In the US, consumers are increasingly paying attention to what they put in and on their bodies. They are reading product labels, scrutinising chemical-sounding or perceived unnatural ingredients, and seeking out healthier, less processed offerings that their grandparents would recognise.
Consumers are also increasingly demanding greater transparency in the foods and packaged goods products they purchase: what is in the products they buy, where the ingredients came from and how they were made. Shoppers, particularly millennials, want to know the stories behind products and use those stories to determine how much they trust a brand and how much they will pay for it. According to New Hope 2017 consumer research, 65% of millennials would pay more for responsibly produced food compared with 25% of baby boomers.
As US consumers put more dollars towards healthy, clean and sustainable nutrition, their expectations are putting pressure on traditional food and beverage consumer packaged goods companies. But as the big food companies struggle in the age of the new consumer, other companies are finding market opportunity.
Growing at 6-10% each year over the last decade, US consumer sales of natural, organic and functional foods and beverages are far outpacing total US food industry sales, which grew less than 1% in 2016 according to Nutrition Business Journal (NBJ). Although still small in comparison to the total industry, natural, organic and functional food and beverages are forecast to reach $196 billion by 2020.
Other consumer packaged goods product categories are also being impacted by the new consumer. The US dietary supplement market grew 6% to $41bn in 2016, as consumers continued to increasingly spend their dollars on natural nutrition and wellness products. Combined sales of natural and organic personal care, household and pet products increased nearly 7% to $18.6bn in 2016.
The entire US natural and organic products industry, which includes foods and beverages, dietary supplements and personal care, household and pet products, surpassed the $200 billion mark in 2017 and has more than doubled in size since 2007, when industry sales were less than $100bn.
By 2020, NBJ is forecasting nearly $300bn in annual consumer sales, impressive for a business sector that was once considered a fad and supported only by yoga moms and tree-hugging hippies.
Shifting market dynamics, coupled with the increased and new kinds of investment dollars available to emerging brands, is motivating a growing number of companies to launch each year with product innovations that provide healthier, cleaner options; greater product transparency; and mission-driven business models that address societal and planetary problems like global warming, food security/access, nutritional poverty and more.
At our own Natural Products Expo West and East, more than 1,000 new finished product brands launch each year.
The food choices prioritised in Dubai look different to those in Dallas, and yet these same macro forces rocking the food and beverage landscape in the US are causing ripples elsewhere throughout the globe, as evidenced by worldwide growth of everything from organic food to dietary supplements.
In the last 10 years in the supplements market, for instance, China’s share of the market has grown faster than any other country, up to 14.3% of the world’s industry in 2016 from 9.6% in 2006. The Chinese market has gained the attention of many supplements companies as consumers are increasingly spending on health products and e-commerce continues to grow exponentially in the country.
And in vitamins and minerals, the strongest growth is coming from Eastern Europe and Russia, with increasing health concerns, rising obesity rates and disposable income spurring sales of supplements for overall health.
Carlotta Mast Senior Vice President, Content & Insights, New Hope Network