In both cases, the discrepancy is creating opportunities for natural, organic and better-for-you brands to expand, but where and how they market their products will influence the extent to which they can seize this full potential, Scott Dicker, senior market insight analyst at SPINS said during a webinar leading up to Natural Products Expo West.
He explained that the natural products and better-for-you industry “is not just a small industry anymore,” as illustrated by health and wellness positioned CPGs accounting for 25% of the total CPG industry’s dollar volume.
What may be more impressive though is the outsized impact this segment has on total CPG growth – accounting for 63% of dollar growth in the 52 weeks ending Dec. 26, 2021, Dicker noted.
But, he was quick to point out, consumer engagement with health and wellness brands is uneven across channels – suggesting brands and retailers need to meet their consumers where they are in order to leverage the full growth potential of their categories.
He explained health and wellness product shoppers often begin their search online and eventually end up in brick and mortar stores, which means depending on where an ingredient, category or product is in the adoption cycle, brands may want to focus more on one channel or the other or equally split their attention.
For example, as one of the hottest functional ingredients right now, ashwagandha sales are growing equally online and in store at 162%, which might signal rising consumer awareness, knowledge and comfort with the ingredient’s properties, uses and formats. Nootropics also are growing equally in stores and online at 35% year-over-year across formats ranging from drinks to supplements as consumers become more aware of the role they can play in helping them focus while working at home or during chaotic and distracting periods, Dicker said.
Not all ingredients or categories are as evenly distributed across channels, though, he noted. For example, ready-to-drink proteins are growing about 20% in store but almost 60% online. Adaptogens, superfoods, melatonin, cognitive health products and weight loss product all also are growing faster online than in stores.
On the flip side, Dicker said, hydration products are growing much faster in store than online at 232% in store versus about 70% online. Mood boosting products also are growing faster in stores at 46% compared to 9% online year-over-year for the 52 weeks ending Dec. 26, 2021, according to SPINS data.
Organic product sales outpacing conventional across categories
Organic products – a pivotal component of the natural products industry – also are outgrowing their conventional counterparts across categories, which Dicker says suggests the attribute may become table stakes for many consumers, including in the mainstream.
For example, he noted strong sales of organic products in several categories with sleepy conventional sales, including shelf stable creams and creamers, where sales of organic products shot up a whopping 43% while non-organic product sales fell 5% year-over-year in 2021, according to SPINS data.
Organic products also outperformed non-organic options in shelf stable soda and carbonated beverages, with growth up 50% compared to 6%, in refrigerated tea and coffee at 26% compared to 19%, in frozen breakfast to the tune of 38% versus 5% and in infant nutrition 27% versus 1%.
Emerging attributes driving sales within organic
Dicker also noted that emerging attributes in organic with double digit growth in the mid-teens last year include products containing 'super mushrooms' (up 17%) and paleo positioned foods and beverages (up 16%). Other food and beverage attributes growing at a slower but still notable pace within organic include products containing superfoods (up 7%), chicken (up 4%), labelled gluten-free (up 3%) and certified B-corporation (up 2%).