Natural and Organic Foods and Beverages in the U.S., 5th Edition

Chapter 1: Executive Summary

Overview

Scope of Report

Report Methodology

Defining and Re-defining “Natural”

Definition of “Organic”

Retail Sales of Natural/Organic Foods and Beverages Will Reach

$69.4 Billion in 2016

Produce Is the Largest Category

Supermarkets, Natural Foods Stores, Warehouse Clubs Battle for

Market Share

Consumer Drivers for Buying Natural/Organic Foods and Beverages

Organic Farming Takes Root

The GMO Debate

U.S. Retail Sales Will Approach $118 Billion by 2021

Retail Trends

Upsurge of Competition in Natural Foods

Retailer Profiles

Albertsons Cos.

Amazon.com

Costco Wholesale Corp.

Farmers’ Markets

Fresh Thyme Farmers Market

The Kroger Co.

Sprouts Farmers Market

Trader Joe’s

Walmart

Whole Foods

The Marketers

Many Thousands of Marketers

More Acquisitions, Investments, and Funding

Private-Label Natural and Organic Products Proliferating

Natural and Organic Foods and Beverages in the U.S. Table of Contents

September 2016 © Packaged Facts ii

Competitor Profiles

Amy’s Kitchen

Campbell Soup Co.

Danone SA

General Mills

The Hain Celestial Group

Organic Valley

Pinnacle Foods

Marketing and New Product Trends

Going Clean

Ingredients Trends

Avocados

Beets Are Red Hot

Chickpeas and Other Beans Transformed

Grass-Fed Proteins Gaining Momentum

Plant-Based Foods

New Product Trends by Category

Consumer Trends

Packaged Facts National Consumer Survey

Many Consumers Seek Out Organic and Natural Foods and Beverages .

Figure 1-1 Consumers Who Especially Look for Organic or Natural

Foods When Grocery Shopping, 2016 (percent of U.S. adults)

Organic Foods and Beverages Attract Shoppers to Stores

Two Out of Five Consumers Buying More Organic or Natural Foods

Only 45% of Consumers Trust “Organic” or “Natural” Labels

Information Consumers Want Most on Package Labels

Consumer Attitudes Toward Genetically Modified Organisms (GMOs)

Simmons National Consumer Survey

Three Out of 10 Households Seek Out Organic or Natural Foods

Fruit and Vegetables Are Top Organic Categories

Ethnicity, Socio-Economics Differentiate Organic or Natural Food

Shoppers

Natural and Organic Foods and Beverages in the U.S. Table of Contents

September 2016 © Packaged Facts iii

Chapter 2: Overview

Key Points

Scope of Report

Report Methodology

Some Foodservice Crossover

Defining and Re-defining “Natural”

Definition of “Organic”

Market Size and Growth

Methodology for Sales Estimates

A Range of Sales Estimates from Different Sources

Retail Sales Projected at $69.4 Billion in 2016

Table 2-1 U.S. Retail Sales of Natural and Organic Foods and

Beverages, 2012-2016 (in billions of dollars)

Organic Foods and Beverages: A Larger Slice of a Bigger Pie

Figure 2-1 Share of U.S. Retail Sales of Natural and Organic Foods and

Beverages by Market Segment: Natural vs. Organic, 2016 vs. 2012

(percent)

Produce and Dairy Are the Largest Categories

Figure 2-2 Share of U.S. Retail Sales of Natural and Organic Foods

and Beverages by Product Category, 2016 (percent)

Supermarkets, Natural Food Stores, Warehouse Clubs Battle for

Share

Figure 2-3 Share of U.S. Retail Sales of Natural and Organic Foods

and Beverages by Retail Channel, 2016 (percent)

Market Outlook

Most Consumers Buy Natural and/or Organic Products

Consumer Drivers for Buying Natural/Organic Foods and Beverages ..

Widening Distribution Channels Also Driving Increased Sales

Produce and Dairy Are ‘Gateway’ Categories for Organic Foods

Organic Farming Takes Root

Illustration 2-1 Number of Certified Organic Farms by State, 2015

Figure 2-4 Top Dairy, Poultry, and Meat Sales, 2015

Figure 2-5 Top Organic Crops, 2015

Some Organic Products in Short Supply

The GMO Debate

Litigation Over the Meaning of “Natural”

Natural and Organic Foods and Beverages in the U.S. Table of Contents

September 2016 © Packaged Facts iv

Projected Market Growth

U.S. Retail Sales Will Approach $118 Billion by 2021

Table 2-2 Projected U.S. Retail Sales of Natural and Organic Foods

and Beverages, 2016-2021 (in billions of dollars)

Chapter 3: Retail Trends

Key Points

Overview

Upsurge of Competition in Natural Foods

Table 3-1 Selected Leading Natural and Organic Foods Competitors,2016

Retailer Profiles

Ahold Delhaize

Albertsons Cos.

ALDI Inc.

Illustration 3-1 ALDI’s SimplyNature Private-Label Line

Amazon.com—AmazonFresh, Prime Pantry, and Prime Now

Illustration 3-2 AmazonFresh Delivery Truck in Los Angeles

Costco Wholesale Corp. Strengthens Organic Position

CVS Expanding Selection of Healthier Foods and Beverages

Fairway Market Emerges from Bankruptcy

Farmers’ Markets Grow to Almost 8,700 Nationwide

Figure 3-1 Growth in the Number of Farmers Markets, 1994-2016

The Fresh Market Pulls Back, Goes Private

Illustration 3-3 The Fresh Market

Fresh Thyme Farmers Market Rolls Out in the Midwest

Illustration 3-4 Fresh Thyme Farmers Market

The Kroger Co.

Illustration 3-5 Kroger Simple Truth and Simple Truth Organic

Natural Grocers by Vitamin Cottage Planning Major Expansion

Illustration 3-6 Natural Grocers by Vitamin Cottage, “Eco Hip Hop”

Demonstration

Sprouts Farmers Market Appears to Have a Winning Formula

Illustration 3-7 Sprouts Farmers Market Layout

Target Corp. Recasting its Grocery Business Again

Illustration 3-8 Target “Made to Matter” Program Participants, 2016

Thrive Market

Trader Joe’s

Natural and Organic Foods and Beverages in the U.S. Table of Contents

September 2016 © Packaged Facts v

Walmart Forays into Organic Foods—Again

Illustration 3-9 Walmart Ad for Great Value Organic Line

Whole Foods Market Feeling the Heat of Competition

365 by Whole Foods Market: Streamlined and Value-Priced

Illustration 3-10 365 by Whole Foods Market, Silver Lake, Los Angeles,

Exterior

Chapter 4: The Marketers

Key Points

Marketer Overview

Many Thousands of Marketers

More Acquisitions, Investments, and Funding

Illustration 4-1 Who Owns Organic Chart

Recent Mergers and Acquisitions

July 2016

June 2016

May 2016

March 2016

January 2016

October 2015

September 2015

August 2015

July 2015

June 2015

May 2015

February 2015

January 2015

Private-Label Natural and Organic Products Proliferating

Amy’s Kitchen, Inc.

The Nation’s Leading Organic Frozen Foods Brand

Campbell Soup Co

Danone SA

General Mills, Inc.

Illustration 4-2 General Mills Q4 2016 Earnings Call (July 29, 2016):

Natural and Organic Portfolio

The Hain Celestial Group, Inc. Challenged by Growing Competition ..

Organic Valley

Owned by a Cooperative of Farmers

Pinnacle Foods Group Sees Health and Wellness as a Key to Growth .. 109

Natural and Organic Foods and Beverages in the U.S. Table of Contents

September 2016 © Packaged Facts vi

Chapter 5: Marketing and New Product Trends

Key Points

Marketing Trends

Going Clean

Illustration 5-1 Beech-Nut Website Lists Exact Percentages of

Ingredients

Kashi Launches New ‘Certified Transitional’ Label

Illustration 5-2 Certified Transitional Label

Ingredients Trends

Avocados

Illustration 5-3 Kettle Brand Chips Cooked in 100% Avocado Oil

Beets Are Red Hot

Chickpeas and Other Beans Transformed

Illustration 5-4 Love Grown Foods Kid-Friendly Cereals Made from

Beans

Functional and Fortified Foods and Beverages

Grass-Fed Proteins Gaining Momentum

Illustration 5-5 Carl’s Jr. All-Natural Grass-Fed Burger

Plant-Based Foods

Illustration 5-6 Beyond Meat Beyond Burger

Jackfruit, an Old World Plant Meat

Illustration 5-7 Upton’s Natural Jackfruit

Turmeric and Matcha

Illustration 5-8 Califia Farms Ginger Almondmilk and Matcha

Almondmilk

Illustration 5-9 Numi Organic Tea Turmeric Chai and Turmeric Cocoa ...

New Product Trends by Category

Frozen Meals

Illustration 5-10 Lean Cuisine Marketplace Entrées

Illustration 5-11 Healthy Choice Simply Café Steamers

Illustration 5-12 Evol Cups

Illustration 5-13 Evol Lasagnas and Enchiladas

Illustration 5-14 Amy’s Kitchen Gluten-Free Rice-Crust Pizza

Illustration 5-15 Amy’s Kitchen Swirls

Illustration 5-16 Michael Angelo’s Made with Organic Frozen Meals

Illustration 5-17 Eating Well Frozen Entrées

Illustration 5-18 Good Food Made Simple Entrée Bowls

Illustration 5-19 Grainful Steel Cut Meals

Soups

Refrigerated Soups

Illustration 5-20 Blount Organic Soups

Illustration 5-21 Tio Gazpacho Chilled Drinkable Soup

Illustration 5-22 Sonoma Brands Züpa Noma Chilled Drinkable Soup

Illustration 5-23 Fawen Drinkable Soup

Shelf-Stable Soups

Illustration 5-24 Campbell’s Well Yes Soup

Illustration 5-25 Campbell’s Organic Soups

Illustration 5-26 Campbell’s Organic Kids Soups

Illustration 5-27 Annie’s Organic Soups

Illustration 5-28 Back to Nature Ancient Grains Soups

Illustration 5-29 Eden Foods Instant Miso Soup Cubes

Dairy Case

Got Milk?

Illustration 5-30 Horizon Organic Single-Serve Chocolate Milk

Illustration 5-31 Organic Valley Good-to-Go Single-Serve Chocolate

Milk

Illustration 5-32 WhiteWave Foods Sir Bananas

Non-Dairy Milk Alternatives

Illustration 5-33 Jindilli Beverages Milkadamia Macadamia Milk

Illustration 5-34 Silk Cashewmilk

Illustration 5-35 Silk Nutchello

Illustration 5-36 Bolthouse Farms 1915 Bolthouse Farms Organic

Protein Beverages

Yogurt

Illustration 5-37 Organic Valley Grassmilk Yogurt

Illustration 5-38 Annie’s Organic Yogurt

Illustration 5-39 Liberté Organic Yogurt

Illustration 5-40 Drink Chobani Drinkable Greek Yogurt

Illustration 5-41 Chobani Meze Dips

Illustration 5-42 Noosa Yoghurt Sweet Heat Yogurts

Illustration 5-43 Chobani Ancient Grains Greek Yogurt

Illustration 5-44 The Greek Gods Yogurt with Chia Seeds

Fresh Produce

Illustration 5-45 Earthbound Farm Organic Salad Kits

Illustration 5-46 Earthbound Farm Organic Crunchy Slaw Blends

Illustration 5-47 Ready Pac elevAte Organic Salad Kits

Breads

Illustration 5-48 Dave’s Killer Bread

Illustration 5-49 Rudi’s Organic Bakery Kids Bread

Cereals and Cereal Bars

Illustration 5-50 Annie’s Organic Cereals

Illustration 5-51 Kashi Overnight Muesli

Snacks

Snack Bars

Illustration 5-52 Lärabar Organic with Superfoods Bars

Illustration 5-53 Clif Bar Clif Kid Zbar Fruit & Veggie

Illustration 5-54 Clif Bar Nut Butter Filled Energy Bars

Jerky Snacks

Illustration 5-55 Organic Prairie Mighty Bar

Illustration 5-56 Krave Bar

Fruit and Vegetable Snack Pouches

Illustration 5-57 Shine Organics Snack Pouches

Desserts and Sweets

Better-for-You Baked Goods

Illustration 5-58 Pure Genius Blondies and Brownies

Illustration 5-59 Back to Nature Ancient Grains Cookies

Illustration 5-60 Hidden Garden Cookies

Illustration 5-61 ColorKitchen Food Colors

Illustration 5-62 Miss Jones Baking Co.

Illustration 5-63 Pillsbury Purely Simple Baking Mixes

Non-Chocolate Candy Goes Organic

Illustration 5-64 Jelly Belly Organic Jelly Beans

Illustration 5-65 Black Forest Organic Candies

Baby and Kid-Targeted Foods

Illustration 5-66 Beech-Nut Organics Baby Foods

Illustration 5-67 OrgaNums HPP Baby Foods

Illustration 5-68 Plum Organics Mighty Dinos Crackers

Illustration 5-69 Plum Organics Mighty Mealtime Meal Kits

Illustration 5-70 Peas of Mind Veggie Tots

Beverages with Benefits

Hydration Beverages

Illustration 5-71 Elmhurst Naturals Banana Water

Illustration 5-72 Blossom Water’s Blossom Water

Illustration 5-73 Bulletproof Nutrition’s FATwater

Illustration 5-74 CORE Organic Water

Illustration 5-75 G Organic

Cold-Pressed, High Pressure Processed Juices

Illustration 5-76 Naked Pressed Juice

Juice Drinks

Illustration 5-77 Capri Sun Organic Juice Drinks

Illustration 5-78 Santa Cruz Organics Agua Fresca

Drinking Vinegars

Illustration 5-79 Live Soda Live Drinking Vinegars

Cold Brew Coffee

Illustration 5-80 Califia Farms Nitro Cold Brew

Illustration 5-81 Happy Tree Maple Water Cold Brew Coffee

Ready-to-Drink and Bagged Teas

Illustration 5-82 Arteasan Teas

Illustration 5-83 Celestial Seasonings Sleepytime Mint Tea

Chapter 6: Consumer Trends

Key Points

Packaged Facts Proprietary Consumer Survey

Many Consumers Seek Out Organic and Natural Foods and

Beverages

Figure 6-1 Consumers Who Especially Look for Organic or Natural

Foods When Grocery Shopping, 2016 (percent of U.S. adults)

Consumers Shopping Multiple Channels

Organic Foods and Beverages Attract Shoppers to Stores

Figure 6-2 Where Consumers Shop for Groceries by Retail Channel,

2016 (percent of U.S. adults)

Figure 6-3 Importance of Organic Foods to Where Consumers Shop for Groceries, 2016 (percent of U.S. adults)

Two Out of Five Consumers Buying More Organic or Natural Foods ..

Figure 6-4 Buying More Organic or Natural Foods than Two Years Ago,2016 (percent of U.S. adults)

Half of Consumers Believe Organic or Natural Foods Are Healthier ...

Figure 6-5 Organic or Natural Foods Are Healthier Than Regular

Foods, 2016 (percent of U.S. adults)

No Artificial Ingredients Outweighs Organic in Packaged Foods

Figure 6-6 Prefer to Buy Organic Packaged Foods vs. Packaged Foods

With No Artificial Ingredients, 2016 (percent of U.S. adults)

Only 45% of Consumers Trust “Organic” or “Natural” Labels

Figure 6-7 Consumers Who Trust Labels Saying Foods and Beverages

Are Organic or Natural, 2016 (percent of U.S. adults)

Willing to Pay More for Organic—But Think It Costs Too Much

Figure 6-8 Level of Agreement with the Statement: “I am willing to pay more for organic foods and beverages,” 2016 (percent of U.S. adults) . 204

Figure 6-9 Level of Agreement with the Statement: “I think retail stores and manufacturers charge too much for organic foods and beverages,” 2016 (percent of U.S. adults)

Information Consumers Want Most on Package Labels

Consumer Attitudes Toward Food

Figure 6-10 Information Consumers Want Most on Packaged Food

Labels, 2016 (percent of U.S. adults)

Figure 6-11 Consumer Attitudes Toward Healthy Food, 2016(percent of U.S. adults)

Consumer Attitudes Toward Genetically Modified Organisms (GMOs) .. 207

Figure 6-12 Consumer Attitudes Toward Genetically Modified

Organisms (GMOs), 2016 (percent of U.S. adults)

Consumer Attitudes Toward Social Responsibility

Figure 6-13 Consumer Attitudes Toward Sustainability, 2016(percent of U.S. adults)

Simmons National Consumer Study

Methodology

Three Out of 10 Households Seek Out Organic or Natural Foods

Nearly Half Prefer Foods Without Artificial Additives

Table 6-1 Consumers Who Prefer Foods Without Artificial Additives;

Who Look for Organic or Natural Foods; and Who Buy Natural or

Organic Foods When Watching Their Diet, 2012-2016 (percent and number in millions)

Fruit and Vegetables Are Top Organic Categories

Table 6-2 Top Product Categories for Consumers Purchasing Organic

Foods Most Often, 2012 vs. 2016 (percent)

Ethnicity, Socio-Economics Differentiate Organic or Natural Food Shoppers

Table 6-3 High-Index Demographics for Consumers Who Agree with the

Statement, “When Shopping for Food, I Especially Look for Organic or Natural Foods,” 2016 (index)

Table 6-4 Demographic Overview of Consumers Who Agree with the

Statement, “When Shopping for Food, I Especially Look for Organic or Natural Foods,” 2016 (percent, number and index)

Asian-Americans, Educated Consumers, Homemakers Avoid

Additives

Table 6-5 High-Index Demographics for Consumers Who Agree with the

Statement, “I Prefer to Eat Foods Without Artificial Additives,” 2016(index)

Table 6-6 Demographic Overview of Consumers Who Agree with the

Statement, “I Prefer to Eat Foods Without Artificial Additives,” 2016(percent, number and index)

Attitudes Toward Food and Cooking

Table 6-7 Attitudes Toward Food and Cooking: Consumers Who Look for Organic or Natural Foods, and Consumers Who Prefer Foods

Without Artificial Additives, 2016 (percent and index)

Attitudes Toward Nutrition and Health

Table 6-8 Attitudes Toward Nutrition and Health: Consumers Who

Look for Organic or Natural Foods, and Consumers Who Prefer

Foods Without Artificial Additives, 2016 (percent and index)

Other Surveys

International Food Information Council Foundation Survey

Figure 6-14 How Consumers Define a Healthy Eating Style, 2016

Figure 6-15 How Consumers Define “Natural” Foods, 2016

Wedbush Securities Consumer Survey

Consumer Reports Labels Survey

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