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Vegan, paleo, grass-fed, pasture-raised, ancient grains, and allergen friendly claims are gaining

From grass-fed to Paleo: What are the hottest trends in the natural food and beverages market?

By Elaine Watson+

05-Mar-2015
Last updated on 10-Mar-2015 at 18:37 GMT2015-03-10T18:37:04Z

While plant-based foods are hot right now, high-protein meat-snacks such as jerky are also gaining momentum
While plant-based foods are hot right now, high-protein meat-snacks such as jerky are also gaining momentum

According to Chicago-based market research firm SPINS, US retail (dollar) sales of foods & beverages rose 1.7% in 2014, while unit sales declined by 0.4%. By contrast, sales of natural and organic brands grew nearly 12%. But where are the opportunities in this space, and which trends have legs?

According to an analysis conducted by specialized investment banking firm Silverwood Partners and SPINS - which you can download HERE  – label claims such as vegan, Paleo, grass-fed, pasture-raised, ancient grains, and allergen friendly are all on the rise, while the following trends are also worth watching:

  • Chia bars and beverages.
  • Fermented foods.
  • Large CPGs removing high-fructose corn syrup, artificial colors and ingredients.
  • Healthy snacking and the ‘snackification’ of food.
  • Popcorn.
  • The mainstreaming of non-GMO.
  • Linkages between weight management, digestive health, gluten free and the nervous system.
  • The mainstreaming of functional food.
  • Sugar now the root of all evil; fat no longer the enemy.

Recent transactions, from General Mill’s acquisition of Annie’s to Pinnacle’s acquisition of Gardein , WhiteWave Foods’ acquisition of SO Delicious , Hershey’s deal to buy KRAVE Jerky , and Mondelez’s deal to buy Enjoy Life Foods also show that large CPG companies are increasingly buying in growth by acquiring smaller, more innovative brands in fast-growing natural and organic categories, says Silverwood Partners.  

Meanwhile, private equity firms are also signaling their belief in some of the above trends by pumping cash into firms from SkinnyPOP to Hampton Creek Foods , Instacart, Noosa , True Drinks , Soylent , Suja Juice , Runa , Door to Door Organics and Barefruit, it adds.

Annie's, SO Delicious and Gardein have all been acquired by leading food brands over the past 12 months

SOURCE: SPINSscan Natural and Specialty Gourmet (proprietary), SPINSscan Conventional (powered by IRI), 52 weeks ending 12/28/2014. Growth based on dollar volume for the current period versus year ago and is based on currently coded UPC items

Here are some key trends Silverwood Partners is watching:

Millennials and their parents are driving growth in natural & organic foods: “Millennials are not the only age group driving growth in the natural/organic category; baby boomers are increasingly influential.”

Probiotics, Vitamin D, nutrients to watch:  The global market for probiotic ingredients, supplements and food is expected to reach $36.7bn by 2018, with a CAGR of 6.2%.”

Healthy beverages are hot: Lower calorie drinks, kombucha, water, coconut water remain hot, while fermented beverages anything with turmeric in it are also gaining momentum.

Sports nutrition: Look out for more specialized products, cleaner labels, allergen-friendly products and products that claim to boost energy levels.

Meat Snacks: “Health-conscious shoppers are getting the message from the media that protein is a better source of fuel than fats, sugars or carbs.”

There is money to be made in online grocery: Venture capitalists and publicly-traded companies alike both believe you can make money out of online food shopping now, says Silverwood Partners.

Public markets are rewarding healthy food companies: Shares of firms such as Hain Celestial and WhiteWave Foods are performing better.

Paleo, Bulletproof, on fire: Three million people now estimated to follow Paleo diet (56% women, 74% with college degrees), says Silverwood. Bulletproof, which emphasizes eating more healthy fats and protein and avoiding grains/carbs also seems to be gaining traction, and celebrity backers, claims Silverwood.

Frozen 2.0?  Legacy brands such as Healthy Choice, Lean Cuisine, Stouffers, Banquet and Marie Callendar in decline, but Saffron Road, EVOL, Amy’s and Blake’s are on the up.

While only a tiny percentage of groceries are currently purchased online, companies such as Door to Door Organics have proved that you can make money with the right business model

Read our recent interview with Silverwood Partners managing director Mike Burgmaier:

Corporate finance expert: 'We’re seeing a widespread rejection of traditional foods and brands and it’s leading to a seismic shift in some categories'

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