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    Breaking News

    Natural & Organic Retail Foods and Beverage Market Reaches $69 Billion

    Natural & organic industry sales 32% higher than five years ago, with growth outpacing overall food and beverage market.

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    10.10.16
    While traditional value drivers—price, taste, and convenience—continue to be among the most important influencers of consumer shopping behavior, Americans also weigh “evolving drivers”—health and wellness, safety, social impact, experience, and transparency—in their food purchasing decisions. Perhaps nowhere are these “evolving drivers” more inherently perpetuated than in the thriving industry for natural and organic foods and beverages, according to market research publisher Packaged Facts, Rockville, MD in the new report Natural and Organic Foods and Beverages in the U.S., 5th Edition. 
     
    “From freshness to healthy ingredients to transparency of sourcing to eco-conscious business models, there’s no denying that today’s core consumer values increasingly center around what the natural and organic food and beverage market has been offering for years,” says David Sprinkle, Packaged Facts’ research director. 
     
    Packaged Facts estimated that total U.S. retail sales of natural and organic foods and beverages through all retail channels will reach $69 billion by the end of 2016—an 11% gain over 2015 sales of almost $63 billion and 32% higher than sales five years earlier. During the 2012-2016 period, sales rose by a compound annual growth rate (CAGR) of 7%. Growth of natural/organic products outpaced that of total food and beverage sales during the period. 
     
    Looking ahead, Packaged Facts projects that the retail market for natural and organic foods and beverages will grow by almost 70% between 2016 and 2021. It’s no wonder then that big brands are making notable investments to overhaul products and portfolios in hopes of winning over natural-leaning consumers. And make no mistake, successfully integrating natural and organic foods into established brands is more challenging than it sounds. It isn’t a matter of merely swapping traditional tomatoes for those that are naturally or sustainably grown. Changes can often seem frustratingly difficult or slow due to the need to find clean ingredients that will work in iconic brands and products without negatively affecting their color, taste, texture, and shelf life. 
     
    Despite the challenges, an investment in natural and organic has clearly been worth it. Over the past 18 months alone the food industry has seen more than a half dozen popular brands make waves on the natural and organic front. Just to name a few examples. 
    • Campbell Soup announced plans to removed artificial colors and flavors from nearly all its North American products by the end of fiscal 2018. 

    • Mondelēz International made a commitment to remove artificial colors and flavors from many of its packaged food brands by 2020. 

    • ConAgra Foods introduced three new organic canned tomato products—diced tomatoes, tomato sauce, and tomato paste—under its Hunt’s brand. 

    • General Mills has already made five of its top-selling Cheerios flavors gluten-free and intends to transition two more Cheerios varieties to gluten-free in fiscal 2017. 

    • General Mills competitor Kellogg Co. is working to eliminate artificial colors and flavors from its Froot Loops, Apple Jacks, and other branded cereals by 2018. 

    • Kraft Heinz quietly removed artificial colors, flavors, and preservatives from its flagship macaroni & cheese and consumers—to the company’s credit—did not notice the difference.
    • Meanwhile, The Hershey Co. introduced Simply 5 Syrup, a chocolaty syrup made from just five ingredients—cocoa, water, pure cane sugar, organic invert cane syrup, and natural vanilla. 

    • In a similar vein, WhiteWave Foods’ International Delight brand launched a new line of coffee creamers called Simply Pure, made with skim milk, cream, cane sugar, and natural three flavors (vanilla, caramel, or hazelnut). 

    • And not to be outdone, Mars Inc. pledged to remove artificial colors from all its human food products over the next five years, as part of its commitment to meet evolving consumer preferences. 

    Packaged Facts anticipated the next phase of clean label could resemble a move that The Beech-Nut Nutrition Co. has taken. On its website, the company has begun listing the exact percentage of each ingredient in its jar and pouch baby food products. It’s what Packaged Facts views as the ultimate nod to product and ingredient transparency in an increasingly competitive market. 
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