Natural Foods Merchandiser

Natural Products Sales Top $34 B

Retailers may be disappointed to see a second year of single-digit growth when they consider the double-digit growth of the '90s. But 2001's 8.3 percent growth for natural products retailers glows compared with the second-half 2001 performance of the top 10 supermarket chains—an almost flat 0.1 percent as reported in the April 22 Supermarket News.

"Growth in conventional foods lags even inflation," says Jay Jacobowitz, president of Retail Insights, Brattleboro, Vt., who adds that the strong 8.3 percent growth is both an opportunity and a threat. "The value proposition that natural products retailers offer continues to attract new consumers. At the same time, the threat is that conventional operators will not sit on their hands, [but] will attempt to capture a piece of the pie."

Natural and organic products' sales in food/drug/mass merchandisers increased 5.5 percent; growth for all natural and organic product sales in retail and nonretail outlets increased 6.7 percent.

Natural food sales growth in 2001 was 17.3 percent. The fastest growing categories the Natural Foods Merchandiser "Market Overview" survey tracked were nutrition bars at 21 percent; food service at 16 percent, which includes deli, restaurant and juice bars; other beverages at 12 percent, which excludes dairy and nondairy beverages, beer wine, coffee and tea; and snack foods, 10 percent.

Superstars in the organic foods category were food service, 37 percent; nutrition bars, 35 percent; snack foods, 29 percent; nondairy beverages, 26 percent; and packaged grocery, 23 percent.

Supplements sales were led by double-digit growth in sports and specialty categories. Sport supplements, in the "Market Overview" survey include powders, pills and sports beverages; growth was 13.7 percent. Specialty supplements include Ayurvedic products, hormones and essential fatty acids; growth was 12.5 percent.

The natural personal care/other category also saw substantial growth, particularly among organic products. Personal care, which includes aromatherapy, grew 22 percent. Organic personal care, a category subset, grew 42 percent. Housewares grew 22 percent, but organic housewares increased 66 percent. Pet products saw 9 percent growth; organic pet products grew 93 percent. Jacobowitz sees two trends: consumers looking for healthful natural convenience foods and a move by consumers toward the core organic and natural lifestyle.

"People are aspiring to an organic lifestyle. That trend is driving deeper down our socioeconomic scale so not just highly educated, higher-income people are interested in buying these products, but more middle-class and lower-middle-class [consumers] are aspiring to an organic lifestyle represented by these products," Jacobowitz says. "It's hard to overstate the implications of that trend for the growth of our industry."

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

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