Whole Foods Market, Inc. (WFM) Is Tier 1

“And, by the way, the bulk of the billions in Berkshire Hathaway has come from the better businesses. … And most of the other people who’ve made a lot of money have done so in high-quality businesses.”
— Charles Munger

At Tier 1 Investments, a Motley Fool Real-Money Portfolio, I seek out and invest in elite businesses. These include companies with the most valuable brands, best management, superior products, and strongest competitive advantages. I call these businesses Tier 1 enterprises, and Whole Foods Market, Inc.  (NASDAQ:WFM) fits that description perfectly.

An aspirational brand
Many casual observers make the mistake of believing that Whole Foods is simply a high-priced grocery store, but it’s actually much more. Whole Foods is fast becoming a premium lifestyle brand and has earned a reputation as a purveyor of some of the healthiest foods and beverages on the market, at a time when consumers are beginning to care more and more about what they put into their bodies. These people aspire to live healthier lifestyles and are willing to pay a premium for the type of ultra-high-quality products that Whole Foods provides.

High-quality products and services
I could attempt to describe the differentiation between Whole Foods products and those of its competitors, but I believe Stock Advisor member Jason Hall explains it best here:

If I buy a packaged food product in Whole Foods, I can buy it with the assurance that it has been vetted to be from an ethical supplier, and that it won’t contain a bunch of artificial, non-natural ingredients. I will also know that the fresh produce is produced in sustainable ways, and that the suppliers are managing the land they use responsibly. And when it comes to the seafood, I can see at a glance if I am making the most responsible choice in terms of overfishing impact. Move to the meats, and I can see at a glance the conditions the animal was raised in.

I cannot go into another grocery chain in the U.S. that I know of and have anywhere close to this level [of] confidence that I am purchasing products from suppliers that have been vetted and are held to such high standards.

Combine this with Whole Foods’ amazing attention to detail when it comes to the manner in which it stores and displays its wares, the pleasant atmosphere of it stores, and its happy and helpful employees, and you begin to understand what separates Whole Foods from its peers.