From The Spring 2004 Issue of Natural Grocery Buyer

What’s New in Natural and Organic?

Hot sellers range from exotic items such as rooibos tea and pomegranate juice to everyday staples like cereal and eggs

Mitchell Clute

It can be difficult for a buyer to predict which natural categories will become the next big thing, but the wealth of research now available makes choosing the right product mix more scientific than ever before. Category sales are affected by a variety of influences, including diet trends, changing demographics and even stories in the headlines. The products and categories below seem all but guaranteed to continue their current patterns of strong growth.

More protein, please
The most obvious effect of the low-carb craze has been increased sales of low-carb bars, snacks and other products that are traditionally higher in carbohydrates. But the trend has also created rapid sales increases in high-protein categories, as shoppers shift their diets toward protein-rich foods. “The explosive growth in egg sales is driven by low-carb diets,” says Bob Burke, principal for Natural Products Consulting Institute in Andover, Mass. “There’s been a huge growth in organic eggs, and the benefit of high omega-3 eggs is giving people permission to include eggs in their diets again.” Nut butters have also shown explosive growth in the last year. “I think the increase in nut butter sales is partly because of the low-carb trend, but also because of increased media attention around the heart-healthy benefits of nut oils,” Burke says.

John Maggiore, president of Maggiore’s Sales and Marketing in Saugus, Mass., has also noticed this trend. “Eggs, nut butters—anything that’s high in protein and low in carbs is doing very well,” he says.

Juice it up
The juice category has also shown gains in the past year, and Maggiore thinks this trend will continue. “It’s not the juice cocktails that are taking off, but the 100 percent pure juices like cranberry, blueberry and pomegranate,” he says. “Shoppers are looking for almost medicinal benefits from juices.” Media coverage of the antioxidant benefits of blueberry and pomegranate juices, and of cranberry juice’s ability to prevent urinary tract infections, has had a positive impact on sales.

This popularity carries over to the frozen aisle, where organic frozen fruits are flourishing. “People are reading more in the mainstream press about the health benefits of fruits,” Burke says. “Because of the popularity of smoothies, they’re buying a lot more frozen fruits to get their five-a-day.”

Kids are us
With younger, naturals-friendly consumers having families, the demand for healthy kids’ products has soared. “As the people who have been buying natural and organic for years become parents, they want to give healthy food to their kids,” Maggiore says.

One example is the growth in Earth’s Best organic baby food, which now sells more than half its product though mainstream channels. “There’s an awareness that any level of pesticide is too much for an infant,” says Burke. “Parents aren’t going to quibble at spending a little extra for organic baby food.”

These days, successful kids’ products are popping up in nearly every category. “Yo Baby, Stonyfield’s organic whole-milk yogurt for babies, has been a blockbuster,” says Burke.

“Ian’s has a line of frozen kids’ meals that are doing very well,” Maggiore says. He also mentions the mainstream success of Annie’s macaroni products, and the rollout of a new organic macaroni and cheese line from Back To Nature.

Jeffrey Nibler, senior vice president of business development for SPINS, a San Francisco-based provider of scan data services for the natural products industry, believes these products are successful for demographic reasons. “The entrance to the natural and organic products set is through new families concerned with feeding their kids in a healthy way,” he says.

Coffee, tea or chai?
As the tastes of mainstream shoppers have matured, formerly specialty or gourmet items such as whole-bean coffees and imported teas have become staple foods. With changing tastes in coffee and continuing press coverage about the health benefits of certain teas, this trend should continue for the long haul.

“Supermarkets are carrying a greater variety of healthy teas, including green teas, white teas and red teas like rooibos,” Burke says. “A lot of these products weren’t found in the mainstream even three years ago.”

Part of the increase in premium coffee sales, Burke says, is simply because of increased consumer exposure to higher-quality coffees, driven by the explosion of Starbucks and other high-end coffee shops. But there are other reasons as well. “As both shoppers and buyers get more educated, there’s an increasing interest in fair trade and organically grown coffees, like the Equal Exchange brand,” Burke says. “Supermarkets are looking to reduce the erosion of coffee sales to competitors like Trader Joe’s and Whole Foods, so they need to stock a few offerings that keep consumers from going elsewhere.”

Finally, there’s chai—a category that didn’t even exist in supermarkets a few years ago. “Oregon Chai, the leader in the chai category, has shown tremendous growth,” Burke says. “Chai is a value-added product compared to tea, with higher volume and a greater profit margin for stores.”

Great grains
Cereal is a mixed bag, so to speak. According to Nibler, much of the sales increase in natural cereals in the conventional channel is due to increased market penetration. Inevitably, the low-carb craze has had an impact on cereal sales. That said, there are a number of particular products that have shown strong growth in this category.

“Kashi has been a huge success in the mainstream because of its weight-management positioning,” says Burke. “When Kellog’s purchased the brand, it just exploded.” Maggiore says that Cascadian Farm cereals have also performed well since their introduction two years ago.

Natural and organic meats
The meat category is rapidly expanding its market penetration, and winning over shoppers with a combination of improved taste and perceived health benefits. It includes prepared deli-style meats, such as category leader Applegate Farms’ sliced turkey, and natural steaks and ground beef, such as Coleman’s.

Burke sees three reasons why natural (free from antibiotics and growth hormones) and organic meat sales have increased in the past year. “First is the connection to the low-carb phenomenon, which often equals high protein,” he says. “Second is concern about food safety; there has been tremendous media coverage not just about mad cow disease, but about things like hormones and antibiotics in the food supply.”

A third reason Burke gives is the recent grocery workers’ strike in California, which pushed many shoppers into the natural store channel. He believes that a certain percentage of these customers, when they return to conventional stores, will request natural meats.

“You’ll continue to find more natural meats because as more consumers get into it, there will be more commitment from the retailers to represent this category,” says Maggiore.

Healthy snack food
It seems like an oxymoron, but snack food has gotten healthier. Big sellers include products by both traditional natural products companies and mainstream manufacturers.

“The [natural] snack category will take off now, with Frito-Lay getting into it,” say Maggiore. “They’ll spend a lot of money to publicize it, and the whole category will grow because of it.”

Maggiore also notes increased sales for Robert’s American Gourmet, which offers versions of traditional snacks with healthier ingredients and no trans fats. One of its products, Tings, Maggiore says, is “like a Cheeto but with white cheddar, so it doesn’t turn your fingers orange,” he says.

Another line showing strong growth is Snyder’s of Hanover, maker of traditional pretzels as well as new products such as Soy-Teins and Veggie Crisps. “They made the commitment to get into organics and take the trans fats out before all the media hoopla,” Burke says. “Their products are taking off in the natural snacks area.”

Personal care
As natural personal care lines gradually work their way into the mainstream, expect consumers to ask lots of questions about ingredients, says Lynea Schultz-Ela of A Natural Resource, a consulting firm based in Austin, Texas. “Every store should have a go-to person within the department who becomes well-educated on these products and can pass this information on to the consumer,” she says. (See “Knowledgeable Staff Boosts Natural Sales.”)

One of the key growth areas is in anti-aging products from companies such as Avalon Organics. This growth is fueled largely by the books The Perricone Prescription (HarperResource, 2002) and The Wrinkle Cure (Warner Books, 2001), both by Nicholas Perricone. More and more shoppers will begin asking specifically for products containing key ingredients such as vitamin C ester, alpha lipoic acid, retinol and alpha-hydroxy acids, she says.

“These facial care products are the serious products,” says Schultz-Ela. “[On] the other side of the growth equation are the fun and funky products for hair and body care. Kiss My Face is a good example; the packaging speaks to the consumer, you can tell what it’s for, and it fits with other categories in the mainstream.”

Mixing it up
As stores continue to wrestle with issues of product placement, it’s worth noting that many of the best-selling natural products tend to be integrated into the product mix. “The most successful natural and organic brands driving high growth through conventional channels are doing so through in-line placement,” says Nibler of SPINS, citing categories such as organic dairy, baby foods, frozen convenience foods and cereals. With the right products and the right placement, supermarkets should continue to see strong growth in many natural foods categories in the coming year.

Mitchell Clute is a free-lance writer, poet and musician living in Crestone, Colo.