Natural Foods Merchandiser

Natural Product Sales Top $42 Billion

Natural product sales in all channels reached $42.8 billion in 2003, an 8.1 percent increase over 2002. Natural products retailers, along with the mass market, drove growth 9.1 percent compared with direct-channel competitors, who saw 4.5 percent growth in the same period.

The retail segment of the market represented 80 percent of sales The Natural Foods Merchandiser tracked. Natural products retailers saw sales rise to $20.5 billion, a 9.9 percent increase over 2002. Mass market sales rose 7.8 percent, higher than last year but still less than that of their naturals counterparts.

Nearly all the growth in the mass market channel?98 percent?came from natural and organic food sales, which grew 17 percent. Supplement sales in conventional retail channels contracted in 2003, shrinking by nearly $20 million. The nonherbal supplement with the most mass appeal is a combination of glucosamine and chondroitin, which Information Resources Inc. tracks with 7 percent growth to $296 million—and accounting for 51 percent of the nonherbal supplement category.

Growth in the naturals channel appeared more balanced. Food and natural personal care/other sales, which make up 68 percent of sales in the channel, grew 12 percent. Supplements, 32 percent of the total, grew nearly 6 percent.

Nutrition bars continued to outperform average food growth in the naturals channel, leading all nonorganic naturals categories with 25 percent growth to more than $1 billion. Bars? closest competitor in growth, pet products, increased 18 percent; category sales, however, are worth only $251 million. Naturals retailers saw sales of organic nutrition bars grow 48 percent to $48 million, matched only by 48 percent growth in the organic beer and wine category with sales of $54 million. But the organic superstar in the natural channel was not a food: Organic personal care grew 81 percent in 2003, reaching $232 million in sales. Whether this category can retain sales remains to be seen following the National Organic Program?s announcement that it would not regulate personal care. (See ?USDA Directives May Jeopardize Organic Label.?)

In response to the low-carbohydrate feeding frenzy, NFM this year added a new question to the Market Overview. We asked retailers to determine low-carb percentage of store sales. Excluding products such as produce, meat and coffee/tea, low-carb sales in the natural products retail channel totaled $485 million. Large health food stores sold the largest share of low-carb foods at $137 million, or 17 percent of sales.

Natural Foods Merchandiser volume XXV/number 6/p. 1

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