The Future of Natural Products: 5 Signs of Continued Growth [Expo West 2021 Keynote]

June 16, 2021
by David

Introduction

Kathryn Peters is the Executive Vice President of Business Development for SPINS.

5 Signs That Natural Has a Healthy Future

We’re midway through 2021, lockdown restrictions are easing, and the future of natural products looks bright but still has plenty of unknowns. We still have the rest of summer, back-to-school (and possibly back-to-office) season ahead of us, and the holidays to plan for. There’s no better time than now to take a look at the state of the natural industry. 

When we talk about the state of the natural industry, we have to focus on natural supermarkets. These community-minded, independent, and regional stores are indispensable to customers because they set the trends and have knowledgeable staff that you can’t find elsewhere. I recently spoke at New Hope’s Natural Products Expo West to dig into what SPINS data tells us about the natural industry. 

Below we’ll cover 5 signs that show how strong today’s natural industry is:  

  • Natural and Wellness Products Continue To Lead Growth 
  • The Future of Retail Is Digital and Brick-and-Mortar 
  • Wellness Attributes Are (Still) Booming 
  • Nutrient Density Matters to Shoppers 
  • Meals at Home 

1. Natural and Wellness Products Continue To Lead Growth

Thanks in part to a heightened—and understandable—focus on health, natural and wellness products have continued to perform well. Natural and wellness make up a $187 billion market that is growing at 12.5%. 

In fact, natural and wellness products are leading growth when we look across channels, but the strongest growth comes in those specialized channels. Conventional positioned products grew 6.3% over 52 weeks in the SPINS Conventional Multi-Outlet Channel (powered by IRI). However, looking at SPINS Natural Enhanced and Regional and Independent Grocery Channels, we saw that specialty and wellness positioned products grew 14.1% and natural-positioned products grew 9.8%.  

2. The Future of Natural Retail Is Digital and Brick-and-Mortar

The move toward online shopping in all its forms accelerated last year, and with it came convenience for shoppers who could get their groceries delivered at home, put in the car curbside, or packed up for in-store pickup. That’s here to stay and shoppers aren’t going to accept a retail experience where these perks are taken away.  

However, there’s more to the online story: Natural product shoppers rely on internet ordering at nearly twice the rate of all customers and spend less at the biggest conventional outlets. That matters because it tells you that natural shoppers are tech-friendly, eager for convenience, and committed to spending their dollars at outlets that deliver a specialized experience they’re not getting at the big box stores. As you look ahead, your shopper experience needs to account for the brick-and-mortar customers (who still make up the bulk of business) and the growing, dedicated online shoppers as well. 

3. Wellness Attributes Are (Still) Booming

Natural products, as mentioned above, are doing great in today’s market. However, products with wellness attributes are performing stronger than ever. Attributes are label claims, ingredients, and product qualities that can attract shoppers—think vegan, plant-based, or keto.  According to SPINS data, overall store growth is 13%, while a wide range of products with wellness attributes and certifications are growing at much higher rates in terms of dollar growth: 

Certified Paleo Keto products are up

Plant-Based Positioned products are up

Labeled Grain Free products are up

Labeled Animal Welfare products are up

As manufacturers think about product positioning, think about how any of your package claims can retain their staying power and appeal to shoppers who are scanning the shelves for these attributes. For retailers, consider how wellness attributes play into your in-store merchandising, online experience, and promotional tactics so that shoppers realize you have the breadth of products that appeal to their lifestyles. 

4. Nutrient Density Matters to Shoppers

Convenience isn’t confined to the shopping experience; it’s also part of the shopping list. Natural shoppers have health on their minds, and when given the chance they will opt to buy foods that are both flavorful and that pack a nutritional punch. Not only do foods with high nutritional density benefit health but they also save shoppers time (and money) by giving more return on the dollar.  

Shelf-stable dry beans are an example of a pantry staple that helps health-focused shoppers easily hit their dietary targets, particularly when looking at macros such as protein and carbohydrates. The healthy and even aggressive growth of some beans shows their versatility for everyday shoppers, health-minded consumers, and anyone stocking up on non-perishable items: 

5. Meals at Home Continue to Rise

Lockdown restrictions are lifting quickly, restaurants are doing their best to woo patrons back, and many shoppers will be eager to eat out once again. The (necessary) increase of at-home dining will adjust accordingly, but we don’t anticipate them returning to pre-lockdown levels. Over the past 15 months, shoppers discovered the joy of cooking at home, the convenience it brings, and its health benefits. Plus, all signs point to a different kind of workday for many office workers, which means more remote working and at-home meals. Plus, the economic situation for many workers has not fully recovered, and at-home dining is an affordable option. 

One winner in the rise of at-home meals is the frozen aisle. Natural product growth is consistently outpacing conventional growth across the store, and it’s true in many frozen categories: 

  • Natural frozen fruits and vegetables are up 21.5% vs 11.9% for conventional 
  • Natural frozen breakfast foods are up 24.6% vs 13.8% for conventional 
  • Natural frozen desserts are up 20.6% vs 12.0% for conventional 

Prepare for the Back Half of 2021

Now that you have these lessons in your back pocket—and you can find even more trends in the full State of Natural 2021 presentation below—you can start planning the rest of your year confidently. Easting restrictions and a reshaped daily routine will have ripple effects for everyone, including our industry. As you approach the back of 2021, build out long-term strategies but don’t forget to identify immediate opportunities as well. As you look ahead, keep these tips in mind: 

  • Educate your shoppers about nutrient dense and functional foods 
  • Support your shoppers as they adopt maintainable diet and lifestyles 
  • Evaluate and personalize promotional efforts as the restaurants begin the fight back 
  • Measure and course correct as needed to maintain and grow market share  
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