INDIANAPOLIS Sunflower Market, a new grocery format from Supervalu being touted as the first value-priced organic and natural food store, opens in January in Indianapolis.

The 15,000-square-foot store will be modeled after Supervalu’s Save-A-Lot format, but with a focus on natural and organic products. Offerings will include grocery, frozen and dairy items, produce, deli and cheese, bakery, cafe, hormone-and antibiotic-free meat and seafood, beer and wine, and wellness departments.

“Across the nation, we are seeing a grow ing demand for affordable organic foods with exceptional taste and nutritional quality. Sunflower Market draws on our expertise in small-box formats, and leverages our supply chain expertise, which enables us to deliver outstanding natural and organic products at a price point consistent with consumer expectations,” noted Jeff Noddle, Supervalu’s chairman and ceo.

Increasing customer interest in organic and natural foods is a major factor behind the new initiative along with the success specialty chains such as Whole Foods and Wild Oats continue to achieve. The market for natural and organic foods is growing 17% to 21% a year, according to Supervalu, and currently brings in more than $10 billion in revenue.

A sizable 96% of consumers purchase organic products occasionally, said John Hooley, president of corporate retail, during Supervalu’s investor conference last month. In addition, 27% of shoppers buy organics weekly. Pricing is often a barrier to trial, Hooley said.

“Organics is not a fad. It is fast becoming a constant in consumers’ lives. By offering these items in a convenient neighborhood market at a value price point, we create a compelling proposition for the middle-market consumer,” said Hooley.

The first Sunflower Market store will stock 8,000 to 12,000 SKUs of the most in-demand organic and natural items, similar to the limited-assortment strategy of Save-A-Lot. Hooley said pricing will be 10% to 15% below that of conventional and natural food stores, leveraging Supervalu’s ownership of specialty produce company W. Newell & Co. A new private-label organic and natural line called Nature’s Best from Supervalu will launch at Sunflower Market and afterward be available to Supervalu’s distribution customers.

Sunflower Market will offer value-priced products of the highest quality and include minimally processed items with no artificial colorings, sweeteners, flavors or preservatives. Hooley said a quick ramp-up of the concept is expected, though no specifics were given as to a time frame or number of stores planned for 2006.

The idea for the new concept likely evolved from success at Cub Foods and Farm Fresh in selling organic items. Both of these banners are supermarket chains operated by Supervalu. At Cub, customers responded well to expanded organic offerings this past year.

With sales from Supervalu’s retail division flat through the first half of this year and compstore sales down 1.6% in the most recent quarter, the company has actively pursued ways to differentiate from rivals, hence the Sunflower concept.