From The Winter 2005 Issue of Natural Grocery Buyer

Resolution: Give the People What They Want

Fiber tops list of what’s set to sell

Laurie Budgar

Trying to keep up with food trends can feel as futile as shoveling the driveway in the middle of a blizzard. But when there’s compelling evidence—or a break in the storm—it’s a little easier to follow the winds of change. And for the foreseeable future, the No. 1 trend is going to be foods high in fiber, and often that means whole grains.

“Fiber is really hot,” says Stacey Zawel, president of Zawel Health Collaborative in Hingham, Mass., and executive director of the Beans for Health Alliance. Indeed, Productscan Online reported in September that the percentage of new-product introductions making high-fiber claims has nearly doubled in 2004, from 2.5 percent to 4.2 percent.

Natural and organic food producers, such as Rudi’s Organic Bakery and Nature’s Path, market numerous whole-grain, high-fiber products. But even mainstream mainstays like General Mills, Sara Lee and Nestlé have launched high-fiber products in recent months. GM announced it would be reformulating all its breakfast cereals with whole grains. Nestlé’s Lean Cuisine brand is launching a line called Spa Cuisine, which contains lean meat, vegetables and whole grains; and Sara Lee has rolled out new high-fiber varieties of Earth Grains bread.

One reason for the rising interest in whole grains and high fiber is the decline of the low-carb diet fad but continued interest in weight control. “Y’know, fiber’s the whole story there,” Zawel says. People “are moving away from simple carbohydrates and toward complex carbs, which means fiber.” Adding punch is the U.S. Department of Agriculture’s August report on dietary guidelines, which emphasizes the ability of whole grains to reduce the risk of heart disease and type 2 diabetes, and help with weight control. The authors recommend that the new dietary guidelines, expected to be released early this year, urge consumers to eat at least three 1-ounce servings daily of whole-grain foods, “preferably in place of refined grains.”

Meats, fish and poultry
In 2003, natural and organic meat sales increased 77.8 percent, according to Grant Ferrier, editor-in-chief of Nutrition Business Journal. Much of the growth stemmed from consumers’ fears of mad cow disease. While this category’s penetration into the overall market for meat is tiny at just 0.07 percent, its growth potential is huge. In its spring 2004 Trend Mapping Report prepared jointly with the Center for Culinary Development, Packaged Facts identified grass-fed beef as a growing trend, noting that it has higher levels of omega-3 fatty acids and half as much saturated fat as conventional beef.

Some well-known brands of natural beef include Niman Ranch, Coleman, Maverick Ranch and Laura’s. Applegate Farms features a full line of organic and natural deli meats, while Petaluma Poultry has—well, poultry. Organic Valley, best known for its dairy products, has recently launched a line of organic meats as has Albert’s Organics, which produce managers know for its fruits and vegetables.

Allergen-free foods
In 2003, sales of allergen-free foods rose 17.2 percent, totaling more than $1.8 billion, according to Packaged Facts. And that’s no fluke. With reports of celiac disease (gluten intolerance) as high as 1 in 133 Americans, and sensitivity to common ingredients such as nuts as high as 1 in 25, manufacturers—and consumers—are finding this category a valuable niche and are trotting out everything from peanut-free chocolate bars to wheat-free, gluten-free pastas and breads. Nearly three-fifths of these purchases are made in the mass market.

The biggest sellers are dairy and dairy-alternative products, constituting 70 percent of the allergen-free category. And most of these items are available in natural and organic formulations. Organic Valley now makes lactose-free milk, going head-to-head with the country’s leading nonorganic product in the category, Lactaid. Amy’s Kitchen makes gluten-free Italian, Mexican and Indian frozen entrees—a good thing, since gluten-free pasta, flour and baked goods are the second-most sought-after products in the allergen-free market.

Look for this trend to continue its steady growth. It could reach $3.9 billion in another three years, says Packaged Facts.

Tea
While gourmet coffees have been in vogue for some time, teas are now coming into their own. Tea houses are popping up all over the country, and consumers bought $5.5 billion worth of the brew at retail last year, according to Packaged Facts. “Making tea—sitting down, letting it steep—it insinuates taking a break, taking a breather,” says Laura Bloom, a member of the steering committee for Slow Food Boulder (Colo.). “In our hectic world, people are seeking out [relaxation] more and more.”

But there’s more to the story. Every day, it seems, research is trumpeting the benefits of tea. Green tea and rooibos (red tea) have high levels of antioxidants, which offer promising protection from cancer and possibly Alzheimer’s disease. Herbal tea offers consumers fruity flavors without caffeine, while basic black is proving healthy for the heart. And consumers are discovering the subtleties of various flavors, like Celestial Seasonings’ Marrakesh Express Vanilla Spice or Numi’s Chamomile Lemon Myrtle Teasan.

Organic wine
If there’s one thing to know about organic wine, it’s this: It tastes good.

That’s a big change from years past, when a glass of pesticide-free grape tasted more like paint thinner than pinot noir. “Now you have [organic] wines that are winning medals,” says Barney Feinblum, president and CEO of Boulder, Colo.-based Organic Vintners.

And as consumers seek out more and more organic versions of everyday foods and beverages, wine is likely to have an eager following. In natural products stores, organic wine and beer sales grew 48 percent over 2002, according to The Natural Foods Merchandiser’s 2003 Market Overview. “Organic [practices] are especially important to wine because the grapes are macerated,” Feinblum says, which unfortunately results in efficient distribution throughout the fruit of any pesticides.

Price has been the other major obstacle to selling organic wines in the past. “Its viability in the market would be limited as a novelty until and unless the price comes down,” says Kim Long of The American Forecaster Almanac. Even Feinblum agrees with that, which is why Organic Vintners offers many mid-range wines, such as a $9.99 Torrontes (a white grape) from Argentina or an $11.99 French Merlot. Says Feinblum: “People are probably willing to try it at that price, but they’re not going to buy a $30 bottle of wine if they think it’s going to taste bad. Once they try it, they’re pleasantly surprised.” When that happens, higher end wines, like the $35.95 Jacques Blanc Merlot, are also available.

Functional foods A Reuters Business Insight report identified functional foods as one of the biggest market opportunities in the next five years. Foods that lower cholesterol, are “diabetes-friendly,” improve energy or gut health, or slow down the aging process are poised for explosive growth. “Functional foods; prepacked, preprepared fruit snacks; and probiotics will be the most successful healthy food products to 2009,” according to Datamonitor’s Expert View. “The desire to self-medicate” is the reason for the category’s popularity, the report says. Datamonitor further predicts that the category should be worth about $39 billion by 2008, up 38 percent over 2003’s $28 billion.

While it’s not uncommon now to see fortified orange juice and yogurt, don’t be surprised if the next year brings cholesterol-lowering beer and fruit juices, or chocolates packed with antioxidants for skin care.

Chocolate
Consumers who see chocolate more as an indulgence than a remedy can rest assured that gourmet treats abound, and many of them happen to be organic. They range from the familiar Newman’s Own Organics and the fun Endangered Species line to high-end Green & Black’s, and the market is expanding all the time. “There’s been a real kind of turnaround in getting Americans used to organic chocolate,” says Chris Samuel, vice president of marketing for Green & Black’s. “Cocoa is one of the most heavily sprayed crops that there is.” In addition, Samuel notes, manufacturers have “done a lot in trying to stimulate interest among consumers.”

The category was worth more than $28 million in the naturals marketplace in 2004, a 57 percent increase over the previous year, according to market research firm SPINS. Most of the bars retail from about $1.25 to $3.25, making an impulse luxury buy accessible for most consumers. It just could be a sweet new year for on-trend naturals products.