Safeway Inc. plans to sell its line of organic foods and beverages outside its store-network, marking a strategic shift to profit on consumer demand.

The No. 3 U.S. grocery-store operator Safeway Inc said Thursday it's striking partnerships to sell its "O Organics" line in Asia and South America.

A recent deal was also struck with distributing giant Sysco Corp.
Sysco Corporation to sell the products to the foodservice segment, Safeway said.
"We're in the process of monetizing that brand," Chief Executive Steve Burd told analysts and institutional investors at the company's investor day.

The products, introduced in 2006, had been sold exclusively at Safeway's network of 1,738 stores in the U.S. and western Canada.

Since its launch, O Organics has grown to 300 items, including milk, chicken, food entrée and juice products. Safeway estimates O Organic sales are estimated to reach $300 million in 2007, up from $164 million the prior year. The products are targeted at adults and kids.
Consumers are buying more organic foods.

U.S. organic foods sales rose 20.9% to $16.7 billion in 2006, and could reach $20 billion this year, according to the Organic Trade Association.

Safeway made a push into the organic foods market to fend off rising competition from Whole Foods Market Inc. Whole Foods Market Inc, the nation's largest organic-grocery chain, and privately-held grocery operators such as Trader Joe's.