Natural and Organic Food and Beverage Trends: Current and Future Patterns in Production, Marketing, Retailing, and Consumer Usage, 2nd Edition
Sep 1, 2008
246 Pages - Pub ID: LA1119530
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CHAPTER 1: EXECUTIVE SUMMARY
Scope of Report
Definition
Report Methodology
The Market
Dynamic Growth Has Transformed Both Shopping and Retailing
Natural and Organic Sales Just Under $33 Billion in 2008
While Organic Sales Projected to Reach Just Under $20 Billion in 2008
Table 1:1 Organic and Natural Food Sales 2005-2008 (in million $)
Strong Growth in FDM and Natural Channels
Market Outlook
Table 1:2 Packaged Facts Estimates Natural and Organic Products 2008-2013 (in Billion $)
The Retail Arena
Huge Retail Expansion—From Grass Roots to Mass Market
Whole Foods Consolidates Leadership as Trader Joe’s Grows
Trader Joe’s Leading Competition
Emergence of Second-Generation Natural Supermarkets
Record Number of Private-Label Organic Products in 2007
Table 1:3 Private Label Organic Food and Beverage Product Introductions Surge
Target Expands Shabby Chic to Food Aisle
The Marketers
Consumers Want More than Just Organic and Natural
Corporate Buyouts and Consolidation Continue
Hain Celestial Leading Natural and Organic Mfr in the United States
Table 1:4 Total Reported Sales Hain Celestial Foods, 2003-07
Kashi emerges as natural leader in FDM
Table 1:5 IRI Reported FDM Sales of Kellogg’s Kashi Foods, 2003-07
Dean Foods Dominates Organic Dairy and Non-Dairy Beverages
Other CPG Owned Natural/Organic Brands Mostly Sluggish in FDM
Innovation and Entrepreneurial Spirit Still Drive Natural Leaders
Future Trends
Record Number of Organic Product Introductions in 2007
Table 1:6 New Product Introductions Organic, 1997-2007
Natural Claims Get Increasingly “Fuzzy”
Commodity Prices Growing, Supply Shortages To Emerge
Values Other than Price Also Driving Sales
Stevia the All-Natural, No-Calorie Sweetener
Organic Wine, Beer and Spirits
The Consumer
Table 1:7 Percent of Adults Who Shop for Organic Products: By Frequency of Shopping
Concern Over Artificial Ingredients Stronger than Interest in Organic/Natural
Presence of Children Not Indicative of Greater Natural and Organic Interest
Purchase Habits by Outlet
Age Not Consistent with Shopping Habits
Asian and Hispanic Shoppers Seek out Organic and Natural Foods Most Often
Table 1:8 “When I Shop for Foods, I Look for Organic/Natural Products”: By Ethnicity
Higher Education and Higher Income Associated with More Natural/Organic
Table 1:9 “When I Shop for Foods, I Look for Organic/Natural Products”: By HH Income
Pacific and Northeast Respondents Buy More Natural and Organic
CHAPTER 2: MARKET SIZE AND GROWTH
Highlights
INTRODUCTION
Scope of Report
Report Methodology
Background
Various Factors Spur Entry into Marketplace
Response to Post-World War Innovations in Food and Farming
Return to Smaller Scale Production and Less Processed Foods
Definition and Rules for Natural and Organic Foods
Rise of the Cooperative Grocery and Organic Manufacturers
Corporate Buyouts in 1980s and Early 1990s Failed; New Wave of Consolidation Continues
Conventional Products Grow Slowly in FDM While Natural Product Surge In FDM
Organic/Natural Items Surging While Conventional Items Struggle
Table 2:1 IRI Reported Growth of FDM Segments vs. IRI Reported FDM Sales of Natural/Organic SKUs
Baby Food Sales Boom
Tea Sluggish Due to Celestial Seasonings Travails
Natural/Organic Cold Cereal Sales in FDM Surge
Yogurt Surprise—Conventional Items Show Growth Alongside Natural/Organic Ones
Leading IRI Segments with Natural/Organic Penetration
Table 2:2 IRI Reported Share of FDM Segments by Natural/Organic Brands 2003-2007
Natural/Organic Perform While Most CPG Owned Natural/Organic Brands Perform Poorly
MARKET SIZE
Table 2:3 Organic and Natural Food Sales 2005-2008 (in million $)
Produce Lead Organic Sales
Organic Bread Sales Grow
Table 2:4 SPINS Reported Sales of Rudi’s Organic and Food For Life Brands in Natural
Organic Liquid Dairy
Table 2:5 IRI Reported Sales of Organic Liquid Dairy in FDM Outlets
Non-Dairy Beverages
SPINS Data and the Natural Supermarket Channel
Table 2:6 SPINS Reported Sales of Total Packaged Food & Beverages in Natural Products Supermarkets
Market Outlook
Are Natural and Organic Foods No Longer Recession Proof?
Packaged Facts Projects Slower But Steady Growth Through 2013
Table 2:7 Packaged Facts Estimates Natural and Organic Products 2008-2013
CASE STUDIES
Introduction to Manufacturer Case Studies
Case Study: Tea
Table 2:8 IRI Reported Sales of Bag/Loose Tea in FDM Outlets 2003-07
Celestial Losing Ground to Smaller Brands
Health and Wellness Drive Innovation
Case Study: Yogurt
Table 2:9 IRI Reported Sales of Selected Yogurt in FDM Outlets 2003-07
Stonyfield, Doing it Right
Not Doing it Right: Horizon Organic
Case Study: Ready to Eat Cold Cereal
Table 2:10 IRI Reported Sales of Selected Ready to Eat Cold Cereal in FDM Outlets
Kellogg’s Cereal Star Kashi
Nature’s Path Sells More than Just Product
Case Study: Cookies
Table 2:11 IRI Reported Sales of Selected Cookies in FDM Outlets 2003-07
Newman’s Own Organics Leads
Back to Nature Flounders While Kashi Racks up Sales
Diet-Specific Natural Cookies
Case Study: Meat and Poultry Substitutes
Table 2:12 IRI Reported Sales of Meat and Poultry Substitutes in FDM Outlets
Revolutionary Gardenburger
Quorn and Franklin Mushroom as Innovators
Case Study: Premium Refrigerated Juices
Table 2:13 IRI Reported Sales of Refrigerated Juices in FDM Outlets
Coca-Cola’s Odwalla as Leader
Pepsico’s Naked Juice
Pom Wonderful-Vertically Integrated Processor Creating Demand
Case Study: Spaghetti/Italian Sauces
Table 2:14 IRI Reported Sales of Refrigerated Juices in FDM Outlets
Rao, a Gourmet Brand is the Leader
Case Study: Millenium Product’s GT’s Kombucha
Table 2:15 Sales of GT’s Kombucha By Channel
Case Study: Nutrition Bars
Table 2:16 IRI Reported Sales of Nutrition/Intrinsic Health Bars in FDM Outlets
Clif Bar Dominates
Nestlé’s Powerbar
Abbott Lab’s Zone Perfect Also Flat
SPINS Reported Natural Channel Leading Categories & Brands
Table 2:17 SPINS Reported Sales of Natural and Organic Food & Beverages in Natural Supermarkets, Excluding Private Label
Baked Goods Lead in Natural Channel’s Frozen & Refrigerated
Table 2:18 SPINS Reported Sales of Leading Frozen and Refrigerated Categories in Natural Supermarkets
Dairy and Non-dairy Beverages Do Not Lead in Natural Channel
Table 2:19 SPINS Reported Sales of Leading Grocery Categories in Natural Supermarkets
Smucker’s and Nature’s Path Lead as Grocery Brands in the Natural Channel
Table 2:20 SPINS Reported Sales of Leading Natural Supermarket Grocery Brands
Amy’s Kitchen the Clear Leader in Frozen/Refrigerated of Natural Channel
Table 2:21 SPINS Reported Sales of Leading Natural Supermarket Frozen/Refrigerated
CHAPTER 3: THE RETAIL ARENA
Highlights
INTRODUCTION
From Grass Roots to Mass Market
Emergence of Natural Supermarkets
Expanding Natural and Organic Distribution in All Outlets
Conventional Markets Offer Greatest Opportunity for Growth
Conventional Retailers Seeking “Right” Formula For Better Results
Store Within A Store versus Super-Integration
Increased Efforts to Teach Conventional Markets How to Sell Natural & Organic
Conventional Private Label Offerings Items ‘Explode’
Store Brands of Natural and Organic are Becoming Recognizable Brands
Table 3:1 Private Label Organic Food and Beverage Product Introductions Surge
Pricing
Whole Food’s Consolidation of Super Naturals and the Continued Growth of Trader Joe’s
While Some Call it Whole Paycheck, Others Can’t Wait to Have A Whole Foods in Their Town
The Whole Foods Trader Joe’s Two-Step
Regional Outlets and Specialty Markets Seek to Be the Anti-Whole Foods
Conventional Retailers Develop Natural Format Stores
Central Market in Whole Foods’ Backyard
Publix Supermarkets
Supervalu Fails with Sunflower Markets
Look to Safeway’s Dedication and Creativity
Natural Coops Continue To Thrive
Wal-Mart’s Organic Offerings Scaled Back
Target Expands Shabby Chic to Food Aisle Seeking to Capture Natural & Organic Shoppers
RETAILER PROFILES
Introduction
Whole Foods Market
Overview: Ethics Driven Capitalism with Business & Marketing Savvy
Mission Driven Values with Aggressive PR Images
Value Driven Initiatives Grow—Local, Humanely Raised and Fair Trade
John Mackey, an Innovative and Unusual CEO
Employee Relations Key to Success
Combating the Stigma of Whole Foods as ‘Whole Paycheck’
No Slotting Fees and Working with Vendors
Regional Efforts with Increasing Corporate Oversight to meet ‘Numbers’
Whole Foods becomes Whole Lifestyle, Expands to Offer Spa Services, Gourmet Dining and Free Wi-Fi
Future Expansion and Wild Oats Transitions
Retailer Profile: Trader Joe’s Market
Convenience price and quality
Customer Service Drive Sales
Retailer Profile: Earth Fare
Retailer Profile: Sunflower Farmers Market
Retailer Profile: Sprout’s Farmers Market
Retailer Profile: Canadian Planet Organic Mrs. Green’s and New Leaf Community Markets
Retailer Profile: Natural Grocers by Vitamin Cottage
Retailer Profile: Henry’s Farmers Market
Specialty and Conventional Outlets
Retailer Profile : Wegmans
Retailer Profile: Safeway
Retailer Profile: Fresh Market
Retailer Profile: Tesco’s Fresh & Easy
CHAPTER 4: PRODUCER/MARKETER ARENA
Highlights
Look We’re Organic — Product Launches, Product Failures Illustrate Consumers Want More than Just Organic
Consumers Look for More than Just Organic or Green
Corporate Buyouts and Consolidation Continue at a Rapid Pace
Acquisitions as An Alternative to Creativity Within; The Salsa Rule Revealed
Early Buyouts in the 1980s and 1990s Were Failures
But Kellogg’s and Hain Seem to Be Doing It Right
Innovation and Entrepreneurial Spirit Still Drive Natural Leaders
Natural and Organic Leaders Create Social Networks via Website
Kellogg’s Kashi’s Division as a Corporate Role Model
MANUFACTURER PROFILES
Hain Celestial Foods
Table 4:1 Total Reported Sales Hain Celestial Foods, 2003-07
Kellogg’s
Kashi emerges as natural leader in FDM
Table 4:2 IRI Reported FDM Sales of Kellogg’s Kashi Foods, 2003-07
Table 4:3 SPINS Reported FDM Sales of Kellogg’s Kashi Foods, Grocery Items, 2005-07
Morningstar Farms Ready for Revitalizing
Wholesome and Hearty’s Gardenburger
Table 4:4 IRI Reported Sales of Kellogg’s Morningstar Farms in FDM Outlets, 2003-07
Table 4:5 IRI Reported Sales of Kellogg’s Gardenburger in FDM Outlets, 2003-07
General Mills
Cascadian Farms
Muir Glen
Humm Foods’ LaraBars
Table 4:6 IRI Reported Sales of General Mills Small Planet Foods Brands in FDM Outlets, 2003-07
Table 4:7 SPINS Reported Sales of Cascadian Farms Frozen Items in Natural Supermarkets, 2005-07
Dean Foods White Wave Division
Table 4:8 IRI Reported FDM Sales of Dean Foods Brands, 2003-07
PepsiCo
Table 4:9 IRI Reported Sales of PepsiCo Brands in FDM Outlets, 2003-07
Frito-Lay Naturals Moribund
Table 4:10 IRI Reported Sales of Frito-Lay Naturals in FDM Outlets, 2003-07
Flat Earth is Just the Opposite
Kraft Altria
The Back to Nature Foods Company
Table 4:11 IRI Reported Sales of Kraft Altria Natural Brands in FDM Outlets, 2003-07
Boca Foods
J.M. Smucker Company
Table 4:12 IRI Reported Sales of Smucker’s Quality Beverage Brands in FDM Outlets
Table 4:13 SPINS Reported Sales of Cascadian Farms Frozen Items in Natural Supermarkets, 2005-07
Nature’s Path Foods
Table 4:14 IRI Reported Sales of Nature’s Path Cold Cereal and Snack/Granola Bars in FDM
Not Just Organic but Also Eco-friendly and Great Tasting Too
Table 4:15 SPINS Reported Sales of Nature’s Path Grocery Items in Natural Supermarkets, 2005-07
Amy’s Kitchen
Table 4:16 IRI Reported Sales of Nature’s Path Cold Cereal and Snack/Granola Bars in FDM Outlets, 2003-07
Table 4:17 SPINS Reported Sales of Amy’s Kitchen Frozen Foods Items in Natural Supermarkets, 2005-07
Organic Valley of Farms 155 Table 4:18 IRI Reported Sales of Organic Valley in FDM Outlets, 2003-07
Other Marketers
Natural Selection Foods: Earthbound Farms
Newman’s Own Organics
Table 4:19 IRI Reported Sales of Newman’s Own Organic in FDM Outlets, 2003-07
Kettle Foods
Table 4:20 IRI Reported Sales of Kettle Foods in FDM Outlets, 2003-07
Safeway
Con-Agra Foods
Table 4:21 IRI Reported Sales of Con-Agra Brands in FDM Outlets, 2003-07
Other Producer Trends
Imports Likely to Get Scarce While Falling Dollar May Increase Export Opportunities
Food Service Seeks More Organic and Natural
Local is the New Organic
CHAPTER 5 NEW PRODUCT TRENDS
Highlights
Values Other than Price Drive Sales
Innovation and Creativity Are Key for Success
Record Number of Organic Product Introductions Reported and Likely to Continue
Figure 5:1 New Product Introductions Organic, 1997-2007
Table 5:2 Organic Food and Beverage Product Introductions, 1998-2002
Private-Label Introductions Up in Organic and Natural
Table 5:3 Private-Label Organic Food and Beverage Product Introductions
Organic Food Introductions Outpace Beverage Ones
Table 5:4 Organic Food Product Introductions, 1997-2007
Table 5:5 Organic Beverage Product Introductions, 1997-2007
Table 5:6 Leading Organic Product Introductions, by Category, 1997-2007
Natural Product Claims Get Increasingly ‘Fuzzy’ as Manufacturers Seek to Differentiate Products
All Natural High Fructose Corn Syrup
Hormone-Free Milk Claims Get Heated
My Poultry is Better than Your Poultry.
Corporate Organic Continues to Fuel Controversy and Drives Buy Local Movement
Non-GMO Labeling is Up
Table 5:7 New Product Reports For Food and Beverages with Non-GMO Claims
Commodity Prices and Organic Supply
Increased Interest in Organic Farm Methods from Conventional Growers
Increasing Efforts at Educating Conventional Consumers About Organic
Educating Players
Kids Products Grow
How To Do It Right
Table 5:8 New Product Reports For Kids Foods & Beverages Kids with Organic Tags
Connection Between Food, Nutrition and Well Being
Hemp Foods
Table 5:9 New Product Reports Foods & Beverages with Hemp Tags, 1997-2007
Flax, Omegas and Essential Fatty Acids
Table 5:10 New Product Reports Foods & Beverages with Flax Tags, 1997-2007
Raw Foods
High Protein Foods and Low Glycemic Index
Table 5:11 New Product Reports For Low Glycemic Foods, 1997-2007
Other Food Trends
Food Allergies and Food Sensitivities
Table 5:12 New Product Reports For No Gluten Items, 1997-2007
Autism and ADHD Drive Parents to Seek All Natural Choices
Sustainable Seafood
Stevia All Natural No Calorie Sweetener
Frozen Baby Foods
Functional Foods, the Natural Way
Organic Wine, Beer and Spirits
Organic Beer Less Challenged than Organic Wine
Organic Sprits the Latest Trend in Spirits
Cause Related Marking Continues to Grow
Fair Trade
Table 5:13 U.S. Imports of Fair Trade Certified Products, In Pounds, 2002-2007
Table 5:14 New Product Reports For Fair Trade, 2004-2008
Green, Green the Grass Is Green
Other Trends
Organic and Natural Television
Organic Fast Casual and Fast Food Grows
Food Distribution Business to Heat up
CHAPTER 6: THE CONSUMER
Highlights
Methodology
Notes on Simmons Data
Introduction
With $4.00 Gas and $5.25 Heating Oil, will any money be left for Organic Milk?
A Large Number of Disinterested Consumers Remain
Concern Over Artificial Ingredients Stronger than Interest in Organic/Natural
Surprising Data Reveals Presence of Children Not Indicative of Greater Natural and Organic Interest
63% Report Regular or Occasional Organic Purchasing
Table 6:1 Organic Shopping Pattern for U.S. Adults Overall, 2008
Produce is Most Commonly Reported Organic Purchase
Table 6:2 Percent of Adults Who Shop for Organic Products: By Product Category, 2008
Organic Products by Location Shoppers
Table 6:3 Retail Channel Most Often Shopped for Organic Products, 2008
Publix in the Top Five for Organic Purchases
Table 6:4 Retail Chain Most Often Shopped for Organic Products, 2008
Walmart Leads Among Regular Organic Shoppers
Table 6:5 Retail Chains for Groceries Most Frequently Shopped by Organic Shoppers, 2008
Shopping for Organic Products by Category
Organic Shopping Patterns Consistent by Category and Channel
Table 6:6 Organic Shopper Patterns by Product Category and Retail Channel, 2008
Respondents Report Slight Variations For Key Categories Among Retail Chains Shopped
Table 6:7 Organic Shopper Patterns by Product Category and Retail Chain, 2008
Nearly Twenty Percent of Adults Report Spending Less on Groceries
Table 6:8 Retail Chain Most Often Shopped for Organic Products: Adults Overall vs. Adults Who Are Spending Less on Groceries, 2008
Shopping Organic Correlates with Income
Table 6:9 Organic Shopping Patterns by Household Income Level and Average Income
New England, Mountain and Pacific Regions Report Buying More Organic Foods
Table 6:10 Regional Patterns: Adults Overall vs. Adults Who Are Buying More Organic Foods, 2008
Simmons Shows that Most Shoppers Do not Look for Organic/Natural Products
Table 6:11 “When I Shop for Foods, I Look for Organic/Natural Products”
Preference Among Consumers Not Consistent with Age
Table 6:12 “When I Shop for Foods, I Look for Organic/Natural Products”: By Age Bracket
Women Shoppers Look For Organic/Natural More than Men
Table 6:13 “When I Shop for Foods, I Look for Organic/Natural Products”: By Gender
Asian and Hispanic Shoppers Seek out Organic and Natural Foods Most Often
Table 6:14 “When I Shop for Foods, I Look for Organic/Natural Products”: By Ethnicity, 2008 (percent of U.S. adults)
Higher Education Associated with Greater Preference for Natural and Organic
Table 6:15 “When I Shop for Foods, I Look for Organic/Natural Products”: By Higher Education, 2008 (percent of U.S. adults)
Higher Income Leads to Greater Preference for Natural and Organic
Table 6:16 “When I Shop for Foods, I Look for Organic/Natural Products”: By HH Income, 2008 (percent of U.S. adults)
Pacific and Northeast Respondents Buy More Natural and Organic
Table 6:17 “When I Shop for Foods, I Look for Organic/Natural Products”: By Region, 2008 (percent of U.S. adults)
Children in Household not Indicative of Increased Natural and Organic Preferences
Table 6:18 Percent of Adults Who Agree a Lot That They Seek Out Organic/Natural Foods: By Child-Influenced and Family-Centered Psychographic Scales
APPENDIX
Marketers I
Retailers IV
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