Natural Food Retailers in the Pink…and the Green According to Natural Foods Merchandiser, the health and natural products industry’s 2016 revenues increased 7.4%, to a total of $140.9 billion, which was less than 2015’s 8.7%, but still excellent, compared to many other retail sectors. Total natural retail sales increased 7.4% from 2015 to 2016, totaling $115.9 billion, while total non-retail natural sales increased 7.3%, to $25.0 billion. More than half of all health retail establishments in the three primary categories experienced sales increases during 2016: natural products stores, 76%; health food stores, 68%; and supplement stores, 58%.

Natural Products Are Only Natural in Conventional Stores Natural and organic products have continued to become a bigger part of conventional grocery store offerings. Sales increased for these products by 10.2%, to $61.5 billion, in the conventional channel and 4.3%, or $31.9 billion, in the specialty store channel. Of all organic product sales in the US, 27% were in warehouse clubs, 26% in premier natural & fresh grocery, 21% in conventional grocery, 18% in supermarket/mass merchandiser and 7% in discount grocery stores. With its recent acquisition by Amazon, Whole Foods Market is now more of a force than ever, especially with its new, lower prices. Aldi, a German grocery chain with organic produce at low prices, plans to open 900 new US stores.

A Healthy Market for Independents Overall, 4% of natural retailers added one or more locations during 2016, most in the natural product stores segment (7%), with 5% of supplement stores and no health food stores expanding. For 2017, 4% plan to add stores and 1% plan to close stores. New stores are offset by store closings, 4% overall: 4% natural product stores, 2% of health food stores and 7% supplement stores. One-fifth of respondents remodeled one or more stores, mostly health food and medium-to-large natural products stores. Some independents and small chains are using progressive political causes, such as protecting the environment and reproductive rights, to connect with customers wary of the current political landscape and becoming community advocates and centers.

Health Food Future Products marketed as natural outperformed the rest of the industry with an increase of 9% and health and wellness products increased 5% during 2016. Dietary lifestyles, such as gluten-free and vegan, are increasing. Vegan is now commonly called “plant-based.” Grain-free products and products free of other possible allergens, such as soy, are becoming more popular, projected to increase $9.5 billion in sales by 2021 worldwide. Animal welfare and sustainability are other trends in natural foods. Sales at packaged food companies, such as Kellogg, Kraft Heinz and General Mills, have decreased as consumers demand, and supermarkets carry, more fresh foods. Sales of packaged foods are expected to shift to online via Amazon/Whole Foods Market. 

Organic in Almost Every Pot According to Nielsen, during 2016, 88% of US household bought organic food and beverages. During the year ended September 2, 2017, dollar sales of organic products increased 9.8% to $47 billion and unit sales increased 11.4%. More than one-fourth (29%) of consumers say that organic claims influence their food and beverage purchasing behavior, but the importance varies with category. For example, 40% said organic is important for baby food, but for milk, only 8%. Price is a major barrier for organic sales, with 41% saying that financial costs of buying healthy food prevents them from being as healthy as they would like. Private- label products can be a way to offer reduced prices, a successful strategy for Trader Joe’s.

Dynamics of Dietary Supplements According to Euromonitor International, sales of vitamins and dietary supplements in the US will increase 53% by 2021 to $28.7 billion. Demand for probiotics is increasing, in capsule and gummy forms, as well as in food and beverages. Ingestible collagen is also trending, with benefits for hair, skin and nails. Other supplement trends include protein and sleep/relaxation supplements. Almost two-thirds (63%) of Americans have taken a dietary supplement during the past year. Almost half of supplement users (48%) have a college degree or higher and tend to earn more than average. More than half (57%) are women.

Advertising Strategies Baby Boomers are a big market for supplements, so market supplements for mental acuity, weight loss, sensory (vision, hearing) enhancement, immune function and heart health. When marketing natural foods, highlight your “free-from” foods (gluten-free, soy- free, nut-free, etc.) to tap into this growing market. Highlight your commitment to animal welfare and sustainability for meat, dairy and produce products

New Media Strategies Host healthy food cooking classes in store, specializing in different types of food preparation, such as vegetarian, vegan, gluten-free baking, paleo, etc. to drive foot traffic. Record videos and post them on YouTube with coupons for the products used. Create an email newsletter with interviews with local healthcare providers, alternative health providers, nutritionists and cooks. Delve into “food porn,” beautiful photos of mouthwatering food, and post them on Instagram, Pinterest and Facebook.