Positive outlook for natural products

20-Nov-2008 - Last updated on 20-Nov-2008 at 16:45 GMT

The number of US consumers buying natural products is still increasing across the majority of categories, indicating “continued opportunities for product and shelf expansion”, according to a new report.

The “beyond organic” and health concerns segments are some of the strongest performing areas, including fair-trade, raw foods and gluten free, said Spins, an information and service provider for the Natural Products Industry (NPI).

The study, which covers the natural and organic products industry in conventional food, drug and mass retailers, said the NPI saw sales of $13.4bn and growth of 12.2 percent over 52 weeks ending October 4, 2008.

And while the current economic environment is applying downward pressures on growth, the outlook is optimistic.

It suggests that keys to success for both manufacturers and retailers include a continued commitment to the authenticity of products, the core consumer and the underlying drivers of the NPI.

These main drivers include sustainability, a growing personal awareness of the environment and the direct affects of purchase decisions on the environment and health.

Tony Olson, Spins CEO, said: “As evidenced by the performance in the natural channel, authenticity of natural brands and retailers continue to be one of the key factors in product performance.

“Authenticity extends beyond whether a product is free of artificial flavors and ingredients and moves into the realm of overall health and wellness, social and environmental sustainability, nutritional benefits and other leading factors.

“A brand or retailer’s ability to resonate with a consumer on this level is a strong indicator of success in the conventional food, drug, mass channels.”

Economic challenges

A number of negative economic factors are expected to challenge the industry for the next few years but Spins said that the positive drivers offer significant counter pressures.

It is expected that these will strengthen, “offering significant fuel for continued growth which should begin to accelerate once the consumer and the economy regain their stability”.

Spins added that brands most heavily associated with the roots of the industry remain the dominant drivers of both sales and growth.

Meanwhile organic products continue to out-perform the overall NPI with growth of more than 13 percent over the previous year.