Technology, J.E.D.I. are key to natural products' growth, data showTechnology, J.E.D.I. are key to natural products' growth, data show
Expo West State of Natural and Organic recap: Natural products sales growth continues to be higher than pre-pandemic levels, and it's expected to continue.
March 9, 2022
Hopeful. Connected. Opportunity. Inspired. Urgent.
Industry rockstars chose those words to describe how they felt heading into the first in-person Natural Products Expo West in three years.
With a standing-room-only crowd present for the State of Natural and Organic Keynote session, New Hope Network SVP Carlotta Mast shared sales statistics and other data showing the state of the industry is, in a word, strong. And getting stronger.
"The growth rate is just massive," said Mast, wearing ruby red boots—perhaps a nod to Dorothy's (finally) coming home to Anaheim?
But growth doesn't mean the industry can stagnate.
Mast called for the industry to "harness the technology and J.E.D.I to build a prosperous, high-integrity industry that creates health, joy and justice for all people while regenerating the planet."
But first, the billions
"As we all know, growth for the industry in 2020 was off the charts. It did come down to more reasonable levels in 2021," Mast said. U.S. natural and organic products industry sales grew an estimated 7.7% to $274 billion in 2021, with sales on track to surpass $300 billion by 2024 and $400 billion by 2030, according to Nutrition Business Journal and SPINS. While growth slowed in 2021, it was higher than the industry saw before the COVID-19 pandemic began.
The COVID boost will continue to fuel growth over the next four to five years because "consumers have changed," Mast said. "They're paying more attention to health and wellness. They're investigating new brands. They're cooking more at home. All of these create long-term opportunity for this industry."
Technology will continue to shape the industry
Technology has changed the way people buy natural products. Ecommerce sales of natural products grew 50% to $23.5 billion.
Using technology, consumers are continually engaging with brands, not just at the shelf, said Kathryn Peters, EVP of business development for the marketing data company SPINS. "Retailers need to figure out this engagement and convert it into loyalty," she said. Sixty-six percent of consumers are choosing products based on personal health needs.
"It's important that through technology, we leverage ways to meet consumers where their needs are," said Peters, who emphasized that today's—and tomorrow's—sales landscape is not one channel or the other. "Consumers are looking for one, seamless, personalized experience.
"How do we leverage these things to move forward in the most powerful way to move our consumers, and the nation, forward in pursuit of wellness?"
Of the 2,750 exhibitors at Natural Products Expo West, 625 are first-time exhibitors. What's fueling the innovation? Plants.
"Plants are the top product trend. It's all about ways to incorporate nutrient-dense plants into the diet." Mast said.
"Plant-based is expanding its roots," Peters said. "It keeps propagating and propagating." New ingredients combinations and new technology are enabling the use of plants in different ways that will continue to influence the industry. "And, a mindblowing fact: There are only about 170 edible plants in mass use today. There are more than 30,000 plants identified as edible," she added.
J.E.D.I. grows sales
"Primary investors are increasingly demanding ESG (environmental, social and governance) validation," said Nick McCoy, managing director of Whipstitch Capital. "Mission-driven companies will benefit from the increased demand and the impact will accelerate.
"CPG companies that embrace diversity have greater growth," he said, backing up the statement with statistics. Research from KeHE shows a growth opportunity of up to 17% when the consumer base is aligned with the U.S. population. Companies that embrace diversity see year-over-year growth of 4.0%, while companies that don't experience growth of only 0.6%, according to Nielsen and SPINS.
In addition, consumers seek out brands that are owned by women, people of color, LGBT and veterans—and it shows in the sales growth of these inclusive businesses.
"There is an economic business case for why we have to invest in J.E.D.I. and really do the work with our own companies and within the industry to make sure we are creating an industry with opportunity for everyone," said Mast, who urged attendees to take the New Hope J.E.D.I. benchmark survey to help define and plan change.
"It's all about shoppers voting with their dollars and seeing that brands that represent more inclusiveness really are winning in the marketplace," Peters added.
To watch this and other Natural Products Expo West sessions, visit Natural Products Expo Virtual. Access to NPEV is included with Expo West in-person registration.
New Hope Network has planned a year of activities on our community platform, Natural Products Expo Virtual. Discover thousands of amazing companies, more pre-show programming and livestreamed sessions including Climate Day, Pitch Slam and the State of the Natural & Organic Industry keynote.
The slide deck is on the Expo West agenda page.
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