U.S. Health and Natural Food Market

Published: June 1, 2000 - 200 Pages

Table of Contents

  1. Executive Summary
    Scope and Methodology
    The Products
    • Market Definition
    • Attributes of Health and Natural Foods
    • "Organic" Distinguishes Many Products
    • Products Parallel Mass Market
    • The Six Product Categories

    Size and Growth of the Market
    • Retail Sales Reach $10.7 Billion in 1999
    • Sales to Reach $22 Billion by 2004
    • Table 1-1: The U.S. Market for Health and Natural Foods: Retail Sales, 1995-2004 (Dollars)
    • Sales by Product Category
    • Table 1-2: Share of U.S. Food Sales by Product Category: Health and Natural Food Market vs. Overall Food Market, 1999 (Percent): 6 Categories of Product
    • Growth from Organic Food Sales
    • Health and Natural Product Stores Claim 50% of Sales
    • Supermarkets Leading Mass-Market Outlet
    • A Health-Aware Population Boosts Market
    • Aging Population Drives Natural Food Sales
    • Vegetarianism Taking Early Root
    • Natural Foods Marketers Gear Up for Mainstream
    • Growth of Natural Foods Is in Conventional Channels
    • USDA Ruling Increases Awareness of Organics
    • GMOs Draw Media Attention

    The Marketers
    • Growing Number of Players
    • Conventional Marketers Eye Natural Product Industry
    • Mergers and Acquisitions Consolidate Big Players
    • Leaders in Packaged Groceries
    • Leading Bulk Suppliers
    • Leading Produce Marketers
    • Leading Marketers of Refrigerated Food
    • Leaders in Frozen Prepared Meals
    • Industry Is Maturing
    • Natural Food Marketers Targeting Supermarkets
    • Price Competitiveness Increases
    • Angling for Kids' Dollars
    • Organic Adds Differentiation
    • Soy Products Booming

    Distribution and Retail
    • Four Types of Distribution Systems
    • Distributors Grow Through Consolidation
    • Specialty Distributors Move into Natural
    • Margins for Two Distributor Channels Differ
    • Profit Margins Higher at Health and Natural Product Stores
    • One-Half of Sales Through Mass Market
    • Table 1-3: U.S. Health and Natural Foods, Share of Dollar Sales by Retail Channel, 1999 vs. 1997 (percent): Mass-Market Outlets, Health and Natural Product Stores
    • Supermarkets a Growing Outlet

    The Consumer
    • Nutrition Important in Food Choices
    • Americans Try to Eat Healthfully
    • The Health and Natural Product Store Shopper
    • Firm Interest in Organic Foods
    • The Vegetarian Shopper
  2. The Products
    Scope of the 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: 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
    • Consumer Activism Grows
    • First Earth Day in 1970 Firmly Defines Natural Food Movement
    • Natural and Organic Food Companies Emerge
    • Whole Food Supermarkets Up the Pace
    • Vegetarianism Becomes Trendy
    • America Discovers Fitness and Nutrition
    • Alar Scare of 1989 Opens Up Organic Market
    • Bovine Growth Hormone Controversy Spurs Organic Dairy Sales
    • "Mad Cow" Disease Spotlights Nation's Meat Industry
    • Helps Pave the Way for Organic Meat Certification
    • FDA Opens Door to Functional Foods
    • NLEA Empowers Food Marketers
    • Studies on Nutrition Educate the Population
    • Food as Medicine
    • 1997 Proposed Organic Standards Catch Flack
    • Revised Standards Suit Industry

    Product Breakouts
    • Products Parallel Mass Market
    • The Six Product Categories
    • Packaged Groceries
    • Frozen Foods
    • Refrigerated Foods
    • Produce
    • Bulk Foods
    • Perimeter/Prepared Foods

    Government and Industry Regulators
    • Three Regulatory Agencies
    • The FDA
    • The USDA
    • The Federal Trade Commission
    • Health-Labeling Claims
    • Organic Has Been Self-Regulated Industry
    • Final Organic Law
    • Packaging Issues Important to Consumers

    Trade Associations
    • NNFA
    • Organic Trade Association
    • Soyfoods Association of America
    • Hemp Foods Association
  3. The Market
    Market Size and Growth
    • Market Size Estimates Vary by Source
    • Retail Sales $10.7 Billion in 1999
    • Sales Steady
    • Table 3-1: U.S. Retail Sales of Health and Natural Foods, 1995-1999 (dollars)

    Market Composition
    • Packaged Foods Command Greatest Share
    • Table 3-2: Share of U.S. Food Sales by Product Category: Health and Natural Food Market vs. Overall Food Market, 1999 (percent): 6 Product Categories
    • The Top 10 Natural Products
    • Growth from Organic Food Sales
    • Supermarkets the Leading Outlet
    • Health and Natural Product Stores Claim 50% of Sales
    • Natural Food Supermarkets Claim 33% of Sales
    • Table 3-3: Share of U.S. Health and Natural Food Sales by Retail Outlet Type, 1999 (percent): 5 Retail Outlet Types, Other
    • Pacific Region Leads in Number of Health and Natural Product Stores
    • Increase in Outlets in the Northeast and Central Regions
    • Natural Food Shoppers by Region
    • Table 3-4: Share of Health Product Store Shoppers by Region, 1998 (percent and index): Pacific, Northeast, Southwest, Southeast, East Central, West Central

    Factors Affecting Market Growth
    • A Health-Aware Population
    • Aging Population Drives Natural Food Sales
    • Table 3-5: Percent Distribution of U.S. Population by Age Bracket, 1995-2005 (percent): From Age Under 5 to Age 65 and Over
    • Vegetarianism Taking Early Root
    • Natural Foods Marketers Gear Up for Mainstream
    • Growth of Natural Foods Is in Conventional Channels
    • Conventional Producers Embrace Natural Foods
    • USDA Ruling Increases Awareness of Organics
    • GMOs Draw Media Attention
    • Organic Interest and Acreage Increases
    • Meat Irradiation Authorized by USDA
    • Organic Meat Gets USDA Approval

    Projected Market Growth
    • Sales to Reach $22 Billion by 2004
    • Table 3-6: Projected U.S. Retail Sales of Health and Natural Foods, 1999-2004 (dollars)
  4. The Marketers
    The Marketers
    • About 1,800 Companies in the Field
    • Large and Small, Most Privately Held
    • Move Toward Public Companies
    • Conventional Marketers Eye Natural Product Industry
    • Mergers and Acquisitions Consolidate Marketers
    • Broad-Line Marketers
    • Growers and Producers
    • Mass Marketers with Natural Foods
    • Leaders in Packaged Groceries
    • Leading Bulk Suppliers
    • Leading Produce Marketers
    • Leading Marketers of Refrigerated Food
    • Leaders in Frozen Prepared Meals
    • CROPP Launches Organic Frozen Meat
    • Table 4-1: The U.S. Market for Health and Natural Foods: Selected Marketers by Brand Line and Product (192 marketers)

    The Competitive Situation
    • Industry Is Maturing
    • Growth through Partnering
    • Growth through Acquisition or Mergers
    • Venture Capitalists Prepare Companies for Bigger Players
    • Natural Food Marketers Targeting Supermarkets
    • Mass Marketers Escalate Industry Participation
    • The New Organics Co. Only Targets Mass Market
    • Price Competitiveness Increases
    • Soymilk Wars Escalate
    • Competition in Frozen Foods Heats Up
    • Meat Gets Certified Organic Labeling
    • Angling for Kids' Dollars

    Competitive Profile: Coulee Region Organic Produce Pool (CROPP)
    • Company Overview
    • Cooperative Philosophy
    • Meat Products Introduced in 1999
    • Higher Cost Not a Factor
    • Move into Freezer Poses New Challenges
    • Milking Dairy Sales
    • CROPP Goes Global with Sustainable Agriculture
    • Future Prospects

    Competitive Profile: The Hain Celestial Group, Inc.
    • Company Overview
    • Product Lines
    • Acquisitions and Licensing Agreements Revive Niche Brands
    • Natural Nutrition Group Provides Many Brands
    • H.J. Heinz Buys Into Hain, Strengthens Alliance
    • Other Major Acquisitions Add to Cache
    • History of Hain
    • Brands, Not Buildings
    • Direct-Sales Force Tames Unwieldy Number of Brands
    • Product Innovation Peppers All Brands
    • Brand Building Through Consumer Ads and Promos
    • Future Growth

    Competitive Profile: Horizon Organic Dairy
    • Company Overview
    • Current Operations
    • Products Not Price-Sensitive
    • Licensing Agreements
    • Acquisitions Grow the Company
    • New Products Compete with Mass-Market Brands
    • Milk Launches Equal Big Profits
    • First National Advertising Campaign
    • Future Prospects

    Competitive Profile: Imagine Foods, Inc
    • Company Overview
    • Natural Beginnings
    • Move to California Brings Success
    • Move into Soy Not Smooth
    • Soy Setback Overcome
    • Unique Corporate Protocol
    • Category Management and the New Millennium
    • New Labeling and Addition of Dairy Ingredients
    • Manufacturing May Expand to East

    Competitive Profile: Natural Selection Foods (Earthbound Farm)
    • Company Overview
    • Acreage and Production
    • First Product Pre-Washed Salad Mix
    • Product Line and Customer Base Sprout Quickly
    • Earthbound Farm Forms Partnership and Expands
    • Organic Orientation
    • Alliance with Lettuce Producer Increases Organic Acres
    • Added Acreage Equals More Produce
    • Conventional Grocers Are Main Customers
    • Merchandising Focuses on Integration
    • Abundant Trade and Consumer Advertising
    • Kids Garden Teaches Organics
    • Future Includes New Items and More Growers

    Competitive Profile: Odwalla, Inc.
    • Company Overview
    • Growth Through Merger
    • Beginnings from a VW Bus
    • Growing Line of Products
    • Food Bars and Broader Distribution
    • Contamination Tragedy Causes Sales Loss
    • FDA Juice Regulation Follows
    • "Juiced in Time" Delivery System
    • New Packaging Does the Advertising
    • Continued Innovations

    Competitive Profile: Small Planet Foods (General Mills, Inc.)
    • Company Overview
    • Former Owners an Investment Partnership
    • Leaders in Their Categories
    • Cascadian Farm Markets Worldwide
    • The Cascadian Line
    • An Environmental Mission
    • Major Ad Campaign to Penetrate Grocery Channel
    • Muir Glen First Organic Tomato Company
    • The Freshest Product
    • General Mills Plans to Expand Small Planet

    Competitive Profile: SunRidge Farms
    • Company Overview
    • Humble Beginnings
    • Bulk Equals a Healthy Planet
    • Diverse Product Offerings
    • Branding the Category
    • Dispensers, Displays, and Demos Help Promote Product
    • Move into Mass Market and Foodservice
    • Future Prospects

    Competitive Profile: Smucker Quality Beverages
    • Company Overview
    • History of R.W. Knudsen
    • The R.W. Knudsen Line
    • Departure from Beverages
    • History of Santa Cruz Organic
    • The Santa Cruz Organic Line
    • History of After the Fall, Inc.
    • After the Fall Line
    • History of Rocket Juice
    • Rocket Juice Brands
    • Challenges of Marketing Diverse Brands
    • Newsletters Update Retailers

    Competitive Profile: Traditional Medicinals
    • Company Overview
    • Origins and Operations
    • Category Management Aids Retailers …
    • …and Builds Sales
    • Targeting Key Accounts
    • Teas Repositioned as Dietary Supplements
    • Packaging Distinguishes Tea from Competition
    • Consumer Programs Boost Sales
    • Future Fortunes

    Competitive Profile: Walnut Acres Organic Farms
    • Company Overview
    • History Down on the Farm
    • Organic Focus Continues
    • Catalog Main Sales Tool
    • More Than Just a Farm: On-Site Production
    • Alliance with Internet Financier
    • Tie-In with Sunnyside Farms
    • E-Commerce Takes Off
    • Broader Retail Distribution

    Competitive Profile: White Wave, Inc.
    • Company Overview
    • In the Beginning There Was Tofu
    • Product Offerings
    • Convenience, Upscale Marketing
    • Silk Fastest-Growing Product
    • Plant Expansion
    • Alliance with Dean Foods
    • Future Prospects

    Marketing and New Product Trends
    • More Companies Position to Mass Market
    • Category Management Key to Entry
    • Private Label Muscles In for Shelf Space
    • Natural Marketers Copy Conventional Products
    • Natural Food Marketers Target Gourmet
    • Refrigerated Juice Marketers Squeeze Mass Market
    • Marketing to Mature Women
    • Online Internet Marketing a Growing Force
    • Marketing More Than Food
    • Growth Through Foodservice
    • Natural and Organic Introductions Still on the Rise
    • Natural and Organic Product Introductions by Segment
    • Table 4-2: Percent of Natural and Organic Food New Product Introductions by Type, 1999, 1998, 1997 (percent): 67 Types of Food Products
    • Organic Is Booming
    • Healthy Convenience Food Is Growing
    • Grab-and-Go Single-Serve Foods Increase
    • Functional Foods Here to Stay
    • Functional Beverages Equal Liquid Gold
    • Soy Products Booming
    • Organic Dairies Broaden Offerings
    • Energy Bars Specialize
    • Ethnic Foods Continue to Grow
    • Hemp Foods for the Future
    • Table 4-3: The U.S. Market for Health and Natural Foods: Selected New Product Introductions, July 1998 - December 1999

    Consumer Advertising and Promotion
    • Ad Expenditures Remain Level for Majority of Marketers
    • Heavy Spending by a Few
    • Big Media Campaigns Can Benefit Competitors
    • Print Is Preferred
    • Store Level Advertising Favored by Most Marketers
    • Newspaper Advertising on the Rise
    • Increase in Radio Advertising
    • A New Age of Confident Prosperity
    • Product Photo Is Central
    • Active Lifestyles Require Convenience
    • Preventive Health and Health Claims
    • Benefits of Soy
    • Enlightenment in Your Cup
    • Balance in an Unsteady World
    • Inner Beauty Reigns
    • Conventional Products Done Naturally
    • Targeting a Mainstream Consumer
    • Food Safety Concerns
    • Organic Ingredients: Safe to Ingest, Good for the Planet
    • No GMOs Touted
    • Manufacturers Make Themselves Accessible
    • Web Sites the New Ad Frontier
    • Coupons Gain in Popularity
    • Coupon Booklets Offer Promotional Opportunities
    • Health Expert Tie-ins
    • Chef Tie-ins
    • Examples of Consumer Advertising and Promotions

    Trade Advertising and Promotion
    • Most Advertising Is at Trade or Store Level
    • Use of Key Trade Publications
    • Trade Ads Serve to Educate Retailers
    • Bigger Budgets Support Better Advertising Production
    • Trade Promotions Necessary
    • Displays Effective Space-Grabbing Tool
    • Sampling and Demos
    • Trade Allowances and Deals Part of Business
    • Co-op Advertising Offers
    • Trade Shows Forum for the Industry
    • Major Trade Shows
    • Examples of Trade Advertising and Promotions
  5. Distribution and Retail
    At the Distribution Level
    • Types of Distribution Systems
    • Health and Natural Product Distributors
    • Largest Distributors Grow through Consolidation
    • Regional Distributors Also Consolidate
    • Other Regional Health and Natural Product Distributors
    • Specialty Distributors Consolidating
    • Distributors Offering More Services
    • Forward Buying by Distributors
    • Some Wholesalers Offer Private Label
    • Margins for the Two Channels Differ
    • Bypassing the Distributor
    • Brokers Aid Marketers, Distributors, and Retailers

    Distributor Profile: Tree of Life, Inc./Gourmet Award
    • The National Leader
    • Netherlands-Owned
    • Growth through Eliminating Competition
    • Growth through Adding Mass-Market Accounts
    • Promotional Publications

    Distributor Profile: United Natural Foods, Inc.
    • A Large National Player
    • Formed from Mergers
    • Retail Operations
    • Future Growth

    At the Retail Level
    • Mass-Market Outlets Are Leading Channel
    • Table 5-1 Share of U.S. Health and Natural Food Sales by Retail Channel, 1999 vs. 1997 (percent): 2 Types of Outlet
    • Profit Margins by Sector

    Retail Focus: Mass-Market Outlets
    • More Natural Products Sold in Mainstream Outlets
    • Supermarkets a Growing Outlet
    • Natural Items Typically Carried by Supermarkets
    • Supermarkets See Green with Organics
    • Organic Alliance Builds Supermarket Sales Nationally
    • Vegetarian Offerings Now Common
    • Integration, Separate "Health" Sets, and Store-within-a-Store
    • Table 5-2: Recent Natural Food Activity by Selected U.S. Supermarkets and Grocery Stores (53 stores)
    • Majority of Mass Merchandisers Offer Few Natural Foods

    Retail Focus: Health and Natural Product Stores
    • Five Types of Health and Natural Product Store Formats
    • Majority of Food Sales from Natural Food Supermarkets
    • Table 5-3: Share of Food Sales Through U.S. Health and Natural Product Stores: By Retail Outlet Type, 1999 (percent): 5 Types of Outlet
    • Natural Food Supermarkets
    • Natural Food Stores
    • Natural Food Cooperatives
    • Supplement Chains
    • Supplement Stores
    • Supermarket-Size Stores Battle for Key Markets
    • Small Stores Succeed with Niche Marketing
    • Medium Stores Enlarging
    • Product Mix Varies by Store Type
    • Product Mix Changing
    • Conventional Items Carried
    • The Mix of Natural and Gourmet
    • Retailers Offer Private Label
    • Retailers Adding Refrigerator and Freezer Space
    • Home Meal Replacement Increasing
    • More Sophisticated Merchandising
    • Retail Advertising Budgets
    • Advertising Focuses on Education
    • Community Service and Goodwill Policies
    • Customer Service

    Retailer Profile: Whole Foods Market, Inc.
    • Whole Foods Is National Leader
    • Locations and Operating Divisions
    • The Whole Foods Environment
    • The History of Whole Foods
    • Growth through Acquisitions
    • And More Acquisitions
    • Growth through New Stores
    • Pricing Strategies
    • Private Label Growing
    • Advertising and Promotions
    • Internet Commerce and Communication
    • Internet Sales Significant to Future Expansion
    • Partial Acquisition of Real Goods Trading
    • WholePeople.com Becomes Separate Venture

    Retailer Profile: Wild Oats Markets, Inc.
    • Wild Oats Is Second-Largest Chain
    • History of Wild Oats
    • Continued Aggressive National Expansion
    • Henry's, Wild Harvest, and Sun Harvest Acquired
    • Growth through Diversification
    • Private Label Focuses on Organic
    • Advertising and Promotion
    • Plans Include More Stores

    Other Retail Sectors
    • Buying Clubs in Decline
    • CSAs Increase
    • Farmers' Markets on the Rise
    • Catalog Sales Still a Niche
    • Foods Follow VSMs to the Web
  6. The Consumer
    Consumer Attitudes
    • Many Studies but No Definitive Profile
    • Nutrition Gains Importance as Food Choice Factor
    • Americans Try to Eat Healthfully
    • Barriers to Healthful Eating
    • Improving Health Is Primary Motivation
    • Consumers Seek Information
    • Table 6-1: Health Information Sought by Food Shoppers in Past Month, 1999 (percent): 8 Health Concerns
    • "True Naturals" Are Core Customers
    • Health Opinion Leaders

    Consumer Purchases
    • Products Sought in Mass Market
    • Products Purchased in Health and Natural Product Stores
    • Herb Tea Is Most Popular Among Spectrum of Foods
    • Growing and Declining Interest in Other Products
    • Table 6-2: Foods Purchased in Independent Health and Natural Product Stores, 1999 vs. 1997 (percent): 53 Types of Food
    • Organic Products Most Commonly Purchased

    The Health and Natural Product Store Shopper
    • The Simmons Consumer Survey
    • 6% of Adults Are Regular Customers
    • More Women Than Men Are Customers
    • Over Age 45 More Likely to Shop
    • Part-timers and Households without Children
    • College-Educated Know Where to Shop
    • White-Collar Workers Are Important to Market
    • Single- and Two-Person Households
    • Lifestyle Changes
    • Western Region Leads the Way
    • Table 6-3: Demographic Characteristics Favoring Regular Shopping at Health and Natural Product Stores (U.S. adult population)
    • Whole Foods Respondents Frequent Shoppers
    • Majority of Respondents Are Women, Aging Baby Boomers
    • The Whole Foods Market Shopper

    The Organic Shopper
    • Firm Interest in Organic Foods
    • Four Types of Organic Users
    • Organics Gaining Recognition and Buyers
    • Organic Believed Healthier
    • Organic Shoppers: Baby Boomers and Educated
    • All Incomes and Occupations
    • Geography of Organic Shoppers
    • Seeking Organic in the Mainstream
    • Purchase Criteria and Barriers for Organic Products

    The Vegetarian Shopper
    • Types of Vegetarians
    • Number of Vegetarians Growing
    • Reasons for Being a Vegetarian
    • Teenagers Choosing Vegetarianism
    • Vegetarians Are Prime Natural Food Consumers

    Appendix I: Examples Consumer Advertising And Promotions
    Appendix II: Examples Trade Advertising And Promotions
    Appendix III: Addresses Of Selected Retailers And Distributors


This timely update analyzes the rapidly growing health and natural food market, which is projected to surpass $21.0 billion in sales by the year 2004. The report details current market size and provides growth projections for the six product categories: packaged groceries, bulk groceries, frozen, refrigerated, produce, and perimeter/prepared foods. The report assesses marketing and new product trends, provides details on products recently introduced, and profiles major players including Hain Food Group, Horizon Organic Dairy, and Small Planet Foods. Distributor trends and consumer attitudes and behaviors are also covered in detail. Individual sections are available. From Packaged Facts.

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