Across nearly all food, beverage, supplement, and personal care categories, growth in the sales of natural and organic products outpaced conventional counterparts, noted market observers speaking at Natural Products Expo West’s “The State of Natural and Organic” education session.

In 2024, sales of natural and organic products grew 5.7%. The natural and organic products market is primarily made up of foods (71.3% market share), followed by dietary supplements (22%) and personal care products (6.7%), reported Jessica Rubino, vice president of content and summits at New Hope Network.

In nearly 20 years, the natural and organic products market has tripled in size, from $97 billion in 2007 to an estimated $325 billion today, Rubino noted.

In both dollar sales and units sold, consumer packaged goods categorized by SPINS as natural products outpaced all non-natural counterparts, said Kathryn Peters, SPINS’ head of industry relations. The number of consumers who reportedly bought natural products went up by one percentage point last year compared to the year prior, and shopping trips in natural retail channels per buyer increased by 4%. The average consumer also spent 6% more on natural products than the year prior.

“This is being driven across many areas of the store, including refrigerated, grocery, and vitamins and supplements, so it’s a resilient, wonderful story of growth for the entire industry,” Peters said. “In every channel that SPINS tracks, we see natural products not only growing strong, but outpacing all other products in that store … this is not a zero-sum game, and a rising tide lifts all boats. So it’s great to see that continued, foundational growth across all the channels.”

While inflationary spending patterns beginning in 2022 have benefited private label products, and products designated as “better-for-you” had slower growth rates than all CPGs, “better-for-you” product sales now outpace all CPG sales by nearly 5%, noted Nick McCoy, co-founder and managing director at Whipstitch Capital, representing a significant rebound.

How Will the Election Impact This Market?

Following the 2024 election, consumers expect some palpable changes regarding the economic effects of the Trump administration and Robert F. Kennedy Jr.’s impact on health and wellness policy.  

Between January and February, consumer perceptions skewed negatively on both fronts, said Rubino, per a 4,000-person survey conducted by New Hope. “During uncertain times around policy or administrations, consumers often turn to their own choices and industries they trust, making it even more important for the natural and organic product industry to lean into its values,” Rubino said.

Economic concerns are centered around tariffs, which have a particularly strong impact on the dietary supplements industry, Rubino noted, and companies are leaning into domestic production and onshoring other aspects of business where and when possible.

Despite declining optimism regarding health and wellness policy, “there is greater awareness and more dialogue around chronic disease prevention and holistic health,” Rubino said. As the market becomes saturated with new companies, “we need to safeguard the integrity of the industry. There’s opportunity, but we want to make sure we safeguard it against opportunism.”

Policymakers have the potential to change the way consumers shop through their platforms, said Peters, even simply through building public awareness. After the U.S. Food and Drug Administration (FDA) announced that it would be banning Red Dye No. 3 from food products, consumers spent substantially less on products containing the additive, such as candy (-12%), bread and baked goods (-7%), jerky and meat snacks (-12%), and baking ingredients (-16%).

Will Innovation and Investment Accelerate?

While new product development has been declining across natural and non-natural CPG products, that downturn is beginning to stabilize, suggesting there may be a return to growth of product launches in the near future, said Peters.

Founders of natural and organic brands have struggled to find liquidity for several years now, but this may be changing soon, said McCoy, and it wouldn’t be surprising to see initial public offers pick up in this segment.

“We may not have had as much M&A or investment in the past two years, but this industry has built a tremendous amount of value; and investment, M&A, and other dollars are eventually going to catch up. CPG investors right now are sitting on a large pool of illiquid but very attractive assets, with lots of viable brands growing faster than the broader market,” he said. “Companies are growing large enough to become their own buyers and there’s lots of talk about the IPO market starting again. Before 2021 I could count the number of natural and organic brands that IPO’d on one hand, and now it sounds like it’s going to come back.”

According to SPINS data, there are an estimated 71 natural and organic brands valued at over $100 million, and 43 of those brands appear likely to get sold, said McCoy. Two years ago, just 55 natural/organic brands achieved a valuation of over $100 million.

Natural and organic brands valued at over $100 million are growing at 15.2%, while sub-$100 million brands are growing 6.2%. McCoy noted.

Products with Purpose

Maria Shriver, journalist, author, former First Lady of California, and founder of the Women’s Alzheimer’s Movement, spoke about the momentum behind the holistic health movement, and purpose-driven natural products. Shriver recently co-founded Mosh, a brand of protein bars fortified with cognitive support ingredients, with her son, Patrick Schwarzenegger.

“It’s so exciting that people are now focused on brain health and that people are creating products and supplements talking brain health, women’s health, and more, and it’s really been driven by people in this industry,” Shriver said. “My generation didn’t grow up looking at labels, or thinking about the impact of sugar, sodium, or other things we now know so much more about. I’ve learned about the role of food in brain health from researchers, and others trying to influence how we talk about chronic disease and neurological diseases … We, as a country, need what you are doing. We need healthier food and people focused on changing the trajectory of chronic disease in this country.”

She added: “The country is moving in your direction. Healthcare is too expensive, and neurological diseases are bankrupting families across this country. It’s not a question of whether we should change, it’s a question of how fast we can do it.”

Peters said the industry should feel compeled to make sustainability topics, such as climate impact and regenerative agriculture, more of a “table stakes” issue, as shoppers won’t go out of their way to spend money on a sustainable product if it doesn’t also fully deliver on taste and quality. There are currently many bright spots, with sales of a regenerative grain called Kernza (+44.8%), controlled environment agriculture produce (+12.1%), and certified regenerative products (+20%) each rising substantially over the past year.

“Founders are taking purpose-driven ideas forward, with biodiversity to future-proof the food supply; kid-positioned products that can create conversations at home; and new packaging with plastics removed, biodegradable materials, and reusable packages. Founders are doing what’s right to prepare for generations ahead of us, even if consumers aren’t demanding it. We also see retailers making commitments and getting ready,” said Peters.

At Expo West, members of Purpose Pledge, a peer-led model for ethical businesses in the natural products space founded by 14 companies, discussed the new standard they’re setting for mission-driven natural brands.

In order to comply with the Purpose Pledge guidelines, brands need to make long-term commitments to 10 ethical and transparent practices. The role of the organization is “cultivating right relationship, upholding mutual accountability, and accelerating authentic stakeholder capitalism,” through commitments to product quality, independent governance by a purpose-led team of management and owners, supply chain integrity, fair and balanced compensation (20:1 pay ratio or better between highest- and lowest-paid employees), a living wage as calculated by MIT Wage benchmark, inclusion, community engagement, climate positivity, circularity for zero waste, and capacity building.

The Pledge was founded by representatives from Dr. Bronner’s, One Step Closer, and Lift Economy, who were frustrated with companies making sustainability claims of varying credibility and scaling back their commitments rather than improving over the long term. “Existing certifications, standards, financing models, and policy initiatives,” designed to come secondary to investor returns, “are wholly inadequate to meet these urgent challenges,” and “many companies exacerbate the problem through greenwashing and purpose-washing,” according to the organization.

The founding companies behind Purpose Pledge are Dr. Bronner’s, Gaia Herbs, Guayaki Yerba Mate, Kuli Kuli, MUD\WTR, Nature’s Path Organic Foods, Numi Tea, Organically Grown Company, Pachamama Coffee Farmers, Philosopher Foods, SIMPLi, and Wildway.

“Not only are these companies leaders modeling really ethical business practices, but they’re also doing pretty well as businesses,” said Les Szabo, chief strategy and impact officer at Purpose Pledge member company Dr. Bronner’s. “In total, these 14 companies represent well over $1 billion in sales. That’s collective impact and that’s our hope for the Purpose Pledge — that we can build this foundation and lay groundwork that will eventually ripple out to accelerate the shift to stakeholder economics.”

“We’ve seen lots of relationships break down, and companies roll back their commitments,” said Lara Dickinson, executive director and co-founder of One Step Closer. “We can build our capabilities by challenging each other’s assumptions, reciprocating, listening humbly, and taking more steps than one company would do alone. That’s the big difference from the other commitments we’ve seen out there. There’s a deep structure of accountability, support, and development in this community.”

Everyday Biohackers

Biohacking is on its way to becoming a household term, Rubino noted. When surveyed by New Hope, the leading practices that made up consumers’ biohacking routines included dietary supplements (37%), diet modification (31%), “sleep improvement hacks” (28%), wearable technology (28%), extreme exercise (25%), and blood tests (19%). 

The way consumers get information is changing rapidly, she added. “This is largely driven by Gen Z, but consumers at large are getting a better understanding of how to use generative AI to help them make decisions about their food, beverage, and dietary supplement purchases.”

For Gen Z, 65% of consumers used AI to decide on a food or beverage purchase, and 68% on dietary supplement purchases. Similarly, 41% of Millennials used AI when deciding what supplement to purchase, the survey revealed. This begs the important question of how a marketing team can ensure their product is recommended by ChatGPT.

Rubino noted that 52% of consumers today use wearable devices, and how they use them is shifting. “It’s no longer about tracking your steps or your sleep, now it’s about identifying stress management, how sleep relates to stress, and what can take that understanding to a deeper level,” she said.

Hormonal Health

With menopause management receiving some overdue attention in the supplements space, and with testosterone replacement therapy usage increasing severalfold among U.S. men, positioning products for hormonal health could be a key growth driver in years to come, Rubino noted.

Sexual health supplements are mostly positioned for men (61.8% market share), but women’s (23.6%) and general (14.6%) products are seeing higher growth rates, innovation, and buy-in from more companies, said Rubino. Reproductive health and menopause products experienced significant growth, increasing in sales by 20% and 14%, respectively.

According to New Hope’s research, “More than 50% of consumers report that they’ve experienced reproductive or fertility concerns, and more than half of them are getting their hormones tested, so that testing was kind of the missing piece of the puzzle and it’s all coming together now,” Rubino noted.

Everything in Balance

Consumers surveyed by New Hope expressed openness to both conventional Western medicine and natural, alternative, or integrative healthcare products.

Gen Z strongly over-indexed in turning to a combination of both approaches (46%) to manage a health condition, versus utilizing only natural/alternative healthcare (29%) or conventional/Western medicine (25%). Similarly, Gen X consumers said they’re most likely to turn to a combination of both approaches (45%), followed by conventional/Western medicine (41%) and then natural/alternative healthcare (14%). On the other hand, both Boomers and Millennials expressed a strong preference for conventional/Western medicine alone over natural/alternative medicine, or a combination of both approaches.

Rubino noted this dynamic is leading to some collaborative efforts between the nutraceutical and pharmaceutical segments, such as the Vitamin Shoppe’s recent decision to offer prescriptions for both GLP-1 receptor agonist drugs and testosterone replacement therapy prescription services within its stores.