They say one thing always sells well during wartime or when the economy puckers: lipstick. Does this hold true for organic gloss? While there's no national stock ticker for organic tubes, the old adage might hold a kiss of truth. "Our sales have grown every month over the past two years," says Nancy Caigan, founder and president of Primitive Natural Lip Color in Woodstock, N.Y. "I'm not sure it's because of the recession, though," she adds with a laugh.
A Mintel study earlier this year reported that the number of Americansâ36 percentâwho claim to regularly buy green products has remained stable, after tripling from 12 percent in 2007. The Chicago-based company forecasts that green products will experience 19 percent growth through 2012, with green personal care and household cleaners leading the way. But for now, times are toughâmostly.
Not every category is hurting. Sales of some things are growing like greens in the White House garden. The chief components in the "downturn diet" are not surprising: beans and rice. That category grew 22.4 percent during the six months that ended Feb. 21, according to SPINS, the Schaumberg, Ill.-based market research firm specializing in naturals. The next three categories with the strongest growth were refrigerated entrees and prepared meals at 18.1 percent, shelf stable pastas at 18 percent and baking mixes, supplies and flour at 16 percent.
These numbers are in line with the loss of restaurant sales, according to Vinnie Hernandez, director of the product library for SPINS. "The rise in sales of staples showcases the economic reality that in shaky times, consumers cook at home."
But the real storyâand opportunity for retailersâis the growth of refrigerated entrees and related grab-and-go meals. SPINS defines that category to include refrigerated and prepared entrees, salads, appetizers, sandwiches, burritos and sushi. "Since restaurant sales were so high in the preceding years, I would venture a guess that those same consumers are now purchasing these refrigerated, prepared foods as a way of cutting costs but maintaining the convenience and tastes they cultivated in better times," Hernandez says.
"The silver lining to retailers is that this could be the source of new dollars as these items are higher-priced and tend to increase the total register ring. Since most products are made in-house, the potential for shoppers returning to the store offers a significant branding opportunity. The dollars and loyalty that retailers could gain from expanding on this category would not be cannibalized from other departments, but from restaurants."
The gluten-free market continues to surgeâapparently gluten allergies don't recede with 401(k)s. According to New Orleans-based market research firm Packaged Facts, the one-time niche grew at an average annual rate of 28 percent since 2004, and is expected to reach $1.56 billion in 2008. Company officials attribute the category's growth not only to increased diagnoses of celiac disease but also to an increased number of people going gluten-free for perceived health benefits. Packaged Facts' report estimates gluten-free sales will be worth $2.6 billion by 2012, but adds, "Market growth will slow substantially due to the recession, slipping to a still sizable 11 percent in 2009 and then bottoming out with 9 percent growth in 2010."
Nutrition Business Journal editors called private label "the darling of this economic downturn" on their website. Sales of private label organic products shot up during the past year as consumers sought bargains in their baskets. A new survey by J.D. Power and Associates suggests that shoppers' views about the quality of these itemsânot just the price tagsâare changing. Rather than being considered low quality with bland packaging, private label brands are being thought of as unique, with quality commensurate with that of traditional brands, according to the report.
It's a dog-eat-aÃ§aÃ world
The natural pet product category has been called recession-proof. "We prefer recession-resistant," says David Lummis, a senior pet-market analyst for Packaged Facts. "It really does appear to be holding up well in the recession." One of the reasons for the growth, Lummis says, is the move toward more premium products and products with preventive health claims. "The products are significantly more expensive, but much higher quality, with ingredients like aÃ§aÃ berries and antioxidants," he says. "But they're not as expensive as a catastrophic health condition." While pet food sales continue to grow, high-quality natural pet treats tend to be more discretionary purchases. People may hold up on the super-expensive treats and trade down. Not so with food. Food safety concerns catalyzed by the pet food scare of 2007 have boosted sales.
The Organic Trade Association was preparing to release its economic report at press time (go to naturalfoodsmerchandiser.com for the latest info), which will reveal how organics have fared during the past six months. Preliminary information suggests that die-hard consumersâthose loyal to organic staples, such as milk and eggsâhave not changed their buying habits. But how do habits change for those who must adjust? Lou Crandall, chief economist at Wrightson ICAP, an independent research firm, says three types of products sell well during tough times. He recently explained these types to the New York Times: The first is "traditional inferior goodsâwhat people have to buy when they can no longer afford their favorites." The second is small indulgences, inexpensive treats meant to substitute for a bigger-ticket item. The third category is morale boosters.
Chocolate may be both morale-boosting and a small indulgence. In the conventional market, chocolate sales are spiking like blood sugar after a bag of M&M's. Cadbury reported a 30 percent rise in profits for 2008. After struggling for much of 2008, Hershey saw profits jump by 8.5 percent in the fourth quarter. Historically, bad economic times have created good, sweet things: Snickers and Tootsie Pops appeared in 1931. Mars and Three Musketeers came along in 1932.
Are things as sweet for natural chocolate manufacturers? "Even with a bad economy, our sales were up 70 percent year over year," says Charles Horne, chief financial officer for Seattle-based Theo Chocolate.
"I don't want to gloss over the challenges in the current environment," he says. "It's hard. It's really, really challenging for everybody, including us. We'd be much further along building our business in a more favorable economic environment. But we're soberly hopeful."
To sell a premium product, like a five-dollar candy bar, it comes down to the item's value proposition, says Horne, explaining a principle that seems to hold true across the naturals marketplace: "Fundamentally, people buy quality and they shop to their values," he says. "Our product is known for being sustainable and responsible, but above all, our product is known to be quite yummy."
And for those nonedible products, the overall greenâand naturalâcategory seems to be holding steady, even if it reveals itself in different shades. One of Primitive Lip Color's top-sellers? Belize. It's red. Even though the company's solidly in the black.