Turf wars

When Jade Jagger and the Duchess of Kent next visit their favourite London organic store, Fresh & Wild on Westbourne Grove, they are unlikely to notice much difference at first. But if they take a closer look at the wording on their distinctive green carrier bags, they'll see a discreet change.

The word 'organic' has been quietly dropped in favour of the 'Real Food Store'.

A seemingly innocuous rebranding perhaps, and yet the subtle word change belies a much bigger story of the cut-throat organic market, which is now battling for survival.

Fresh & Wild, a chain of six stores, has become the first of London's organic 'mafia' to sell out to big business. Having recorded losses of nearly £3 million over the past two years, three weeks ago its owner and founder, the entrepreneur Hass Hassan, sold Fresh & Wild for £21 million to US supermarket giant Whole Foods Market.

Observers believe it could mark the start of bloody battle in the rarefied world of 'ethically pure' food. What's more, Patrick Holden, director of the Soil Association, the organic regulatory body, is concerned that shoppers will be confused by the 'real' food tag - which can just mean fresh, seasonal and traditionally produced food - and assume it's the same as organic.

'It's very important that on the verge of going mainstream, organic values don't suddenly become diluted,' he says.

Although organic sales in Britain continue to grow steadily, recently passing the £1 billion barrier, they still account for only a tiny fraction of the nation's shopping trolley. Many of London's trendy organic food stores barely break even, if at all, and some have already gone to the wall. So with the first big sell-out under way, who are the men and women at the front line of London's organic wars, and which of them will survive?

The big players are Planet Organic, with its two supermarkets on Westbourne Grove and Torrington Place off Tottenham Court Road, and a third one under way at an undisclosed location, owned by organic pioneer Renée Elliott and her husband Brian; and Fresh & Wild with its six outlets across London that until this month were run by the affable Irish chief executive Bryan Meehan and his wealthy wife Tara.

It was 36-year-old Meehan who once boasted: 'We place our vegetable order to our main supplier in the morning, it's picked from the fields that afternoon and is on the shelves by 6am the next day.' With the Meehans having cleared their desks and retreated, presumably with a share of the £21 million and with a continuing role as consultants, it will be interesting to see if a US supermarket will continue to uphold their strict organic values.

Certainly the news that Whole Foods Market, with its sales of £2 billion through 146 stores across North America, has entered the market has prompted what has been described as a 'major tizzy' among its rivals, many of which are already loss-making.

Fresh & Wild may boast an eye-catching list of A-list customers, but since its inception in 1999, it has never made a profit. Even Planet Organic, Britain's first organic supermarket, has lost nearly £700,000 in the past two years, and its plans for a rapid expansion to 40 outlets have been drastically scaled down.

In the crossfire, other outlets such as the Sundance Organic Market in Chelsea Farmers' Market have also failed. Sundance was set up by Jonathan Dwek, the 35-year-old son of former world backgammon champion Joe Dwek and a co-founder of Planet Organic. Caroline Walker, the 26-year-old daughter of former Iceland Food boss Malcolm Walker, who runs As Nature Intended on Chiswick High Road, remains in the market, but only after shutting down another of her stores in East Sheen in 2002.

In the face of growing competition from the supermarkets (whose organic sales total £800 million a year and are rising at 15 per cent) the organic retailing world has become a dogeatdog marketplace in which few have a kind word for each other. The organic business may sound cuddly; it hides a quiet ruthlessness.

Private conversations with some of the main protagonists are peppered with cutting asides about their rivals, their low chances of survival, their competitive personalities and high prices.

And yet it all started with the late arrival of the N15 nightbus from Trafalgar Square to Barking on a pleasant May evening in 1986. This run-of-the-mill transport failure gave a particularly determined American student called Renée Jurgelon a chance to persuade a 'cute' young Englishman to abandon his own journey home and travel on the bus with her.

Soon deeply in love with Brian Elliott, the young Renée rushed back to Britain to rejoin him on finishing her degree in the US and soon started to look for ideas for a new business to set up.

A trip back home where she was impressed by a Boston natural food store called Bread & Circus, put her on track.

'I said to myself that this was what I was going to do with my life. I was going to make organic mainstream.' By November 1995, she had raised enough money to open up Planet Organic, at the less salubrious Bayswater end of Westbourne Grove. The brand, the concept, and the innovations sparked a media frenzy and an outbreak of panic in more than one conventional supermarket boardroom. 'Researchers' were soon dispatched by rivals to root out the reasons for its success, and says Elliott, some were even equipped with tiny 'spy' cameras.

Now 39 and the mother of two-year-old Jessica, she is notoriously determined to get her way, a trait that has stood her in good stead in the world of British shopkeeping but also reputedly led to a rift with her founding partner Jonathan Dwek. Within two years, Dwek, who helped to set up the store's initial financing, was trying to oust her from Planet Organic and she countersued in response. After 14-months of bitter litigation culminating in 11 days in the High Court, Elliott won the case and bought Mr Dwek out from the company.

Dwek, bruised but not bowed, went on to set up the rival organic supermarket, Sundance.

'It was a bad approach to a good plan,' says Troy Smith, the 43-year-old American who was Planet Organic's first store manager. Together with his wife Michelle, and with backing from ecologist Zac Goldsmith, Smith now runs his own smaller-organic store across the road called Here. 'Jonathan spent a lot of money developing it, really overspent and then lost a lot of money really fast,' Smith explains.

Shutting up shop can be a painful experience but for Caroline Walker, the youthful managing director of As Nature Intended, closing their East Sheen store was 'the best thing we ever did'.

'We now have a very lean supermarket operation. Shops like Fresh & Wild spend a lot of time on their fabulous displays, and charge more. We have fewer staff, a plainer interior, supermarket systems and aim to have supermarket prices.

I think of them as very American, while we're very British,' she says.

Walker is now looking for new sites across London from Hammersmith to Clapham, but small retailers are often squeezed out of the high street by Sainsbury's Local stores or Tesco Express.

Meanwhile, Elliott claims that as her business is now breaking even and sales are recovering, she is about to announce a third London store, the location of which she is understandably keeping secret.

She does, however, admit that one of her greatest challenges was, and continues to be, Fresh & Wild. It was while Elliott was distracted by the fall-out from the Dwek saga, that Hass Hassan, a 55-year-old Kashmiri who came to Britain as a two-year-old but moved to America in his twenties, began building up an organic empire that now includes a shop in Bristol, with a seventh London store to open shortly in Crouch End.

Although Hassan and Meehan will continue as consultants during the handover to Whole Foods Market, they leave their stores with an uncertain future. Whole Foods wants to expand into much larger premises, creating proper-sized supermarkets to take on the likes of Waitrose or Sainsbury's head-on.

But critics say it will be at a high cost, especially with the new emphasis on the rather vague term 'natural' food.

'We're still about 90 per cent organic overall,' says Fresh & Wild's new marketing director Peter Bradford. 'But in certain areas such as cheese we're now only 50 or 60 per cent organic because there are so many good cheeses that don't have organic certification it would be a shame not to stock them. So while we used to call ourselves the store for organic foods and natural remedies we have just rebranded ourselves the Real Food Store. Organic alone doesn't communicate all the right values.'

But Elliott has already fired a warning shot to her fellow Americans. She says: 'The British shopper is very clued up, and knows the difference between organic and non-organic.'

But the question remains: are we willing to spend so much more on our misshapen carrots and knobbly potatoes that we can keep the independents in the marketplace?