Natural products industry is doing well while doing good

Natural products industry is doing well while doing good

Natural Foods Merchandiser's annual Market Overview numbers are in, and the picture looks pretty rosy for natural products retailers. Gross profit margins are up and sales growth is rebounding, particularly in those categories hit hard by the recession. This is only a piece of the story, however—and maybe not even the most important one.

Summer Auerbach, Taylor Hamilton, Don Summerfield, Jimbo Someck and the hundreds of other natural products retailers we interviewed and surveyed for NFM’s 2012 Market Overview research have a lot to smile about these days. Sales of natural and organic products, including dietary supplements, within the natural channel continue to boom and independent retailers are finding creative and effective ways to grow in the increasingly competitive and complex natural products landscape.

Growth within the $37 billion natural channel hit 9 percent in 2011. This was better than the channel performed in 2010 but still behind the 11 percent expansion of natural product sales at mass-market retailers or the 15 percent uptick experienced within the online retail channel last year. Still, growth numbers are only one metric for measuring the success of natural products stores. Another is to track the positive change retailers are creating in their communities and within the broader marketplace as they work to solve real social, environmental and health problems.

A recent example is one that went viral on Facebook and actually had the power to motivate one of the world’s largest consumer packaged goods companies to commit to changing its ways for the better. The retailer I’m talking about here is The Green Grocer, a 5-year-old natural products store on Rhode Island’s Aquidneck Island. After reading a report detailing the pesticide residue and genetically modified ingredients found in Kashi and other natural cereal brands, The Green Grocer’s John Wood decided to pull the offending products from his shelves and display a shelf talker explaining why the offerings had been removed.

Long story short, a picture of the placard was posted on Facebook, where it ignited so much consumer outrage directed at Kellogg’s Kashi brand that the company announced its Kashi GOLEAN cereal and Kashi Chewy Granola Bar lines would be Non-GMO Project Verified by the end of 2014. Kellogg also pledged that, starting in 2015, all new Kashi foods introduced into the market would contain at least 70 percent organic ingredients and also be Non-GMO Project Verified.

These changes are substantial—and were driven, at least in part, by the action of a retailer who took very seriously his responsibility to carry only those products he feels good about selling to his customers. While it's true that Kellogg was working on achieving Non-GMO Project Verification for some of it's offerings prior to The Green Grocer's involvement, the social media-fueled brouhaha resulting from the retailer's actions certainly forced the CPG to accelerate its plans for moving toward and communicating its commitment to Non-GMO Project Verification.

As The Green Grocer’s Wood emphasized in an interview with NFM, his goal wasn’t to attack Kashi or any other brand. He just wanted to do right by his shoppers and provide education on why organic and non-GMO are important. “We had people telling us that’s why they trust us and come and shop with us—because of our integrity and because we are passionate about scrutinizing and being careful about what’s on our shelves,” Wood said.

It’s this customer focus and values-driven approach to business that are fueling the current success of natural products retailers and that, we believe, will be even more important for the future.

How are you working to improve your communities and the larger marketplace? Share your stories here or on the NFM Facebook page—after all, maybe your good work will go viral.

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