Natural and organic sales approaching $300 billion

Natural and organic sales approaching $300 billion

PHILADELPHIA — The natural products industry has the size, scale and influence to create positive impact for people and the planet, said Carlotta Mast, senior vice president at New Hope Network.

Sales of natural and organic products, including food and beverage, supplements, household and personal care categories, are on track to surpass $300 billion by 2023 and $400 billion by 2030, Ms. Mast said, citing Nutrition Business Journal estimates, during a presentation at Natural Products Expo East on Sept. 23 in Philadelphia.

Demand has eased from the spike that occurred in 2020, when consumers stockpiled groceries during the early pandemic period. Still, growth remains robust as consumer habits over the past year changed in favor of the natural products industry.  Sales growth driven by the pandemic is expected to continue over the next three years as new consumers discover and buy more natural and organic brands, Ms. Mast said.

“People tried those new brands, and in many cases, they stuck with them, especially across the food and beverage categories,” she said. “In addition, health and wellness and supporting our immune health became top priorities for us during the pandemic, and this continues to also persist and help grow our industry in 2021.”

The dramatic shift to home cooking elevated demand for organic produce, dairy and packaged foods as more consumers began paying attention to how food is grown and produced, Ms. Mast said.

“It is these new customers that will help define our industry’s future as well as the core customers that have always driven natural and organic,” she said.

Sales of natural and organic foods grew three times faster than sales of conventional foods, said Kathryn Peters, executive vice president of business development at SPINS, a data technology company. The pandemic pushed consumers to seek foods with functional ingredients previously found only in the supplement aisle, Ms. Peters said, highlighting products containing apple cider vinegar, elderberry, moringa, collagen, super mushrooms and ashwagandha.

“It’s so exciting to see people realizing that your food can do more for you than just sustenance and really act as medicine,” she said.

Plant-based products continue a strong trajectory, with 12.8% growth over the past year while all of food and beverage grew 4.2%, Ms. Peters said.

“(Plant-based) is still on fire because people are increasingly understanding, ‘it’s good for my body, it’s good for the world,’” she said.

Ms. Mast and Ms. Peters, along with Nicolas McCoy, managing director and co-founder of Whipstitch Capital, discussed how the industry may harness the momentum to address social and environmental issues.

Mr. McCoy suggested broadening the definition of vital infrastructure to include education, health care, arable land and ocean. Investing in these key areas can accelerate progress in reducing poverty and incarceration, promoting income equality and protecting natural resources, he said.

“One paradigm that is important to change if we want to accelerate things is to stop looking at tax increases and charity to fund impact,” Mr. McCoy said.

Brands may take action to tackle climate change by partnering more closely with economically vulnerable farms and supporting conversion to more sustainable practices, Mr. McCoy said. Localizing production as much as possible will help reduce logistical costs and reduce carbon footprint.

Ms. Mast pointed to a lack of diversity in industry leadership that does not reflect the general population.

“We don’t have much representation of Black, Indigenous, Latinx and other people of color on our industry boards or within our industry leadership circles, and that’s increasingly going to be a challenge for our industry because how can we stay relevant to and serve an increasingly diverse consumer base if our leadership doesn’t reflect the needs and the behaviors and the desires of those consumers?” she said. “Our innovation will just not keep pace if we don’t actively work to nurture more diverse leadership in our industry, if we’re not really supporting those BIPOC-owned and -led brands in our industry.”

Businesses must invest in providing living wages, education and training and creating an inclusive culture, and retailers should ensure their aisles reflect all customers, she said.

“The ethnic and international aisle just doesn’t cut it anymore for where we’re heading as a country,” Ms. Mast said.

Investors should embrace and create space for new board talent and invest in diverse entrepreneurs, she added.

“We have to make sure that our practices and the way we’re investing in these companies really is fair and equitable and can, again, bring that diverse leadership we need for tomorrow,” she said.