Let them eat $20 smoothies: How Erewhon is reinventing luxury groceries

You don’t need to live in Los Angeles to know about Erewhon. Despite having just 10 locations – all in LA County – the upscale grocery chain has become a household name, thanks to the popularity among celebrities and influencers of its $20 smoothies and other high-priced food items. 

Erewhon was founded in 1966 by macrobiotic and organic food advocates Michio and Aveline Kushi in Boston. The name was inspired by the 1872 satirical novel Erewhon by Samuel Butler. In the novel, Erewhon – ‘nowhere’ spelled backwards – is a utopia where individuals are responsible for their health and prosecuted for the crime of being ill.

Fast forward to 2011, when entrepreneurial husband-wife duo Tony and Josephine Antoci acquired Erewhon, which had relocated to California, and set about creating a luxury food retail empire. 

They slowly but steadily launched 10 grocery stores specialising in organic and B Corp-certified food items and various health and wellness goods, ranging from supplements to skincare. 

As of last year, Erewhon had amassed a total ending market value (EMV) of $60 million, exceeding more accessibly priced grocery chains like Sam’s Club ($59 million EMV) or Sprouts ($27 million EMV), a report by influencer marketing platform CreatorIQ stated. 

But how is a brand known for selling $88 jars of sea moss managing to capture consumers’ attention and their wallets, especially considering current economic circumstances?

How the luxury grocery retail market blew up 

The market for luxury groceries is driven by three main factors: a growing disinterest in traditional luxury goods, the expansion of wellness culture, and the recent fashionability of food.

Due to the Covid-19 pandemic and ensuing economic and social circumstances, sales of traditional luxury goods have experienced a roller-coaster ride of highs and lows. 

In January last year, many economic analysts predicted a mild US recession, as inflated product and service prices and high interest rates affected consumers’ discretionary spending habits. Barclays analysts said the annual growth rate of global luxury sales was expected to slow to mid-single-digits, from nearly 9 percent last year and double-digits in the previous two years.

It’s not just the price of luxury handbags and designer apparel that is on the rise, however, but also the cost of everyday necessities like groceries. 

As the US Department of Agriculture has reported, average annual food-at-home prices increased by 11.4 percent from 2021 to 2022, with the greatest changes seen in eggs, fats and oils, and meat.

A report by consumer intelligence company NielsenIQ noted that consumers are shifting their behaviour to make their dollar go further, such as by shopping at value retailers. 

The report revealed that the only grocery group whose share of sales grew last year was the value-price tier, which grew about 0.6 points, and that more than a quarter of Americans bought larger sizes of products with long shelf lives as a savings strategy to get a lower cost per use.

Of course, Erewhon is not targeting consumers trying to reduce their weekly bills by shopping at value grocers. Still, wealthy people can feel the pinch of higher prices, too, and for this cohort, the retailer may present a more economical alternative to fine dining.

Marie Driscoll, an expert on luxury retail and the founder and chief analyst at Driscoll Advisors, noted that consumer awareness of specialty foods increased during the pandemic, as eating out wasn’t an option and people had more time and energy to pay attention to groceries.

“Consumers discovered new brands and luxury gourmands and one thing about luxury is it’s sticky,” Driscoll told Inside Retail. “Once you’ve enjoyed the quality and the emotional lift of treating yourself with luxury products, services and experiences, you are reluctant to return to generics that don’t provide the same experience nor create a sense of wellbeing.”

Driscoll added that luxury grocery retailers that offer a wide array of organic products, like Erewhon, have also benefited from the growing interest in health and wellness. 

“The pandemic also supported the growth of gourmand, organic and luxury foods as it focused consumers on their health and wellness, which became top of mind for many months during and post-pandemic lockdown,” she explained. 

Global data and business intelligence platform Statista reported that the size of the wellness market worldwide reached about $5.61 trillion in 2022 and the figure is expected to rise at a compound annual growth rate of 8.6 percent, to reach an estimated $8.47 trillion by 2027.

Correspondingly, data from Vantage Market Research confirms that the global market for superfoods is expected to increase at a compound annual growth rate of 10.5 percent from 2023-2030, to reach $361.2 billion.

Why Erewhon is leading the luxury grocery store charge

When it comes to providing a high-end grocery shopping experience to tap into these markets, few grocers do it quite like Erewhon. 

A large part of Erewhon’s success derives from its celebrity partnerships and influencer collaborations. 

Even before the pandemic, Erewhon had a loyal following of influential and affluent customers, from food influencers to Hollywood A-listers, thanks to its well-curated selection of high-priced, health-focused goods and the aesthetic store design. But in the first year of the pandemic, Vito Antoci, Erewhon’s executive vice president, reported a 30 percent increase in revenue and stated that same-store sales were up 18 percent, year over year.

In 2021, the grocery retailer started garnering wider consumer recognition with the launch of its first celebrity smoothie collab with TikTok influencer Christina Najjar, otherwise known as Tinx. Together, they launched the Tinx x Erewhon Basic Witch Smoothie. The following year, Erewhon launched a similar product with Marianna Hewitt, co-founder of skincare brand Summer Fridays and a fellow content creator, before hitting peak smoothie success with its launch of Hailey Bieber’s Strawberry Skin Glaze smoothie. 

Last year, Antoci reported that Erewhon sold about 40,000 Strawberry Skin Glaze smoothies a month, which totaled roughly $10.6 million in profit. At this time, there is a nine-month waitlist for those interested in clinching a smoothie partnership, which the retailer carefully cultivates to maintain its high-status image. 

The grocery store tote bag flex

For the modern consumer, grocery shopping isn’t simply a means of attaining nutritional necessities, but also a means of following a trend and ‘flexing’ in a similar, but more financially attainable way, than purchasing a luxury leather handbag.

Consider the Erewhon tote bag, which retails for $52 to $138 and signals that the wearer, in theory at least, not only prioritises their health and wellbeing but also is a person of means, who can comfortably shop in stores that sell $88 jars of sea moss and $20 smoothies. 

“We often think of grocery shopping as utilitarian and functional, and for many people it is. However, for a sizeable minority, it is about much more than this,” GlobalData GM Neil Saunders pointed out to Inside Retail. 

“There is a certain fashionability to food, especially with some of the younger DTC brands. There can be a buzz around certain products and brands that make them the next ‘must try’ thing. Some also like the experience of food shopping in a nice, upscale environment, something that many mainstream supermarkets in the US do not deliver on. 

“Chains like Erewhon are an antidote to this. They inject fashion, fun and energy into grocery shopping. And for some, it’s worth paying a premium.”

Another player that is beginning to make its mark in the luxury grocery scene is Pop Up Grocer, which opened its first permanent store in New York City last year. 

Pop Up Grocer has taken the traditional bodega concept and turned it on its head, offering a variety of mid-tier to luxury food and lifestyle goods, from $16 packs of strawberries to organic cereals. Diversity is a big focus and it stocks many , BIPOC-, women- and LGBTQIA-owned brands. 

With steadily increasing consumer interest in wellness and a shift to viewing food as a luxury worth investing in, stores like the Pop Up Grocer and Erewhon aren’t going away any time soon.

This story first appeared in the June 2024 issue of Inside Retail US magazine.

Further reading: How luxury lifestyle brand Chaiboy aims to disrupt the global tea market

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