Natural food sales continue to balloon since the Covid-19 pandemic, but food producers should not get comfortable yet with the wellness-minded consumer. Brands need to brace for what’s coming. With inflation, supply chain challenges and a looming recession, brands must remain resilient in the changing economy.
“Even in the face of a recession, growth is continuing,” says Carlotta Mast, senior vice president of New Hope Network (a division of Informa PLC), which produces Natural Products Expo West. “People are not expected to ‘trade down’ from health.”
Sales in the natural and organic products industry grew 7.7% in 2021 to reach $272 billion. Estimates put the industry at hitting $300 billion in sales in 2023. The stats were presented during the State of Natural & Organic Industry presentation (presenters pictured) at Expo East, the natural products show hosted in Philadelphia this year. More than 1,100 brands exhibited at the expo, many capitalizing on the growing wellness and functional foods trends.
Functional food and beverages – the subcategory where fermented products reside – continues to be a bright spot in the natural products space. Functional food and beverage sales are driving 70% of natural product sales. Functional sales grew 8.3% to $83.7 billion in 2021, with sales on track to reach nearly $100 billion by 2024. Functional food and beverage – like kombucha, drinking vinegars and probiotic sodas – is the top growth category in functional.
“This is truly a hot spot for our consumers,” Mast says. “People are expecting their foods and their products to have real health benefits.”
Natural products are outpacing growth of conventional products. Over 60% of CPG brands launched in the last year have a health and wellness focus. Natural products are also leading sales in all retail channels – natural, regional grocery, conventional multi-outlet and convenience stores.
“Everywhere we buy, were all buying more natural products and it’s outpacing mainstream growth which is really encouraging as we go forward,” says Kathryn Peters, executive vice president at SPINS (a data provider for natural, organic and specialty products).
Of note, online sales of CPG have returned to pre-pandemic levels, proving brick and mortar sales still reign supreme. Natural products are purchased online at two times a higher rate than conventional products, proving a multi-channel strategy is needed for brands.