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Category-by-category sales growth reflects retail booms and busts in 2020

Getty Images Grocery store shelves

How consumers shop and what they buy has changed dramatically in the first six months of 2020. While many retailers reported a rough start to the year in January and February, the rollercoaster that soon followed with the onset of the COVID-19 pandemic has been even more difficult to navigate.

With so much of the last several months spent in reaction mode—dealing first with supply chain issues and health and safety concerns, then with restocking, reopening (for some) and now the possibility of renewed shutdowns in some regions—it has been challenging for many natural products retailers to take stock, both literally and figuratively, during this ongoing crisis.

The situation has also varied greatly from place to place and store to store. Some natural product retailers reported huge upticks in sales during the early days of COVID-19 panic buying—by as much as 300% and 400% in a few cases—yet others have shared with New Hope Network that, several months later, they’re only doing 30% to 40% of their “normal” business..

Such disparate experiences make it tough to understand what’s going on in the natural products industry—yet this is precisely what retailers need to help plan for the future.

The following charts report data provided by SPINS for its “natural enhanced channel,” a grouping of more than 1,850 full-format stores with more than $2 million in annual sales and 40% or more of coded sales from natural/organic/specialty products. Using average sales growth year-over-year for the six-month period between January and June 2020, they depict what the best and worst categories have been so far this year in terms of sales growth. Though some of the featured categories may not be a surprise, the degree of growth and decline for others is staggering.

Categories holding strong

 

These 12 categories reported the strongest average growth from January to June 2020 compared with the same period in 2019. Just over half of these categories—and particularly those comprising shelf-stable pantry staples such as pasta, beans, grains and rice, meats, fruit and vegetables, as well as first aid products—experienced the greatest growth in March during the initial pandemic panic-buying surge. Notably, other high-growth categories including shelf-stable meat, poultry and seafood, and shelf-stable and frozen fruits and vegetables, came back with a bang after having reported negative growth in January and February, compared with that same period last year.

And while the meteoric more-than 160% growth of shelf-stable beans, grains and rice for the four weeks ending March 22, 2020, had dropped to 26% by June, this still amounted to a massive increase. This is particularly striking when considering that the total sales growth in 2019 among natural products retailers was just 2.3%, according to the Annual Market Overview conducted by Natural Foods Merchandiser and Nutrition Business Journal of chain and independent natural, health and supplement stores (including Whole Foods Market).

The ongoing success of refrigerated plant-based meat alternatives has been a surprise to some prognosticators who forecasted a decline in this somewhat novel category early on in the pandemic in favor of more traditional meat and poultry products. However, coronavirus troubles at meat processing plants have shone a negative light on the conventional meat industry and caused supply chain breakdowns. At the same time, consumers are more aware than ever of the connection between what they eat, their own wellness and the health of the planet—concerns that plant-based meat alternatives address.

Categories in decline

 

Though some categories have performed exceptionally well pre- and during COVID-19, these 12 suffered overwhelmingly sharp declines in sales growth when compared with 2019 performance. In fact, all but two of the categories included in this chart—with the exceptions being wellness bars and gels and pet care and wellness—started the year off with negative growth even before the onset of the pandemic in the United States.

For some categories, particularly personal care items including cosmetics and beauty products, and body care kits, the decline over the course of this six-month period has increased, with particularly marked decline in April, perhaps as a result of any essential purchases being made the month before. And while some staple products such as deodorants and antiperspirants, wellness bars or gels and skin experienced positive growth during the March stockpiling phase, their numbers quickly turned negative again in April.

More surprising perhaps was the decline in shelf-stable baby food, which seems like more of a pantry must-have for anxious parents in a time of uncertainty. Although this category rose to double-digit growth in March, it was down by more than 30% percent in April compared with the year before. Shelf-stable jerky and meat snacks also experienced March growth followed by a rapid decline in April.

What is the Spark Change Product Discovery Zone?

With trade shows and business travel canceled through 2020, it’s more important than ever for the natural products industry to find meaningful ways to stay connected, informed and on the leading edge of product innovation, health and wellness content and consumer trends.

The resulting initiative from New Hope Network is Spark Change.

The Spark Change journey starts with the Product Discovery Zone. Attendees can use the PDZ to easily find products and brands based on category, attribute, trend, event theme, NEXTY awards and more; obtain samples based on relevant categories; and schedule meetings and connect face-to-face via video chats.

Learn more about the PDZ in the video above, click here to register for Spark Change and hit the button to head that way.

Spark Change Product Discovery Zone button

Vive Organic closes $13M series B funding round

Vive Organic Vive Organic

Vive Organic, makers of doctor-crafted, cold-pressed wellness shots, announces today the closing of a $13 million series B funding round led by Monogram Capital with participation by Cambridge SPG and Powerplant Ventures. Vive is one of the leading functional beverage brands in the market today, providing customers with cold-pressed wellness shots that are formulated with a focus on boosting the immune system.

The brand has seen explosive growth since inception in 2015, with an average of 400% growth year over year, and has cemented itself as the leader in this space. This backing from industry veterans further validates the growth opportunity within this category and consumer demand more broadly for immunity-boosting products. Vive will deploy this latest capital raised to expand its digital footprint, foster its innovation pipeline and make its plant-powered products more accessible to consumers nationwide. 

The company works with a team of holistic medicine doctors in its formulation with an emphasis on sourcing some of the purest ginger, turmeric, elderberry and other immunity-enhancing ingredients anywhere in the world. Vive leverages cold-pressed technology to extract juice from the roots, herbs and flowers used in their products to provide the freshest product with maximum health benefits. The company’s beverages are organic, non-GMO, gluten free and vegan. Beginning with a focus on the natural channel, Vive has expanded to meet rising demand from customers in 8,000 doors across natural, conventional, mass and drugstore accounts including key banners such as Whole Foods, Sprouts, Safeway, Wegman’s, Target, and CVS. 

In February 2020, the brand launched on Amazon and built a direct-to-consumer platform from the ground-up, adding subscription services and extending the brand’s reach to include the entire United States. Over the last several months Vive’s e-commerce sales have increased 52 fold, with production increasing fivefold to allow the brand to keep up with climbing demand at retail. When Taubman set out to raise the series B, his primary objective was to ensure that Vive could continue to supply its loyal customers during this seminal time in which wellness is their top priority. Armed with a strong balance sheet and investor support network, Vive is well-positioned to capitalize on its vision.

“We feel so fortunate to have found such exceptional partners in Monogram, Cambridge SPG, Powerplant Ventures and our roster of investors” said Wyatt Taubman, CEO and Co-Founder of Vive Organics. “We have a powerful product that we believe in deeply, which is quickly becoming the go-to for immunity boosting in lieu of other traditional beverages, powders and supplement solutions. We are very proud of what we’ve created and greatly value the expertise our investors will provide in this next stage of our business as we look to further develop our online offerings and find new, unique ways to connect with consumers at retail.”

Monogram Capital seeks opportunities to partner with founders and strong management teams of high growth brands to help them become the next generation of brand leaders in their respective categories. Current and realized investments include Country Archer Provisions, Chewy.com, Koia, Olipop, 4th & Heart, Kidfresh and more. 

 “Vive has tapped into an incredible opportunity to provide consumers with sustainably sourced, functional products that promote and support wellness needs, whether that be targeting uses case for enhanced immunity, restoration, or energy,” said Jared Stein, co-founder and partner of Monogram Capital. “We are thrilled to join together with this pioneering brand at this prescient time where consumers have never been more focused on their health and wellness needs and prioritizing their immunity.  Led by an outstanding team, Vive is at the forefront of providing these wellness solutions in a convenient, ready-to-drink format that consumers love and we look forward to continue supporting the brand through their new innovations to come.”

Source: Vive Organic

GNC extends bidding deadline to satisfy landlords, creditors

GNC files for Chapter 11 bankruptcy to reorganize or sell the business

GNC Holdings Inc. has revised the calendar for accepting bids and, if needed, putting the company up for auction in its Chapter 11 reorganization proceedings.

The company filed for Chapter 11 protection on June 23, with the goal of selling the company or reorganizing it by the fall.

The company has not yet reached an agreement with Harbin Pharmaceutical Group Holding Co. Ltd., an affiliate of GNC's largest shareholder, for Harbin to be the stalking horse bidder. Harbin has offered $760 million to purchase GNC; if the two companies reach a stalking horse agreement, $760 million becomes the minimum amount that any other parties can bid.

"We remain committed to working to finalize the Harbin stalking horse bid, in that it has the possibility to create additional value for the GNC stakeholders. We will continue to work in good faith with Harbin and our constituents on a transaction," Caroline Reckler, an attorney representing GNC, told the court during a hearing Wednesday.  

Landlords, unsecured creditors and other stakeholders objected to the plan, largely because it didn't give other interested parties time to complete due diligence and put together offers for the company.

To resolve those objections, GNC has agreed to extend the bidding deadline at least one week. If a stalking horse agreement is reached by Aug. 3, the bidding deadline will be Sept. 4. If not, the bidding deadline will be Sept. 11. The auction is scheduled for Sept. 8 if GNC has a stalking horse agreement or Sept. 15 if it doesn't.

The group of 78 landlords involved in the agreement represents 646 locations, Reckler said.

Judge Karen Owens agreed to the proposal and on Wednesday signed the order to make it official.

The bidding procedure, which includes the calendar, was the only matter discussed Wednesday, as GNC and its stakeholders resolved 35 other issues before the hearing, and Owens had already signed the corresponding orders.

The termination of leases for 523 GNC retail locations in the United States—see a list, sorted by state and city—was among those orders. The dates of going-out-of-business sales and store closings vary, however.

Even before GNC filed for protection in the bankruptcy court, it had planned to close as many as 1,200 stores. Because of the COVID-19 pandemic, about 1,600 stores were either closed or operating with limited hours at the end of March, the company reported.

At the next hearing on Aug. 19, the court will review GNC's restructuring plan and objections to it.

5@5: Alternative meat and dairy companies reap investment dollars | Small businesses prepare for prolonged crisis

Getty Images fake meat burger alternative

Alternative meat and dairy companies are raking in investment dollars

Although total VC funding is down due to COVID-19, plant-based and alternative meat, egg and dairy startups are receiving an unprecedented amount of capital from investors eager to fund the future of the food supply chain. These companies raised 14% more (over $850 million) in early 2020 than they did the entirety of 2019. As the world moves away from conventional animal agriculture and climate change worsens, it's likely investors will only become more excited about innovation in the plant-based market. Read more at Fast Company

 

Small businesses brace for prolonged crisis, short on cash and customers

Many of America's small business owners have exhausted their Payment Protection Program funds just as surging COVID-19 cases are forcing states to roll back their reopening strategies. Spending at small businesses recovered slower in May and June than the rest of the economy, and some industries may not fully recover until the health crisis is fully over. Read more at The Wall Street Journal

 

What a sustainable circular economy would look like

Some estimates suggest that 99% of the things people buy are thrown out within six months without the material being repurposed. A circular economy would combat this by making better use of resources, closing loops of resource flows by fully recovering materials instead of sending them to landfills and preventing waste and pollution in the first place by designing products and materials to be in use for the long term. Read more at The Conversation

 

Mondelēz International CEO talks about comfort food and supply chains

Dirk Van de Put is betting on consumers' continued interest in comfort food from brands they've grown up with as pandemic-related stress persists. The company is reducing its number of product sizes or flavors by 25% to keep shelves stocked with shopper favorites, like Oreos. Read more at Bloomberg

 

Dicamba fight continues

Bayer, BASF and Corteva Agriscience are contesting the results of a June 3 hearing that effectively vacated the registrations of their dicamba herbicides. The three companies are requesting that a broader group of Ninth Circuit judges re-hear the original case because they believe the decision violates principles of administrative and constitutional law and was a departure from past precedent. Read more at Progressive Farmer

Why natural brands are boycotting Facebook ads

Getty Images Mark Zuckerberg

The Black Lives Matter movement is peeling back layers of systemic racism. From public health to political representation to venture capital investments, there are few facets of society that have escaped racist policies—whether they are conscious or not.

Social media platforms—particularly Facebook and Instagram (which was purchased by Facebook in 2012)—are under criticism by civil rights groups for their failure to mitigate and moderate hateful speech and racist extremist groups.

Your ad buying dollars are being used by the platform to increase its dominance in the industry at the expense of vulnerable and marginalized communities who are often targets of hate groups on Facebook,” reports Stop Hate For Profit, the organization lobbying for Facebook to change its policies.

As the group calls Facebook to commit to minimizing hate groups on their platform, many businesses—including natural brands—are boycotting ads on Facebook to tell the social media platform to do better.

“We believe that Facebook hasn’t done enough to address discrimination and hate speech on their platform. There hasn’t been accountability to advertisers to make sure their ads aren’t placed next to hateful or discriminatory content,” says Jason Harty, CMO of Theo Chocolate. “And because of this we decided to take a stand by joining the boycott and pulling our ads from Facebook and Instagram this month.”

Stop Hate For Profit says advertisements from reputable companies can appear next to racist content. “Advertisements are running alongside divisive, hateful and conspiratorial content—not something that most companies want,” says the organization.

Aligning values

Companies ranging from Adidas to Levi’s to PopSockets have pledged to boycott ads on Facebook with the hope of sending a message to the social media platform using their bottom line as a leveraging point. And many businesses say their decision hinged upon aligning their brand values with their actions.

“Nutpods has been built on inclusion; we are a diverse, minority-owned company,” says Patrick Coyle, vice president of marketing at Nutpods, makers of dairy-free coffee creamers. “When we learned about the effort of much larger brands to ask Facebook to examine its policies, it was an easy decision for us. Our founder, Madeline Haydon, was very supportive of the idea, and even though it could have financial implications for our growing business, our leadership team fully supported the campaign as well.”

Coyle underscores that Nutpods’ advertisements represent a very small portion of Facebook’s overall ad revenue. Business Insider reports that ad boycotts from Walmart, McDonald’s, Geico, Allstate, Kellogg’s, Kohl’s, Dell, Peloton and Ikea cost Facebook a combined $335 million when they paused ads July 2020.

However, the move is a significant way to send a message to the social media giant. “We decided to put our money where our heart is and stop advertising to send a small but hopefully clear message,” says Coyle.

Many natural brands are adopting a “tiny but mighty” attitude when it comes to using boycotts as a tool to spark change.

“We feel that this boycott will bring attention to the meaningful reforms that Facebook needs to address,” says Harty. “We genuinely hope that the combined voices of all the brands that joined this boycott show Facebook the importance of these changes.”

Those changes range from encouraging Facebook to hire a C-suite level executive with civil rights expertise to establishing an internal mechanism to automatically flag hateful content in private groups for human review—changes that, according to Stop Hate For Profit, don’t seem to be on the horizon anytime soon. The group—along with members of other prominent civil rights leaders—recently met with Facebook CEO Mark Zuckerberg and were disappointed.

“It was abundantly clear in our meeting today that Mark Zuckerberg and the Facebook team is not yet ready to address the vitriolic hate on their platform,” said the group.

Boycotting Facebook ads, say natural brands, may be the best way to acknowledge and change the world for the better. “We want to acknowledge that there is deep systemic racism in America today,” says Harty. “Staying silent on the sidelines wasn’t an option for us.”

EatWell gives Schnuck Markets ‘a great learning platform’

The 42,000-square-foot EatWell store, opened June 24 in Columbia, Missouri, in a former Lucky’s Market location, offers a mix of better-for-you and locally sourced products along with an array of prepared foods and beverages that customers can take home or enjoy on-site as they shop.

Among the EatWell store’s highlights are grass-fed beef, sustainable seafood cooked in-store, deli meat that’s fresh-roasted in the store, and fresh-squeezed juices and infused waters. Also, customers shopping at the store can drink a local draft beer, root beer, kombucha, glass of wine, specialty coffee or other beverage whipped up by the on-site barista, as well as get lunch or dinner at the sushi and ramen bar and counters for fresh-made pizza and made-to-order sandwiches.

Departments and services in EatWell include bakery, bulk foods, a cheese shop, dairy, deli, floral, frozen foods, grocery, liquor, meat and seafood, natural living and, of course, fresh produce.

“It is not the first time that we’ve launched a specialty store concept. Over our history, we have experimented and tried different formats. I would point to our Culinaria store in downtown St. Louis, which has more of a foodservice orientation, and you can do your full [grocery] shop,” Schnuck Markets Chairman and CEO Todd Schnuck said in an interview. “Going back over the years, we did some warehouse stores. And back in the mid-1970s, when we went from a traditional supermarket to a combination food and drug store. So experimenting and trying new things is really in our DNA.”

Though EatWell focuses primarily on natural and organic products, Schnuck noted that the store also carries a selection of traditional groceries to help provide a more convenient shopping experience.

“One thing that we did was add some traditional product, because it was our understanding after talking to the teammates in the store that customers would come in and be looking for something like Cheerios or Campbell’s mushroom soup that they could use in a green bean casserole, or something like that,” he explained. “But we were very judicious in choosing products. I actually reviewed every shelf set myself to make sure that we were being true to the natural food store concept.”

supermarket news logoThis piece originally appeared on Supermarket News, a New Hope Network sister website. Visit the site for more grocery trends and insights.

5@5: Retailers struggle to enforce mask requirements | More COVID-19 aid for the food industry

Getty Images face mask shopper

With wave of mask requirements, Walmart and other retailers face challenge: How to enforce the rules

Several of the biggest retail chains in the U.S. are now requiring shoppers wear masks or face coverings in their stores. Getting them to comply, however, has been a tricky feat thus far and stores have had varying levels of success. This is because at least one retailer, CVS, is relying on customers to obey the new requirement, while others like Walmart will have a designated employee whose job it is to ensure mask-less shoppers don't enter the premises. Read more at CNBC

 

Congress is negotiating the next round of COVID-19 aid. Here’s what that means for the food industry

The Senate is currently negotiating a fourth round of COVID-19 relief, likely the last round of aid before November. Topics of interest to the food industry include the expansion of SNAP benefits (which 6 million Americans have signed up for since the pandemic began) and an extension of the Payment Protection Program. The latter drew much criticism for supporting large food companies and big-box grocers at the expense of small businesses. Read more at The Counter

 

Why RTD cocktail sales are soaring

Ready-to-drink cocktails are primed for success in a world where having a drink out at a bar or restaurant is not an option for most people. They're also easier and more accessible than at-home bartending is, with less of a financial and time investment. One expert argues that even consumers who prefer other alcoholic beverages are being driven to the cocktail space because they make everything seem more civilized amid all the chaos. Read more at VinePair

 

Dumpling launches to make anyone become their own Instacart

The economic and physical risks of working for gig economy companies like DoorDash and Instacart have only become more apparent in the past few months. A new startup in the food delivery space called Dumpling, however, is seeking to remedy this by giving more ownership to its workers. Shoppers using the Dumpling platform can acquire customers through marketing and self-promotion when dropping off orders for other delivery apps, and allows them to set their own tip options. The company's total disclosed venture funding to date is $10 million. Read more at TechCrunch

 

Cambridge Crops rebrands as Mori; secures $12M series A for food waste technology

Cambridge Crops, now Mori, has raised a $12 million series A to advance its protective barrier technology for food to extend shelf life and, by extension, reduce food waste. The U.S. wastes roughly 40% of the food it produces, and other startups such as Apeel Sciences and Imperfect Foods are also targeting this problem. Read more at Crunchbase

Hain Celestial sells Danival brand to European organic food company

Hain Celestial Group Inc.

The Hain Celestial Group Inc., a leading global organic and natural products company, today announced that it has completed the divestiture of Danival to a subsidiary of Wessanen N.V.

Danival is a line of soups, sauces and side dishes based on traditional foods of southwest France, according to the company's European website.

Details of the transaction were not disclosed. Wessanen N.V., based in Amsterdam, Netherlands, recently was certified as a B Corp, the first multinational food business in Europe to be so cited.

Mark L. Schiller, Hain Celestial's president and chief executive officer, said, "We are pleased to complete the strategic sale of Danival in Europe to Wessanen, a leader in healthy and sustainable food in the European market. This transaction helps to further our brand portfolio simplification journey as we continue to improve our margins and cash flow to fuel long term sustainable growth and profitability."

As part of a strategic plan implemented in 2018, Hain Celestial began divesting its less-profitable brands and SKUs.

During the third quarter, Hain Celestial sold three brands—Casbah, Europe's Best and Rudi's Organic Bakery—that had generated $30 million in sales but EBITDA of only $1 million. It also started shutting down three unprofitable brands, DeBole's, Little Bear and Gluten Free Bakery.

The company reported top-line growth in North America for the third quarter, which ended March 31—the first time in 10 quarters. Performance had improved even before the coronavirus pandemic triggered a surge of  what's been called pantry-loading buying, Schiller said in May.

The company's fiscal year ended in June, but it has not yet announced when it will release its 2020 earnings.

Source: Hain Celestial