Natural Foods Merchandiser

NFM presents a new spin on Top 40

Where's Top 40? We're replacing it with Trend?Spotting because in survey after survey, readers have told us they want data they can use to make informed purchasing and merchandising decisions. So, beginning with this issue, we are partnering with SPINS to provide in-depth information about sales, growth and other trend indicators for specific categories in the natural products marketplace. If you don't already know about SPINS, it's a market research and consulting firm solely focused on the natural products industry, and it provided all the text and data below.

Of course, we'd still love to hear from our readers, so if you want to see information about specific categories in the future, please let us know—we'll do our best to accommodate you.

—Eds.

Differentiating Natural Retailers Key to Success in Growing Industry
By SPINS' estimations, the natural channel comprises more than 1,000 natural supermarkets and $12 billion in all-commodity volume—up from $5.1 billion just five years ago. In that period, the channel has maintained an impressive annual growth rate of nearly 15 percent, or more than $1 billion in additional revenue per year. Based on current trends, SPINS expects the channel to have more than 1,200 natural supermarkets and $20 billion in ACV within the next three years.

As the natural channel rapidly matures, its retailers are joining together to share best practices and compete in this changing landscape. Associations such as Natural Synergies, the Independent Natural Food Retailers Association and the National Cooperative Grocer's Association are growing steadily. The NCGA is now widely considered the third largest retailer in the natural channel, after Whole Foods and Wild Oats. Small and mid-sized natural chains are emerging as well; 11 U.S. chains now have between five and 25 stores.

Conventional retailers, now participating in the natural channel, are beginning to open stand-alone natural food stores and purchase independent natural retailers. Following King Kullen's purchase of Wild by Nature and Supervalu's launch of Sunflower Markets-Ohio, Publix announced its plans to open GreenWise Market, and Basha's introduced its upcoming Ike's Farmers Markets.

Purchase drivers
Successful store owners understand what motivates consumers to buy, and inform their business practices with that knowledge. For example, knowing that only 2 percent of consumers drive nearly 50 percent of total organic sales in the United States (SPINS/IRI Consumer Attitudinal Study, 2005), retailers can respond to the needs of their core consumers and see a strong return.

Driven by growing awareness and support of sustainable agriculture, humane animal treatment and social justice, core natural products consumers are increasingly voting with their dollars through ethical consumerism. Retailers can best respond to this trend with a wide selection of items and merchandising efforts that cater to this set of values.

Differentiation products
Naturals retailers can build store sales and precious customer loyalty through products and segments that help them stand out from their growing competition.

Carrying and highlighting items that are unique to the natural channel is an important way to differentiate natural stores. Of the 250,000 active items that make up the natural products retail universe, 150,000 are sold only through the natural channel. Identifying these products and building a merchandising strategy around them will set naturals stores apart. Differentiation categories (for example, refrigerated supplements, frozen breads and raw foods) typically require specialized merchandising or expert product knowledge to sell successfully, but are equally beneficial.

Local and regional consumerism is one of the fastest-growing trends in the industry. Carrying and promoting these products demonstrates a retailer's ties to its community and an even deeper commitment to sustainability.

Best business practices
Both natural and conventional manu?facturers of consumer packaged goods are investing heavily in marketing their natural and organic products. Most of these companies budget anywhere from 10 percent to 20 percent of their sales on trade spending, which translates to millions of dollars each year. It is important for naturals retailers to communicate the strong performance of their channel to get their fair share of these resources and to thrive. Retailers can do this by communicating the size and dynamics of the natural channel. For example, even though conventional and natural channels account for almost the same volume of natural product sales, on a store-by-store level, natural product dollar volume (for sales of products with UPC codes) is 63 times higher at natural stores versus conventional stores.

More Information
Naturals retailers are core to the success, integrity and spirit of this industry. For this reason, SPINS has developed a natural channel strategy that provides expertise that is uniquely beneficial to naturals retailers. For more information, contact Amy Jacobsen at 650.747.0944 or [email protected].

Dollar share of natural UPC sales
Natural supermarkets

Mainstream food, drug & mass merchandisers (excluding Wal-Mart)

*Data are for the 52 weeks ending 12/30/06
** Numbers do not add up to 100% due to rounding
*** Numbers in green reflect growth over previous year


Natural supermarkets' top performing 2005 product launches, by organic content

BRAND

ITEM

CATEGORY

SUBCATEGORY

100% Organic

Naturipe

Blueberries, 4.4 oz.

Packaged Produce

Packaged Fresh Fruit

Albert's Organics

Grassfed Beef, 16 oz.

Frozen & Refrig Meats & Seafood

Frozen & Refrig Beef & Pork

Earthbound Farm

Lettuce, Romaine Heart Leaves, 9 oz.

Packaged Produce

Packaged Salad

Organic Valley

Egg Whites, 16 oz.

Eggs

Organic Eggs

Horizon

Brown Eggs, Large, 12 Count

Eggs

Organic Eggs

95-99% Organic

Organic Valley

Cottage Cheese, Low Fat, 16 oz.

Other Dairy

Organic Cottage Cheese & Ricotta

Organic Valley

String Cheese, Pasteurized, 6 oz.

Cheese & Cheese Alternatives

Packaged Organic Cheese

Lakewood

Pomegranate, 32 oz.

Shelf Stable Juice

Organic Fruit/Veg Juice (Non-Apple)

Kashi

Organic Promise, Cinnamon Harvest,17.5 oz.

Cold Cereal

Packaged Cereal Biscuit

Organic Valley

Cottage Cheese, 4%, 16 oz..

Other Dairy

Organic Cottage Cheese & Ricotta

70-94% Organic

Garden of Eatin'

Tortilla Chips, Blue, 22 oz.

Chips Pretzels & Snacks

Corn & Tortilla Chips

Garden of Eatin'

Tortilla Chips, White, 22 oz.

Chips Pretzels & Snacks

Corn & Tortilla Chips

Annie's Homegrown

Cheddar Bunnies Crackers, 12 oz.

Crackers & Crispbreads

Flavored Crackers

Amy's Kitchen

Bowl Ravioli, 9.5 oz.

Frozen Entrees, Pizzas & Convenience Foods

Frozen Veg Lunch & Dinner Entrees

Amy's Kitchen

Indian Vegetable Korma, 9.5 oz.

Frozen Entrees, Pizzas & Convenience Foods

Frozen Veg Lunch & Dinner Entrees

1-69% Organic

CLIF LUNA

Peanut Butter Cookie, 1.69 oz.

Energy Bars & Gels

Lifestyle & Wellness Bars

Silk

Light Chocolate, 64 oz.

Nondairy Beverages

Soy Nondairy Beverages

CLIF LUNA

Oatmeal Raisin, Iced, 1.69 oz.

Energy Bars & Gels

Lifestyle & Wellness Bars

CLIF LUNA

Cookies & Cream Delight, 1.69 oz.

Energy Bars & Gels

Lifestyle & Wellness Bars

Maranatha

Almond Butter and Honey, Creamy, 12 oz.

Conserves, Jams & Nut Butters

Conserves, Jams & Nut Butters

*Data reflect 2005 product launches' performance in 2006.


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