Healthy, Sustainable, Organic: Tracking the Growth of Natural Foods

Bedrock Analytics

by Bedrock Analytics

March 6, 2019

Recent years have seen a dramatic increase in consumer demand for products falling under the classification of “Natural Foods.”

As a marketing term, Natural Foods was originally applied to products that were non-processed or lacked certain food additives. It was often applied vaguely or inconsistently, and has since grown to include health products, plant-based foods, organic foods, and more. The United States currently has no uniform standards for Natural Food products overall, although there are specific classifications for Organic Foods. For now, Natural Foods remains a marketing term, but one that is meaningful to many consumers.

Its growth in popularity can be attributed to a myriad of cultural, medical and economic factors: An increasing number of consumers suffer from dietary allergies. Others have come to prefer food from sustainable sources. Many are simply becoming more interested in nutrition. Whatever their motivations, the rising demand is having a dramatic impact on retailers of all sizes.

Organic Categories Are Growing Despite Higher Prices

Organic products are one of the most recognizable categories under the natural foods banner and continue to grow in popularity despite their incrementally higher prices. In 2017, 88% of US households had purchased organic food and beverages at least once, while dollar sales of UPC-coded products increased by 9.8%. Retailers have learned that organic foods see the greatest uptake when displayed in deli, grocery, and meat departments.

While costs have decreased in recent years, organic eggs are still 122% more expensive than conventional eggs, with similar increases for milk (87%), vitamins (40%), and baby food (20%). Private label organics are 18% cheaper than branded organics on average, making private labels an ideal choice for low-income households seeking organic foods.

The overall growth trend correlates with a shift in the availability and pricing of organic products. What was once a specialty item in natural grocery stores is now a highly-visible supermarket staple. Conventional grocery stores currently represent 21% of organic spend, which marks a +0.6% increase from 2015-2017. Warehouse and club stores represent 27% (+0.8%), while supermarkets, mass merchandisers, and discount grocers account for 25% (+2%).

Customers Buy Natural For Nutritional Benefits

One of the biggest drivers of Natural Food popularity has been increased consumer interest in dietary health. Today, roughly 36% of US customers actively seek food and beverages that help them meet a nutritional goal. Another 60% want additional benefits including antioxidants, vitamins, or minerals.

The relationship between consumers, food, and nutrition can be notoriously fickle, since the category is susceptible to short-term fads. That said, certain nutritional categories are showing consistent signs of growth:

  • Fresh food departments are seeing increased dollar sales each year
  • Beverages advertised as “probiotic” gained +3.6% penetration growth in the past year
  • Products marketed with fresh ingredients have experienced positive dollar growth (Cauliflower 71%, kale 13%, cranberries 9%)
  • Plant-based food products have seen 20.7% dollar growth in frozen, 18.9% in plant-based meats, and 14.1% in nutritional products


Sustainable Products Show Highest Sales Growth

One common element across all Natural Food markets is a desire for more “sustainable” products. While this term remains imprecise and can refer to anything from sustainable farming practices to recycled packaging, market data suggests it’s valuable to customers. More importantly, sustainable products show consistent, measurable sales growth across all product categories.

A recent Nielsen report determined that sustainable chocolate, coffee, and bath-based products achieved sales increases of 5% compared to overall category sales of 2%. A closer examination of sustainable chocolate found that products advertising claims of environmental benefit, fair trade ingredients, or absence of artificial ingredients achieved similar growth. For example, fair trade products saw 5x more unit sales than conventional chocolate, even though fair trade makes up 0.1% of the chocolate category.

While individual product categories can vary, it’s clear that sustainability has a positive impact on brand growth and financial bottom-line.

Whether it’s organic, sustainable or healthy, Natural Foods are no longer a niche food category. The latest retail data proves that increased demand is real and will continue to grow in the future. Any CPG brand able to grasp the nuances of Natural Foods will be well-positioned to take advantage of this nutritious opportunity.

For more detailed statistics on Natural Food categories, contact us to learn more about the Bedrock Analytics platform today.