In the first year of the pandemic, sales growth for natural and organic products jumped 10% to around $250 billion in 2020 from pre-pandemic levels year-over-year by about 6% in 2019, which represents about $225 billion in sales, according to SPINS data and New Hope analysis.
But since then, sales growth has steadily declined to 7.7% in 2021 and is expected to climb around 6% in 2022 before bottoming out at around 4% in 2023 before slowly starting to climb again to around 5. % in 2024. .
While sales growth is down, total industry sales are still on the rise – hitting a record $272 billion in 2021 and expected to reach $300 billion by 2023, said Carlotta Mast, vice president. -Senior President and Market Leader at New Hope, to Expo East attendees.
The continued growth, while slowing, is notable as it adds to the dollar highs of the start of the pandemic, suggesting that many consumers who came to the natural and organic industry for the first time in 2020 because ‘they needed to stock their pantries, continue to shop in the segment even though they have other choices again,’ Mast said.
This is reflected in data from SPINS showing that shoppers are purchasing natural products at a faster rate than sales growth of other products. Across all retail channels, shoppers purchased natural products at a rate that outpaced sales growth of other products from April 2020 to May 2022. The gap between the two was often at a high figure, but in recent months it has tightened so that in August, the sales growth rate of all other products exceeded that of natural products at 7.4% against 6.7% growth rate year-over-year growth, the data showed.
Despite the slowdown and the recent shift between natural products and other products, this data “is just a wonderful demonstration of how consumers continue to be self-aware of the foods they eat and their impact on our bodies and the planet,” said Kathryn Peters, Executive Vice President of SPINS.
For example, she noted, in 2022, wellness-focused brands grew 9% faster than the total market – continuing a trend from 2020, when they grew 5%. % compared to the total market, and in 2021, when they also increased by 9% compared to the total market. .
Food and beverages drive growth in the natural and organic sector
Natural and organic food and beverages are by far the biggest growth driver in the space, accounting for 70% of industry sales, according to data presented during the session. This includes an estimated 7.1% increase in sales to $186.5 billion in 2021 and projected sales of $220 billion by 2024.
And while growth in sales of natural and organic food and beverages is following the same trajectory as the category as a whole, the slowdown is not expected to reverse in 2024 as is the case for the industry as a whole. ‘industry. But it’s not quite as steep either – hovering between 5 and 6% between 2022 and 2024.
And, as Mast notes, the growth is “enormous” when viewed in the context of the past 10 years, during which sales to US consumers have grown by more than $100 billion.
What do natural and organic consumers want?
Much of this growth is being driven by consumers seeking products that offer more health benefits, according to Mast, who noted that sales of functional foods and beverages in the United States increased by about 8 .3% to reach $83.7 billion in 2021 and are on track to reach nearly $100 billion by 2024.
“We see beverages as the hottest category for functional foods…and within beverages, hydration and energy are key areas where we’re seeing a lot of innovation,”said the mast.
Snacks are another dynamic space for innovation with functional ingredients, including super mushrooms, the use of which grew 29% year-over-year in snacks.
Other beneficial ingredients trending up in snacks include super greens, up 24% YoY, collagen, up 15%, adaptogens and prebiotics – both up 11% % – and ancient grains, up 6%. Superfruits are also gaining momentum – up 4% year-on-year, according to data presented at Expo East.
Demand for products containing functional ingredients simultaneously is bolstered by a better understanding of food as medicine, according to Peters, who noted that sales of ashwagandha-containing products increased 88% to $16 million, products with collagen were up 9% to $19 million and those with elderberry were up 153% to $38 million.
Beyond snacks, desserts are another popular format for providing functional benefits, Mast said.
[Editor’s note: Want to learn more about how the idea of food as medicine is reshaping the food and beverage industry and driving sales? Join FoodNavigator-USA next month during our digital Futureproofing the Food System Summit, where we will be joined by experts on medicinal mushrooms, ‘mood food,’ and how technology and nutrition can be combined for more a more direct impact. Find all the details and register HERE.]