• The Products
• The Meaning of "Health" and "Natural"
• Attributes of Natural Foods
• Organic Distinguishes Many Products
• Products Parallel Mass Market
• The Six Product Categories

The Market

• Retail Sales Approach $77 Billion in 1997
• Sales to Reach $16 Billion by 2002
• Table 1-1: US Retail Sales of Health and Natural Foods, 1993-2002 (dollars)
• Packaged Foods Command Greatest Share
• Growth from Organic
• Trend Linking Behavior and Health
• Aging Population Will Drive Natural Food Sales
• Cross-Generational Appeal
• Vegetarianism Taking Early Root
• Natural Foods Going Mainstream
• Consumer Concerns Spur the Market
• Federal Legislation Is Legitimizing Organic Industry

The Marketers

• A Changing Playing Field
• Packaged Groceries
• Refrigerated Foods
• National Branded Produce
• Amy's Leads in Frozen Foods
• Growth Through Partnering
• Growth Through Acquisition
• Growth Through Public Offerings
• Investment Houses Eye Organic Industry
• Little Price Competitiveness
• Competition Played Out in New Product Releases
• Move to Organic Reflected in Company Names
• Gourmet Trend at a Gallop
• Elbowing In on Mass Market
• Natural and Organic Product Introductions by Segment
• Mainstream Expenditures by Major Marketers

Distribution and Retail

• Four Types of Distribution Systems
• Consolidation Creates Two Major Distributors
• Margins for the Two Channels Differ
• Health and Natural Food Stores Are Leading Sector
• Profit Margins
• Natural Food Supermarkets Claim 56% of Sector Sales
• Figure 1-1: Share of Food Sales Through US Health and Natural Food Stores by Retail Outlet Type, 1997 (percent): 4 Types of Outlets
• Mass-Market Stores Increasingly Carry Natural Products
• Supermarkets a Growing Outlet

The Consumer

• Nutrition Important in Food Choices
• Beyond the Counter-Culture
• Consumers Seek High-Quality Natural Foods
• The Health and Natural Food Store Shoppers
• Growing Interest in Organic Foods
• Strict and Sometimes Vegetarians

Scope and Methodology

• Scope of Report
• Report Methodology

• Scope of Report
• Products and Retail Channels
• Products Not Covered

Product Definition

• The Philosophy of Natural Foods
• Variant Views: The Meaning of "Health" and "Natural"
• Attributes of Natural Foods
• Organic Distinguishes Many Products

History of the Industry

• More Than 160 Years Old
• The First Health Food Stores
• Vitamins Discovered and Food Processing Becomes an Industry
• World War II Spurs the Industry
• Organic Gardening and Prevention Magazines Promote Products
• Walnut Acres Organic Farm Founded in 1940s
• The First Modern Natural Food Stores
• Nutritionists Criticize Processed Foods
• 1960s Counter-Culture Popularizes Health Foods
• Stores Emerge as Expression of 1960s Counter-Culture
• Natural and Organic Food Companies Emerge
• Consumer Activism Grows
• Whole Food Supermarkets Up the Pace
• Vegetarianism Becomes Trendy
• America Discovers Fitness and Nutrition
• Alar Scare of 1989 Opens Up Organic Market
• Studies on Nutrition Educate the Population And Change Eating Habits
• Enter "Designer Foods"

Product Breakouts

• Products Parallel Mass Market
• The Six Product Categories
• Packaged Groceries
• Bulk Foods
• Refrigerated Foods
• Produce
• Frozen Foods
• Other/Miscellaneous

Government and Industry Regulators

• Three Regulatory Agencies
• The FDA and the NLEA
• The USDA
• The FTC
• Allowable Health Claims
• Health Food Industry Supports Labeling Changes
• FDA and USDA Restrict "Healthy" Labeling
• "Natural" Foods
• The Proposed Organic Rule
• Problems with the Rule
• The Organic Industry Mobilizes
• A Rewrite in the Works
• For Meantime, Organic Remains Self-Regulated
• Packaging Issues Important to Consumers

Trade Associations

• NNFA
• Organic Trade Association
• Soyfoods Association of America

• Figure 3-1: US Retail Sales of Health and Natural Foods, 1993-1997 (dollars)

Market Size and Growth

• Estimates of Market Size Vary by Source
• Retail Sales Approach $77 Billion in 1997
• 13%—18% Growth Since 1993
• Table 3-1: US Retail Sales of Health and Natural Foods, 1993-1997 (dollars)

Market Composition

• Packaged Foods Command Greatest Share
• Table 3-2: Share of US Food Sales by Product Category: Health and
• Natural Food Market vs Overall Food Market, 1997 (percent): 5
• Product Categories
• Growth from Organic
• Health and Natural Food Stores Claim 54% of Sales
• Natural Food Supermarkets Claim 30% of Sales
• Supermarkets Now the Leading Outlet
• Table 3-3: Share of US Health and Natural Food Sales by Retail Outlet Type, 1997 (percent): 6 Retail Outlet Types, Other
• 23%-25% of Health and Natural Food Stores in Pacific Region
• Table 3-4: Share of US Health and Natural Food Stores by Region, 1996 (percent): 7 Regions
• Outlets Go East
• Natural Food Shoppers by Region
• Table 3-5: Share of Health Food Store Shoppers by Region, 1997 (percent and index): West, Northeast, South, Midwest

Factors to Market Growth

• Trend Linking Behavior and Health
• Aging Population Will Drive Natural Food Sales
• Table 3-6: Percent Distribution of US Population by Age Bracket, 1995-2005 (percent): From Age Under 5 to Age 65 and Over
• Parents of Baby Boomers Go Natural
• Along with Their Children
• Vegetarianism Taking Early Root
• NLEA Empowers Marketers and Consumers
• Natural Foods Going Mainstream
• Natural Supermarkets Encourage Maturity Among Marketers
• Mass-Market Distribution Broadens
• Room for Growth
• Concerns About Pesticides
• Free-Range Animals vs Food-Related Diseases
• Natural Meats vs Mad Cow Disease
• CPSI vs Olestra
• The Food Irradiation Question
• Environmental Concerns
• And Organic Agriculture
• Organic Food Ingredients Add Cachet
• Federal Legislation Is Legitimizing Organic Industry
• And Attracting Dollars
• Major Food Companies Entering Arena
• Organic Foods vs Biotechnology
• Organic Milk Products vs BGH
• Organic Meat Category Awaits USDA Approval
• Chefs Set the Stage for Organic
• Premium Prices for Organic Limit Growth
• But Prices Are Already Dropping
• The Threat of Organic Fraud
• Limited Funding for Organic Research
• Figure 3-2: Projected US Retail Sales of Health and Natural Foods, 1997-2002 (dollars)

Projected Market Growth

• Sales to Reach $16 Billion by 2002
• Table 3-7: Projected US Retail Sales of Health and Natural Foods, 1997-2002 (dollars)

• The Marketers
• About 1,500 Companies in the Field
• Large and Small, Most Privately Held
• Broad-Line Marketers
• Growers and Producers
• From Chiquita to Roman Meal: The Mass Marketers
• Leaders in Packaged Groceries
• Smucker Dominates Natural Juice Segment
• Blue Sky Leads in Carbonated Beverages
• Leading Tomato Product Marketers
• Several Cereal Marketers
• Top Tea Makers
• Coffee Achievers
• Bulk Suppliers
• Marketer Rankings in Refrigerated Foods
• Tofu Products
• Dairy
• Made In Nature and Pavich Lead in Produce
• Amy's Kitchen Hottest in Frozen Foods
• Leaders in Frozen Meat Alternatives
• Table 4-1: The US Market for Health and Natural Foods: Selected
• Marketers by Brand Line and Product

The Competitive Situation

• Industry Becoming More Sophisticated
• Growth Through Partnering
• Growth Through Acquisition
• Growth Through Public Offerings
• Investment Houses Eye Organic Industry
• Shamrock Holdings, Inc
• Natural Nutrition Group, Inc
• Mass Marketers Enter Organics
• Natural Food Marketers Targeting Supermarkets
• The New Organics Co, Inc
• Premium Prices Can Be a Plus
• Little Price Competitiveness
• Growth of Private Label
• Competition Played Out in New Product Releases
• Many New Products Are Organic
• Old Categories Going Organic
• Sweetening the Pot
• Angling for Baby Dollars
• Fresh Juices a Growing Market
• Fortified Vegetable Juices
• Organic Dairies Cross the Country
• Large Regional Dairies Entering Organic
• Smaller Natural Dairy Product Companies Go Organic
• Limited Availability of Organic Milk
• Organic Eggs
• Organic Meat—The Next Boom Market?

Competitive Profile: Amy's Kitchen, Inc

• Company Overview
• Family Values and Convenience Foods
• Expansion of Product Line
• National Operations
• Future Prospects

Competitive Profile: Coulee Region Organic Produce Pool (CROPP)

• Company Overview
• Shift to Organic
• Cooperative Philosophy
• Diverse and International Distribution
• Move Into Meat

Competitive Profile: Gardenburger, Inc

• Company Overview
• Gardenburger's Roots
• Current Distribution
• Research and Development
• Market Share and Consumer Demographics

Competitive Profile: Hain Food Group, Inc

• Company Overview
• Labels and Alliances
• Brands not Buildings
• Rice Cakes and Acquisitions
• Product Cross-Promotions

Competitive Profile: HJ Heinz Co/Earth's Best, Inc

• Company Overview
• Market Shares and International Markets
• The Earth's Best Past
• Building Up Earth's Best

Competitive Profile: Horizon Organic Dairy, Inc

• Company Overview
• A Dairy Upstart
• Current Operations
• At Home and (Possibly) Abroad

Competitive Profile: Made In Nature

• Company Overview
• On and Off the Dole
• Shifts to Packaged Fruits and Beverages

Competitive Profile: Newman's Own Organics

• Company Overview
• Origins and Operations
• From Pretzels to Private-Label Competition

Competitive Profile: Organic Food Products, Inc

• Company Overview
• Products and Pricing
• 25 Years in Organics
• Alliance with Sunny Farms
• Expansion and Exclusivity

Competitive Profile: Pavich Family Farms

• Company Overview
• Vertical Integration
• Growing Line of Products
• Industry Participation and International Sales

Competitive Profile: Small Planet Foods

• Company Overview
• Cascadian Farm
• The Cascadian Line
• The Cascadian Mission
• Past and Future Technologies
• Fantastic Foods
• Fantastic Launches
• Muir Glen Organic
• Tithing and Exports

Competitive Profile: Worthington Foods, Inc

• Company Overview
• Brands and Channels
• Seventh-Day Adventists and Soyfoods
• Foodservice Markets and Meat Restrictors

Marketing and New Product Trends

• Move to Organic Reflected in Company Names
• Gourmet Trend at a Gallop
• Elbowing In on Mass Market
• Offering Category Management
• Leveraging the Structure/Function Claims
• Marketing More Than Food
• Organic, Or Not
• Well-Developed Lines
• Wider Variety of Products
• Natural and Organic Product Introductions by Segment
• Table 4-2: Percent of Natural and Organic Food New Product Introductions by Product Type, 1996 vs 1997 (percent): 73 Types of Products
• Natural Food Industry Becoming the Organic Food Industry
• Organic Frozen Entrees Warm Up
• Ethnic Incursions and Crossovers
• Other Organic Convenience Foods
• Organic Chocolate
• Organic Green Teas
• Fortified Green Teas
• Other Fortified Foods
• Vegetable/Fruit Nutraceutical Drinks
• Natural Meal Replacements
• Organic Refrigerated Citrus Juices
• "Whole Food" Refrigerated Juices
• Organic Livestock or Animal Products
• Table 4-3: The US Market for Health and Natural Foods: Selected New Product Introductions, 1997 -Spring 1998

Consumer Advertising and Promotion

• Fairly Quiet on the Advertising Front
• Print Is Preferred
• Use of Television
• The Radio Alternative
• Mainstream Expenditures by Major Marketers
• Vitality and a Happy Life
• Purity, Natural Ingredients, and the Farm
• Copy-Intensive Advertising
• Strong Medical Language vs Oblique Health Connections
• Organic Means Environmental Health
• Goodness and Gourmet
• Organic Certification a Selling Point
• Convenience at the Core
• Enter Coupons
• Consumer Education
• Chef Tie-Ins
• Health Expert Tie-Ins
• Cooperative Advertorials
• Building Goodwill
• Samples of Consumer Advertising and Promotion

Trade Advertising and Promotion

• Most Advertising Is at Trade or Store Level
• Use of Three Key Trade Publications
• Trade Ads Educate Retailers
• Bigger Budgets Now Supporting Better Advertising Production Promotions
• Marketers Use Displays to Compete for Retail Space Sampling
• Trade Allowances and Deals
• Co-Op Offers
• A Forum for the Industry
• Major Shows
• Samples of Trade Advertising and Promotion

• At the Distribution Level
• Four Types of Distribution Systems
• Health and Natural Food Distributors
• Consolidation Creates Two Major Distributors
• Other Large Health and Natural Food Distributors
• The Role of Distributors
• Forward Buying by Distributors
• Some Distributors Offer Private Label
• Margins for the Two Channels Differ
• By-Passing the Distributor
• Brokers Aid Marketers and Retailers

Distributor Profile: Tree of Life, Inc

• The National Leader
• The Dutch Connection
• Promotional Publications

Distributor Profile: United Natural Foods, Inc

• A Merger of Regional Distributors
• Operations and Products

At the Retail Level

• Health and Natural Food Stores Are Leading Sector
• Figure 5-1: Share of US Health and Natural Food Sales by Retail Channel, 1997 (percent)
• Profit Margins by Sector

Retail Focus: Health and Natural Food Stores

• Five Types of Health and Natural Food Store Formats
• Majority of Sales from Natural Food Supermarkets
• Table 5-1: Share of Food Sales Through US Health and Natural Food Stores: By Retail Outlet Type, 1997 (percent): 5 Types of Outlet
• Natural Food Supermarkets
• Natural Food Stores
• Natural Food Cooperatives
• Health Food Chains
• Health Food Stores
• Supermarket-Sizers Battle for Key Markets
• Small Stores Succeed with Niche Marketing
• Medium Stores Enlarging
• Product Mix Varies by Store Type
• Product Mix Changing
• The Mix of Natural and Gourmet
• Retailers Offer Private Label
• Retailers Adding Refrigerator and Freezer Space
• Foodservice and HMR a Growing Part

Retailer Profile: Whole Foods Market, Inc

• More Than One Billion in Sales
• The Whole Foods Environment
• The History of Whole Foods
• Growth Through Acquisition and New Store Openings
• Private Label a Growing Business
• Future Plans

Retailer Profile: Wild Oats Markets, Inc

• The Second-Largest Chain
• Aggressive Acquisition of Smaller Stores
• Founded in 1987
• Store Size and Categories
• Marketing Strategies
• Lower Prices and More Stores

Retail Focus: Mass-Market Outlets

• Mass-Market Stores Increasingly Carry Natural Products
• Supermarkets a Growing Outlet
• 200+ Natural Items Typically Carried by Supermarkets
• Organic Produce Offerings Are Expanding
• Vegetarian Offerings Now Common
• Integration vs Separate Sections
• Organic Alliance Builds Sales in Midwest
• Big Box Stores and Warehouse Clubs Check In
• Table 5-2: Recent Health and Natural Food Activity by US Supermarkets

Other Retail Sectors

• Buying Clubs in Decline
• But CSAs on the Upswing
• Farmer's Markets Also Proliferate
• Mail Order Another Option
• The Emerging Web
• Retailers and the Web

Retail Advertising and Promotion: Health and Natural Food Stores

• A Cue from the Competition
• Retail Advertising Budgets
• Advertising and Educating
• Community Service and Goodwill Policies
• Customer Service

• Consumer Attitudes
• Many Studies But No Definitive Profile
• Nutrition Important in Food Choices
• Americans Try to Eat Healthfully
• Improving Health Is Primary Motivation
• Eyeing the Nutrition Facts Label
• Table 6-1: What Food Shoppers Look for on the Nutrition Facts Label, 1996 vs 1997 (percent): 12 Concerns
• Beyond the Counter-Culture
• Seeking Credibility
• "True Naturals" Are Core Customers

What Consumers Buy

• Consumers Seek Natural and Gourmet
• Herb Tea Is Most Popular Among Spectrum of Foods
• Organic Food Purchased by More Than Half
• Growing and Declining Interest in Other Products
• Table 6-2: Foods Purchased in Independent Health and Natural Food Stores, 1995 vs 1997 (percent): 63 Types of Food
• Products Most Commonly Purchased on Weekly Basis

The Health and Natural Food Store Shopper

• The Simmons Consumer Survey
• 6% of Adults Are Regular Customers
• More Women than Men Are Customers
• Boomers Comprise the Bulk of Customers
• College Graduates Know Where to Shop
• Professional/Managerial Workers Are Important to Market
• A Middle-to-Upper-Income Skew
• Single- and Two-Person Households
• Table 6-3: Demographic Characteristics Favoring Regular Shopping at Health and Natural Food Stores, 1997 (US Adult Population)
• Western Region Leads the Way

The Organic Shopper

• Growing Interest in Organic Foods
• Purchases of Organic Products
• Demographics of Organic Food Buyers
• Interest in Buying Organic High at Health Food Stores
• Seeking Organic in the Mainstream
• Purchase Criteria and Barriers for Organic Products
• The Value of a Seal
• The Need for Nationwide Standards

The Vegetarian Shopper

• Types of Vegetarians
• 6 Million Vegetarians
• Vegetarian in the Broader Sense
• Vegetarian Times Subscriber Profile
• Reasons for Being a Vegetarian
• Teenagers and College Students Choosing Vegetarianism
• Vegetarians Are Prime Natural Food Consumers

Appendix I: Advertisements. This appendix appears in bound editions only.

Appendix II: Addresses of Selected Marketers