> I would guess the perceived gap is also popular processed foods that would hurt the Whole Foods brand if they carried it.

I used to think this, but Whole Foods sure has a lot more problem with the 'popular' part than with the 'processed' part. If you actually look at the nutritional content of some of their products, it's pretty dire. (Not so much for processed food, but my wife noticed the other day that one of their cake slices, for one slice of cake, had 1100 calories and 100 grams of sugar.)