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    Online Exclusives

    Natural and Organic at Expo East: Valuing Sustainability, Representation and Climate Action

    At Natural Products Expo East, experts discussed industry growth and incorporating social values into businesses and brands.

    Natural and Organic at Expo East: Valuing Sustainability, Representation and Climate Action
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    By Mike Montemarano, Associate Editor 09.30.21
    Sales of natural and organic products are expected to surpass $300 billion by the year 2023, according to data gathered by SPINS, Whipstitch Capital, and New Hope Network, presented at Natural Products Expo East, one of the first in-person trade events for the industry since the COVID-19 pandemic began.
     
    Sales are equalizing from a surge seen in 2020, but experts project that many consumers will continue to hold to newfound relationships with natural and organic products as a means to promote health and wellness. Compared to pre-COVID estimates, sales of natural and organic foods, beverages, and dietary supplements are still set to exceed Nutrition Business Journal’s pre-COVID estimates by $6.2 billion in 2024, said Carlotta Mast, lead of New Hope Network’s content team.
     
    According to Kathryn Peters, executive vice president of SPINS, wellness and specialty-focused products are experiencing 8% dollar growth while natural-positioned products are seeing 5.9% growth, compared to just 1.9% growth for conventionally-positioned products.
     
    “When we mean wellness products, many wellness products in the mainstream channel might not have a fully-clean ingredient deck, but between the two, these are consumers seeking health benefits,” said Peters. “A lack of accessibility to natural products will be a huge call to action in order to elevate everything across our food supply. As we look at week-by-week sales, we continue to see natural products outpacing the growth of all products on the whole in every channel, which means that consumers are coming, and they’re staying, and they’re continuing to buy more. This isn’t just a pandemic phase.”
     
    While internet sales have soared, consumers are re-emerging from home to shop for natural and organic products at brick-and-mortar establishments again, Peters said. Consumers value the role that in-person retail interactions have in shopping decisions, Peters said, and with a resurgence in in-person shoppers, now is the time for the industry to re-focus on convenience, consumer education, and more.
     
    Key Attributes
    Peters noted that several of the product positionings and certifications which were especially fruitful this year were tied to three ways natural and organic products impact the consumer and the world: sustainability, socially-responsible commerce, and a holistic approach to nutrition. Top-selling product claims for this year included claims tied to animal welfare (especially in terms of animal feed and absence of antibiotics), plant-based, certifications such as non-GMO, gluten-free, fair trade, and B Corp, and adherence to specialty diets.
     
    “Consumers aren’t only looking out for their own safety and health, but pushing into sustainability, whether it’s plant-based or animal-based ingredients,” Peters said. “Consumers are looking for social responsibility and transparency about how certain products can positively affect people. Lastly, consumers want to use their diet as a first line of defense not only for today but what might happen in the future. These three themes are often inextricably combined. Consumers are looking to return to minimalism. The food industry used to be based on simple, natural foods, and then things got added to it. Consumers are going back to wanting as few ingredients in their products as possible. We see real changes in store aisles and anticipate the food supply heading towards clean labels and whole foods as a result of changes in this industry. Things once seen in supplement formats are making their way into groceries and refrigerated foods.... People want more than sustenance from their foods, they want them to act as medicine.”
     
    Representation Matters
    Shifts in the demographic makeup of the U.S. population and rising popularity of international cuisine are cues for the natural products industry to follow, according to speakers at Natural Products Expo East.
     
    A survey conducted by J.E.D.I. Collaborative in conjunction with New Hope Network found that BIPOC (Black, Indigenous, and People of Color) representation in leadership and trade association roles in the natural products industry is far from commensurate with U.S. population demographics.
     
    “We’re not a very diverse industry when it comes to our leadership circles,” Mast said. “It’s going to be a challenge to stay relevant and serve an increasingly diverse consumer base if our leadership doesn’t reflect the needs, behaviors, and desires of those consumers. Innovation won’t keep pace if we don’t actively support more diverse leadership in our industry and support BIPOC-owned and led brands in our industry. This is why the work of organizations like J.E.D.I. Collaborative, which is helping companies make real commitments toward justice, equity, diversity, and inclusion within their businesses, and why new organizations like Project Potluck and Included are so essential.”
     
    Consumers are motivated to shop with their values in mind, Peters said. “Beyond quality, natural, and organic ingredients, progressive shoppers in particular are choosing products based on their values related to health, social justice, and the environment.... People want companies to take social and political stances. We’ve seen a lot of growth in minority ownership and leadership, and veteran-owned businesses have grown a ton as well. People want brands and the products that are available to them to be a reflection of their values and their communities.”
     
    Industry Footprint
    Alongside sales trends, industry leaders should be mindful of the impact of climate change. The United Nations’ Intergovernmental Panel on Climate Change recently reported that its previous estimates of global carbon emissions have fallen drastically short of 2021’s reality, with the annual atmospheric carbon levels now approaching roughly 410 ppm. Today, it is estimated that the U.S. alone is currently experiencing an arable land loss at a rate of 3 million acres per year, and the ocean’s average pH level has reached 8.1, down from a pre-industrial level of 8.2, noted Nick McCoy, co-founder and managing director of Whipstitch Capital. “When we think about peak population, there’s only so much arable land on this planet, and there are only so many crops we can grow,” he said.
     
    Charity has its limitations, McCoy said, and in the future, the industry’s footprint will need to be based on partnerships and initiatives built into business models in order to meet shared goals for social and environmental welfare. “Today, vital infrastructure is thought of in a much more expansive manner, and is a thing that government and private industry can invest in together,” McCoy said, noting that the private sector thinking about education, healthcare, the environment, and income inequality as areas tied to GDP.
     
    “One important paradigm which will lead to substantial change is to stop looking at charity and tax increases to fund impact. Charity is finite, and social and environmental change are compelling investment cases,” McCoy said. “We [the United States] have $150 trillion in assets, growing at a rate of 400% a year.... We have to be involved in positive, risk-adjusted, economically-viable infrastructure investments, and I do believe they exist.”
     
    Peters concurred, saying that the natural products industry is at peak momentum when it comes to long-term sustainability investments. “By 2030, we will be a $400 billion dollar-plus industry, and will have the size and scale to create positive impact for people and the planet,” she said. “People are willing to pay a premium to vote for their values with their dollars. We should leverage this momentum and think about the big and the small things.”
     
    McCoy said the current movement within the industry for companies to shift to vertical integration holds a lot of promise as an investment into human welfare and ecological footprints for nutraceutical companies. Maximizing control over supply from farm to table ensures that finished product companies can promote sustainability on sourcing where often people and the planet are the most vulnerable.
     
    “Supply chains are getting more complicated and challenging. During COVID, we had all kinds of crazy things happen, and companies are growing quickly at a pace that outgrows manufacturers,” McCoy said. “We’re seeing brands backwards-integrating, which is something we really didn’t see 10 years ago. It’s an opportunity here to increase both sustainability and income inequality. It’s a way to partner with farms so that they can sell their product at a fair price, and go organic or regenerative. Companies embracing manufacturing are training employees and investing in the education of their employees; they’re both paying them more and increasing their value. That’s a permanent impact that would still be there for those employees if your company disappeared tomorrow.
     
    “Farms that struggle the most with maintaining their arable land are small farms,” McCoy continued, “however, they’re also the most malleable. Farms under 1,000 acres are the ones that our industry is most likely to partner with.”
     
    Exemplars
    The Expo East keynote panel also highlighted a few companies whose work includes investments in diversity, inclusivity, and environmental stewardship.
     
    “We’re all here, and if we commit to building generational equity with and for each other, we create a new retail experience. We remove ourselves from the center of the work and focus on the humans behind our business,” said Le’Spencer Walker, director of merchandising vendor development at Target and the head of Target’s Black Beyond Measure initiative. “If we focus on people who run the businesses, while harnessing our collective powers and privileges, we can create a more inclusive retail experience where businesses can feel like they’re authentically showing up.”
     
    Corwin Heatwole, head of Farmer Focus, said that today’s organic movement requires small farmers to become investing partners in the process, and maintaining farmer ownership is integral to the humane treatment and organic status of animal products.
     
    “What’s typical for poultry farming is an integrative model—companies who’ve answered the call for faster and cheaper food own the farms, processing capabilities, and even the animals on farms. Farmers historically have lost control and have to go by company playbooks. It hasn’t always been this bad, but today, farmers’ pay is flat, and they’re struggling with shorter returns on bigger investments. We’re focused on a big-picture need for more responsibly-produced meat for an ever-growing population, and want to combine practices and technology that improves quality, animal welfare, and things that you can incorporate into farming for carbon sequestration and scalable, regenerative practices.”
     
    Stephen Ritz, a Bronx educator working in the poorest congressional district in the U.S., discussed his role in nutrition education, and how initiatives such as the Green Bronx Machine can serve as entry points for companies seeking to make a difference in underserved communities whose healthy food options are scarce. As a non-profit organization, Ritz’s Green Bronx Machine provides his students with a fully-integrated, project-based curriculum centered on the science of growing vegetables.
     
    “We have manufactured, synthetic food. We live in what’s called a food desert, but I think it’s more of a food swamp, where there’s nothing good,” Ritz said. “We’re building a business case for investing in food deserts by showing that people respond to healthy food, and showing that it’s about access. Good food should be a basic human right and one of many bottom lines. It’s about children who were born into a situation that other people wouldn’t want to be caught dead in. Access to good food is one way to change that.”


    Mike Montemarano has been the Associate Editor of Nutraceuticals World since February 2020. He can be reached at MMontemarano@RodmanMedia.com.
     
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