The 2021 State and Future of U.S. Natural & Organic: What Brands Need to Know - HEI, March 10, 2021
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The 2021 State and Future
of U.S. Natural & Organic:
What Brands Need to Know
HEI, March 10, 2021
© 2020 Informa LLC. All Rights Reserved.
Natural Products Expo in 2021
Natural Products Expo Virtual Natural Products Expo East
Spark Change—year round Philadelphia—Sept. 22-25, 2021
Expo West Virtual—May 24-27
‘The crocus of hope is
poking through the frost’
--British Prime Minister Boris Johnson
In record year, 2020 industry sales hit $259B
U.S. natural & organic products industry sales grew est. 12.7% to $259B in 2020; total
industry sales are on track to surpass $300B by 2023
350 14% Functional F&B
31%
300 12%
250 10% Natural
Revenue ($bil)
Living
200 8%
Growth
9%
150 6%
100 4%
50 2% Natural &
Organic
0 0% Supplements
F&B
21%
39%
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINS
Food & beverage drove 70% of industry sales
Natural, organic and functional F&B grew est. 13% to $186B in 2020
250 14% Breads &
Grains
12% 11% Snacks
200 Packaged/prepared 8%
Foods
10% Meat, Fish
13%
Revenue ($bil)
& Poultry
150 8% 7%
Growth
Condiments
100 6% 5%
Dairy
4% 15%
50
2%
0 0% Produce
Beverages 24%
17%
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINS
Organic grows in midst of unsettled economy
U.S. organic food & beverage sales grew est. 13% to $47.9B in 2020
Breads &
60,000 14% Beverages Grains
12% 10%
50,000 12% Snacks
Packaged/Prepared 5%
Revenue ($mil)
10% Foods
40,000 12%
Condiments
5%
Growth
8%
30,000 Meat, Fish
6% & Poultry
20,000 4%
4% Dairy
14%
10,000 2%
0 0%
Produce
2020e
2017
2014
2015
2016
2018
2019
38%
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINS
Consumers continue to seek functionality in F&B
Functional food & beverage sales grew est. 9.4% to $78B in 2020
Top growth categories
100 10%
Shelf-Stable
90 9% Frozen
80 8% Snacks
70 7%
Revenue ($mil)
60 6% Hot functional ingredients:
Growth
50 5% Collagen
40 4% Mushrooms
30 3%
Adaptogens
20 2%
10 1% Nootropics
0 0% Healthy Fats
2016 2017 2018 2019 2020e 2021e 2022e 2023e
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINS
COVID fuels surge in all food & beverage sales
Natural, organic & functional F&B grew est. 13% while conventional expanded 8.6%; both
markets driven by COVID-19 and quarantine trends
800 14%
700 12%
600 10%
Revenue ($bil)
500 8%
Growth
400 6%
300 4%
200 2%
100 0%
0 -2%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINS
Brand spotlight: Tea Drops Looking for a way to bring in new revenue, Sashee Chandran used Google trend research to inspire the launch of her company’s hero product for 2020: DIY Boba Tea Kits that enable consumers to enjoy the popular “bubble” tea drink without having to go to a restaurant or boba tea shop
Supplement sales jumped 14% to $56B in 2020
As consumers prioritize health & wellness and seek immune health, supplement sales were
$3B greater in 2020 compared to pre-COVID estimates
$70 16% Sports
Nutrition
Supplements
$60 14% 14%
Meal
Supplement
12% Specialty/Other s
$50 18% 11%
Revenue ($bil)
10%
$40
Growth
Minerals
8% 6%
$30
6%
$20
4%
$10 Herbs &
2% Botanicals
21% Vitamins
$0 0% 30%
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINSCold, flu and immunity sales surged in 2020
Sales grew est. 52.2% to $5.2B in 2020; COVID driving consumers to think
about immune support well beyond the typical cold and flu season
7,000 60%
6,000 50%
5,000
40%
4,000
30%
3,000
20%
2,000
1,000 10%
0 0%
2015 2016 2017 2018 2019 2020e 2021e 2022e 2023e
Cold, Flu and Immunity Sales Cold, Flu and Immunity Growth
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINSSupplements likely to remain a bright spot after COVID
Brand spotlight: Nordic Naturals As supplement sales soared last year, this legacy brand launched the HEAP campaign and advocacy program aimed at increasing Vitamin D supplementation within communities of color
Natural living growth boosted by household products
Natural living (personal care, household, pet) grew est. 9.5% to $24B in 2020; sales of
household cleaning products up 20%, pet up 12% and personal care up 6.5%
Pet
$35 12% 16%
$30 10%
Household
$25 17%
8%
Revenue ($bil)
$20
Growth
6%
$15
4%
$10
$5 2%
$0 0% Personal
Care
67%
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINSCOVID accelerating e-commerce sales growth
Total natural & organic e-commerce sales growth nears 60% in 2020, as consumers gravitate
to online for safety and convenience and permanently shift behaviors in some cases
70%
60%
50%
Revenue ($mil)
40%
30%
20%
10%
0%
2015 2016 2017 2018 2019 2020e 2021e
Natural & Specialty Retail Mass Market Retail E-Commerce
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINSOrdering groceries online will outlast COVID
Don’t count out brick-and-mortar retail
While total natural & organic e-commerce sales are set to double between 2018 and 2023,
retail—especially mass market retail—will continue to fuel majority of natural & organic sales
2018 2023e
3% 4% 8%
5% 3% 22%
2% 26% Natural & Specialty Retail 5%
2%
Mass Market Retail
Mail Order, DRTV, Radio
Multi-Level/Network
Marketing
Practitioner
E-Commerce
59% 60%
Source: Nutrition Business Journal ($mil, consumer sales), powered by SPINSBrand spotlight: Otamot Otamot founder Andrew Suzuka demonstrated the meaning of hustle in 2020, as he landed his products on retail shelves throughout the country, mastered QVC as a sales channel and leaned into innovative digital marketing targeted to both kids and their parents
‘For there is always light
If only we’re brave enough to see it
If only we’re brave enough to be it’
--Amanda GormanConsumers retaining values that grew natural
COVID is making personal health more
important to consumers
Q: Would you say personal health is more or less important to you today than it was in 2019?
Source: New Hope Network NEXT Data and Insights survey of n~1,000 collected week of April 13, 2020, using a convenience sample
directionally representative of U.S. consumers ages 18-65, weighted by age, gender, and region.Consumers view healthy food and nutrition
as more important today than in 2019
Q: Would you say _______ is more or less
Less Important More Important
important to you today than it was in 2019?
Remaining in regular contact with friends 12% 38%
Proactively managing my health 7% 41%
Getting regular exercise 11% 41%
Eating healthy food 10% 43%
Taking dietary supplements and vitamins 13% 33%
Buying organic certified product 20% 15%
Source: New Hope Network NEXT Data and Insights survey of n~1,000 collected week of April 13, 2020, using a convenience sample
directionally representative of U.S. consumers ages 18-65 weighted by age, gender, and region.People also embraced less healthy habits in 2020
While the quest for products that support health & wellness drove strong sales growth for natural
& organic in 2020, we also saw consumers turn to alcohol and food to cope with the stresses of
COVID and quarantine. How can brands help people return to healthier habits?
Binge drinking up Research also shows
41%
people are:
• Eating more junk food
• Exercising less
among women since • Feeling more anxious
• Sleeping less
start of pandemic
Source: “Yes, Many of Us Are Stress-Eating and
Source: RAND Corp. and National Institute of Alcohol Abuse and
Gaining Weight in the Pandemic;” The New York
Alcoholism survey of more than 1,500 U.S. adults, conducted late May and
Times, Dec. 4, 2020
early June 2020Brand spotlight: YourSuper This entrepreneur couple has used the power of digital storytelling and a clean, plant-based ingredient deck to position its supplement powders as nutrient-dense, whole foods that support vitality and vibrant health and that are bringing younger consumers into the supplement category. No pill fatigue here
COVID is making environmental health
more important to consumers
Q: Would you say environmental is more or less important to you today than it was in 2019?
Source: New Hope Network NEXT Data and Insights survey of n~1,000 collected week of April 13, 2020, using a convenience sample
directionally representative of U.S. consumers ages 18-65, weighted by age, gender, and region.At the grocery store consumers appear to be
supporting environmental issues in these ways …
Compared to your typical 2019 grocery
shopping, which of the following are you Doing Less Doing More
doing more or less of now?
Buying plant-based foods
19% 29%
Buying responsibly sourced meat, seafood, or
dairy 16% 26%
Buying organic products
20% 22%
Buying Fair Trade certified products
13% 16%
Paying more attention to food waste 13% 36%
Buying products with more environmentally 11% 18%
friendly packaging
Source: New Hope Network NEXT Data and Insights survey of n~1,000 collected week of April 13, 2020, using a convenience sample
directionally representative of U.S. consumers ages 18-65 weighted by age, gender, and region.Brand spotlight: Renewal Mills This brand has created a proprietary technology that can turn just about any food byproduct into nutritious ingredients. It’s upcycled flours and baking mixes are made from byproducts from plant-based milk production, such as soybean pulp or almond pulp.
‘Diversity is being invited to the party;
inclusion is being asked to dance’
--Verna MyersWe are currently missing the opportunity to serve more diverse consumers Black, Indigenous, Latinx, Asian and other people of color currently make up only 27% of natural & organic products market consumer base Source: New Hope Network Consumer Segmentation Survey, n=5000
Our consumer base doesn’t match U.S. population
The U.S. population is moving toward a white minority within 25 years
Does your company
have the diverse
leadership needed to
engage and serve an
increasingly diverse
consumer market?
Source: Associated Press, 2013. Chart shows population projections by race and ethnicityThis reflects current natural & organic leadership
Industry leadership teams and boards are predominantly made up of white men, according to
2019 JEDI Collaborative survey
% White % Men
84%
81% 68%
57%
Board Leadership Board Leadership
Members Members Members Members
(n=124) (n=172) (n=124) (n=172)
Source: JEDI Collaborative and New Hope Network Benchmarking Survey of U.S. natural products companies, conducted Q4 2019We need more Black, Indigenous and Latinx
leaders and brand owners—period
Without more BIPOC representation in leadership and company ownership, we will not be
able to meet the needs of an increasingly diverse population
BIPOC representation BIPOC representation
on industry boards on leadership teams
9%
7% 6%
2% 2% 2% 2%
1%
Black / Indigenous Latinx East,
African Southeast, Black / Indigenous Latinx East,
American or South African Southeast, or
Asian American South Asian
% of board members % of leadership members
n=124 company responses n=172 company responses
Source: JEDI Collaborative and New Hope Network Benchmarking Survey of U.S. natural products companies, conducted Q4 2019Brand spotlight: AYO Foods Perteet and Fred Spencer celebrate and bring the foods of West Africa to the frozen aisles of Whole Foods Market and other retailers nationwide.
SUPPORTING UNDERREPRESENTED BUSINESSES
Consumers continue to want to support those who have endured oppression
and help build a more equitable future.
LG BT O W N E D MINORIT Y OWNED WOMAN OWNED
& / O R N LG C C &/OR CERTIFIED &/OR CERTIFIED
(BIPOC)
Sales growth
1/24/21 +22% *
+23% *
+19% *
Sales growth
+36% +24% +15%
8/9/20
*DIRECTIONAL: Aggregate of applicable KeHE DIVERSEtrade™ products; For more information, see slide 40
List used for January metrics is same list as used for the 8/9/20 analysis for effective comparison
$ Sales % Chg,; Source: SPINS Latest 12 Weeks Ending 1.24.2021; Total US Natural Enhanced ChannelNew nonprofits created to foster justice, equity, diversity & inclusion in natural & organic, CPG
Thank you!
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