A Record Year for the Natural/Organic Industry


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Record sales growth, a renewed interest in personal and planet health, and a return to live events were all hot topics at the State of Natural and Organic address during New Hope’s Natural Products Expo Virtual Week, which kicked off May 24.

Natural Products Expo East is “full steam ahead” for a live event this Sept. 22-25 in Philadelphia, said New Hope’s Carlotta Mast in her opening remarks. Dubbing it a “smart expo,” the live show will also feature a virtual platform for those who can’t or don’t wish to attend in person. However, a May survey of Expo East retailers found that 83% indicated they planned to attend the event in person, as did 49% of Expo West retail buyers.

A Very Good Year

Despite facing a challenging last 14 months, the great news, said Mast, is that 2020 was a record year for the U.S. natural and organic products industry, which grew 12.7% across all sales channels to reach $259 billion. After “a really stellar year from a sales perspective,” the industry is now on pace to surpass $300 billion in sales by 2023, added Mast.

New Hope, which defines the industry as natural and organic functional foods and beverages, natural dietary supplements and natural living products, found that the industry was driven by food and beverage in 2020. This category made up 70% of industry sales, allowing for the significant expansion of the total industry in 2020.

Sales of natural and organic foods and beverages jumped 13% to $186 billion in 2020, with pantry staples, frozen foods, meat, fish and poultry, as well as plant-based meat and dairy alternatives, leading the pack. Plant-based, in particular, experienced some of the highest growth rates.

Organics have also thrived during the pandemic, said Mast. Among U.S. consumers, sales of organic food and beverages grew an estimated 13% to $47.9 billion last year, “demonstrating that organic truly has moved mainstream,” she said.

Consumer sales of functional food and beverages also performed well, growing 9.4% to nearly $78 billion last year. And while this represents slower growth than organics, which Mast attributes to fewer sales in grab-and-go functional food and beverages during the pandemic, data indicates that from immune health to anti-inflammatories to better fats, more and more people continue to believe in food as medicine.

And while panic buying earlier in the pandemic helped to close the gap between conventional and natural, organic and functional products, Mast predicts conventional gains will lag as we move out of pandemic.

2020 was also a strong year for supplements among U.S. consumers, reports Natural Products Expo. Sales of supplements grew 14% to $56 billion in sales—the highest growth rate for supplements since 1997. Fueled by immunity boosters, general wellness, probiotic and prebiotic products, mood elevators and sleep management products, supplements fared well.

The natural living category grew 9.5% to $24 billion, fueled largely by household cleaners, which grew 20%, pet care (up 12%) and personal care (up 6.5%).

And like virtually all categories in grocery, natural and organics also experienced an online sales surge. As people flocked online, e-commerce sales of natural and organic products were up 58% to $16.5 billion last year, reported Mast.

In terms of channel growth, mass market drove 59% of natural and organic sales, with the channel growing 10.6% to $151 billion. Natural/specialty grew at 6.7% to reach over $60 billion in sales last year.

Despite the growth in e-commerce, escalating competition in the natural/organic marketplace, Mast predicts consumers will continue to predominantly shop brick-and-mortar for their natural and organic needs. “You can’t count out brick-and-mortar,” she said.

And when it comes to what’s next in product innovation, New Hope’s research finds that products that deliver clean ingredient decks and invest in responsible sourcing and better health for humans, animals and the environment will resonate most with consumers.


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Source: winsightgrocerybusiness.com