible, a move which will not be easy even for a retailer as experienced as WFM.
The problem is, according to Roberts, that there is strong specialist competition in the UK. "The specialist market for organic and natural foods is undoubtedly a growth area, but is becoming immensely competitive, particularly in the London area [where most of F&W's stores are located]," he said.
"In addition to Fresh & Wild, there are other specialist organic store-based retailers, such as Planet Organic and As Nature Intended, many of which are thought to be considering expansion.
"Another competitive challenge will be provided by so-called 'box schemes' - home shopping specialists that deliver boxes of fresh organic produce and other groceries to households on a weekly basis. These schemes, such as those operated by Organic Delivery and Abel & Cole, are becoming increasingly popular thanks to the convenience and variety offered by their Internet-based services. If Fresh & Wild can similarly exploit the Internet, perhaps these channels will be less of a threat in the future."
Perhaps the biggest challenge for any specialist food retailer in the UK, however, comes from the strength of the multiple grocers. Groups such as Tesco, Asda and Sainsbury are steadily increasing the range of organic food products they offer, as they seek to cash in on a fast-growing market.
"Gone are the days when organic food was the preserve of market stalls and offbeat specialist outlets," said Roberts. "The sector is worth big money: around £800 million according to WFM, although this could be seen as a conservative estimate, as trade body the Soil Association reported that retail sales of organic foods rose by 10.4 per cent to reach £1.02 billion in the year to April 2003.
"As a result, the mainstream grocery retailers have embraced organics retailing enthusiastically. They now account for over 80 per cent of retail sales of organic foods and have used their firepower to drive down prices charged by their suppliers and pass on some of these savings to consumers.
"The big supermarkets - in addition to carrying unbranded organic produce and well-known organic brands in ambient and chilled lines - have been aggressive in rolling out own-brand ranges in organics, natural foods and dietary/functional foods; further pushing their price-competitive message and ensuring that organic purchases have become part of the mainstream grocery shop."
But Roberts was for the most part optimistic about WFM's chances of making money in the UK.
"F&W is growing at an impressive rate (faster than most of its larger supermarket rivals) and is poised to break even in the near future. If any retailer has the pedigree, skills and ambition to forge a profitable and reasonably sized presence in one of the most competitive food retail markets in the world, it is Whole Foods Market.
"The company has vast experience in the organics sector and has unrivalled credibility in delivering the quality, products and services that organic consumers demand. With the organic food market worth £1 billion and posting double-digit annual growth, there is much to encourage WFM as it crosses the pond."
Whether it will be able to extend its undoubted abilities to the rest of Europe remains to be seen, however. WFM's large-scale store formats may fit better with the traditional retailing styles in France and Spain, for example, but whether the market for organic food in those countries is sufficiently developed as yet for a specialist retailer is highly debateable.
WFM will undoubtedly look for companies similar to F&W in other countries as the most likely means of growing its business, but its main focus will clearly be the UK, at least for the next few years.