Natural and Organic Foods and Beverages in the U.S., 4th Edition

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Natural and Organic Foods and Beverages in the U.S., 4th Edition

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U.S. retail sales of natural and organic foods and beverages rose 5.5% to nearly $53.5 billion in 2014, 53% higher than sales five years earlier, with the organic foods sector leaping ahead 12.5% in 2014. Amid this rapid growth, the marketplace is changing rapidly, with new plays by traditional retailers like Kroger, Walmart, and Target, and strengthening competition to Whole Foods Market from smaller natural food chains and independents. Meanwhile, lawsuits over alleged misuse of "natural" claims on food labels have skyrocketed in the past several years. "Natural" claims have also been slammed by the popular media, consumer advocacy groups, and even organic industry groups as being ill-defined and meaningless. The result has been a retreat from "natural" labels by many marketers, and confusion or avoidance on the part of consumers.

This completely revised report, Natural and Organic Foods and Beverages in the U.S., 4th Edition, examines sales and growth potential, identifying key issues and trends that will affect the marketplace through 2019. The report also analyzes and profiles major marketers and retailers in this market; discusses marketing and new product trends; and looks at consumer attitudes and behaviors toward natural/organic foods and beverages and retail shopping patterns. Included are copious tables, charts, graphs, and illustrations that highlight and reinforce key points.

Methodology

Our sources of information for Natural and Organic Foods and Beverages in the U.S., 4th Edition include primary research entailing interviews with retailers and other members of the industry, and on-site examination of retail stores. Secondary research involved the evaluation and comparison of data from articles found in financial, marketing, and industry and consumer publications, as well as on corresponding websites. Other sources for secondary data include annual reports, 10-Ks, transcripts of earnings calls, and literature from individual companies; government reports; industry associations such as the Organic Trade Association (OTA); and other reports by Packaged Facts. Consumer data are derived from Simmons National Consumer Surveys for Fall 2013, from Experian Marketing Services.
Chapter 1: Executive Summary
Scope and Methodology
Scope of Report
Definition of "Natural"
Definition of "Organic"
Report Methodology
A Range of Sales Estimates from Different Sources
The Market
Retail Sales of Natural/Organic Foods and Beverages Reach $53.5 Billion in 2014
Organic Foods and Beverages: A Larger Slice of a Bigger Pie
Produce and Dairy Are the Largest Categories
Figure 1-1: Share of U.S. Retail Sales of Natural and Organic Foods and Beverages by Product Category, 2014 (percent)
Mass-Market Channels Capture Almost Half of Retail Sales
Most Consumers Buy Natural and/or Organic Products
Social and Environmental Issues as Drivers for Natural/Organic Foods and Beverages
The GMO Debate
The Marketers
Marketer Overview
Recent Mergers and Acquisitions
Is Selling the Company Selling Out?
The Gourmet/Natural Foods Synergy
Private Label Natural and Organic Products Booming
Marketing and New Product Trends
Marketers Removing "Natural" Claims from Products
More Retailers Offering Private Label or Exclusive Lines
Non-GMOs
Two New Frozen Foods Marketers Hope to Take the Market by Storm
Shelf Stable Mixes and Meals
Dairy Case
Snacks
Retail Trends
Upsurge of Competition in Natural Foods
Store-within-a-Store Merchandising vs. Integration
Channel and Retailer Profiles
Supermarkets
Natural Food Stores
Warehouse Clubs
Farmers Markets
Internet and Mail Order
Consumer Trends
One in Four Households Buy Organic Foods
Attitudes Toward Food and Cooking
Trader Joe's and Whole Foods
Figure 1-2: Share of U.S. Adults Who Shop in Trader Joe's, Whole Foods, and Independent Natural Food Channel, 2014 (percent)
Chapter 2: The Market
Chapter 2 Highlights
Market Overview
Scope of Report
Some Foodservice Crossover
Definition of "Natural"
Definition of "Organic"
Market Size and Growth
Methodology for Sales Estimates
A Range of Sales Estimates from Different Sources
Retail Sales of Natural/Organic Foods and Beverages Reach $53.5 Billion in 2014
Table 2-1: U.S. Retail Sales of Natural and Organic Foods and Beverages, 2009-2014 (in billions of dollars)
Organic Foods and Beverages: A Larger Slice of a Bigger Pie
Figure 2-1: Share of U.S. Retail Sales of Natural and Organic Foods and Beverages by Market Segment: Natural vs. Organic, 2014 vs. 2009 (percent)
Produce and Dairy Are the Largest Categories
Figure 2-2: Share of U.S. Retail Sales of Natural and Organic Foods and Beverages by Product Category, 2014 (percent)
Mass-Market Channels Capture Almost Half of Retail Sales
Figure 2-3: Share of U.S. Retail Sales of Natural and Organic Foods and Beverages by Retail Channel, 2014 (percent)
Market Outlook
Most Consumers Buy Natural and/or Organic Products
Reasons for Buying Natural/Organic Foods and Beverages
Social and Environmental Issues as Drivers for Natural/Organic Foods
and Beverages
Produce and Dairy are 'Gateway' Categories for Organic Foods
Increased Sales Also Being Driven by Widening Distribution Channels
Overlap Between Natural/Organic and Gourmet Foods
Some Organic Products in Short Supply
Organic Farming Takes Root
Table 2-2: U.S. Certified Organic Acreage, 1992, 2000, 2003, 2005, 2008, and 2011
2014 Farm Bill Supports Organic Industry
Some Farmers Seek Alternative Labels to Organic
The GMO Debate
State GMO Labeling Initiatives
Retailer and Marketer GMO Initiatives
Say 'No' to Natural?
Is Some of the Shine Off Organic?
Are Organic Foods Healthier?
A Rash of Lawsuits over Natural Labeling
Many Large Companies Are Retreating from Natural Labeling
"Simple" or "Simply" May Not be Safer
What's the Solution?
Is "Raw" the Next Target of Food Litigation?
Less than 20% of Consumers Account for Almost Half of Natural/OrganicSales
Another Demographic Segmentation
Chapter 2: The Market [Continued]
Projected Market Growth
U.S. Retail Sales Will Reach $86.7 Billion by 2019
Table 2-3: U.S. Retail Sales of Natural and Organic Foods and Beverages, 2014-2019 (in billions of dollars)
Chapter 3: The Marketers
Chapter 3 Highlights
Marketer Overview
Many Thousands of Marketers
More Acquisitions, Investments, and Funding
Illustration 3-1: Who Owns Organic Chart
Recent Mergers and Acquisitions
Organic Extensions of Mainstream Lines Not Very Successful
Is Selling the Company Selling Out?
The Gourmet/Natural Foods Synergy
Private Label Natural and Organic Products Booming
Competitor Profiles
Amy's Kitchen, Inc.
The Nation's Leading Organic Frozen Foods Brand
Annie's, Inc.
Boulder Brands, Inc.
The EVOL Empire Is Growing and Evolving
Chobani, LLC
Fast Success and Exponential Growth
General Mills, Inc.
Big Business-Owned Organic
Cascadian Farm
Food Should Taste Good
Lärabar
Muir Glen
Original Cheerios Goes Non-GMO
The Hain Celestial Group, Inc.
Growth Through Acquisitions
the happy egg co.
Humanely Produced by Free Range Hens
Honest Tea
Acquired by Coca-Cola
Newman's Own, Inc.
Wholly Dedicated to Philanthropy
Organic Valley
Owned by a Cooperative of Farmers
WhiteWave Foods Co.
Opening the Gateways to Organic Foods Even Wider
Chapter 4: Marketing and New Product Trends
Chapter 4 Highlights
Marketing Trends
Marketers Removing "Natural" Claims from Products
More Retailers Offering Private Label or Exclusive Lines
Non-GMOs
Chapter 4: Marketing and New Product Trends [Continued]
Third-Party Certification
Illustration 4-1: Certifications on Purely Elizabeth Products
New Product Trends by Category
Frozen Meals
Two New Marketers Hope to Take the Market by Storm
Illustration 4-2: Luvo Chicken Chile Verde Frozen Entrée
Illustration 4-3: Self Healthy Kitchen Frozen Entrees, from Self Magazine
Illustration 4-4: Evol Thai Style Curry Chicken Multiserve Meal
Illustration 4-5: Newman's Own Frozen Steak Fajitas Skillet Meal
Illustration 4-6: Lean Cuisine Honestly Good Frozen Entrees
Veggie Burgers
Illustration 4-7: Dr. Praeger's Sensible Foods Kale Veggie Burgers
Illustration 4-8: Little Green Foods Pea-Lafel Burgers
Ethnic Flavors
Illustration 4-9: Saffron Road Frozen Korean Tacos
Illustration 4-10: Buen Sabor Frozen Plantain & Cheese Empanadas
Illustration 4-11: Kashi Greek Tzatziki Frozen Pizza
Illustration 4-12: Annie's Macaroni & Cheese Frozen Pizza
You Say Potatoes…
Illustration 4-13: Alexia Smart Classics Roasted Fries & Potatoes
Illustration 4-14: Ore Ida Simply Skin-On Fries and Wedges
Shelf-Stable Foods
Mixes and Meals
Illustration 4-15: Lundberg Family Farms Rice & Seasonings Mixes
Illustration 4-16: Horizon Macaroni & Cheese Mixes
Illustration 4-17: Pacific RTE Macaroni & Cheese and Pasta O's
Sauces and Cooking Ingredients
Illustration 4-18: Passage Foods Stir-Fry and Simmer Sauces
Illustration 4-19: Swanson Mexican Tortilla Flavor Infused Broth
Illustration 4-20: Green Giant Veggie Blend-Ins
Dairy Case
Grass-Fed Milk and Cheese
Illustration 4-21: Organic Valley Grassmilk
Illustration 4-22: Organic Valley Grassmilk Cheese
Milk Protein Shakes
Illustration 4-23: Organic Valley Milk Protein Shakes
Milk Alternatives
Illustration 4-24: Silk Almondmilk Protein + Fiber
Yogurt: It's All Greek to Me
Illustration 4-25: Chobani Oats Greek Yogurt
Illustration 4-26: Fage FruYo Greek Yogurt
Illustration 4-27: Newman's Own Greek Yogurt
Illustration 4-28: Smári Organic Icelandic Yogurt
Illustration 4-29: Tarté Asian Yogurt
Illustration 4-30: Blue Hill Vegetable Yogurt
Eggs—Cage Free, Plus
Illustration 4-31: the happy egg co. Eggs
Illustration 4-32: Wild Oats Cage Free Just Laid Eggs
Fresh Produce
Illustration 4-33: Bolthouse Farms Organic Juicing Carrots
Cereals and Cereal Bars
Illustration 4-34: Cascadian Farm Protein Granola
Chapter 4: Marketing and New Product Trends [Continued]
Illustration 4-35: Cascadian Farm Buzz Crunch Honey Almond Cereal
Illustration 4-36: Nature's Path 'Chia Plus' Coconut Chia Organic Granola
Illustration 4-37: Love Grown Foods Power O's
Illustration 4-38: Lärabar Renola Grain-Free Granola Bars
Snacks
Chips and Crisps
Illustration 4-39: Van's Natural Foods Multigrain Chips
Illustration 4-40: Kashi Hummus Crisps
Illustration 4-41: Terra Tropical Blend Chips
Illustration 4-42: Pastry Smart Jack Crisps
Refrigerated Snacks
Illustration 4-43: Hope Hummus
Desserts
Illustration 4-44: Hope Spreads
Illustration 4-45: Just Desserts Organic Salted Caramel Brownie Bites
Illustration 4-46: Amy's Gluten-Free Biscotti
Illustration 4-47: Figo! Organic Gelato
Baby and Kid-Targeted Foods
Illustration 4-48: Earth's Best Organic World Foods
Illustration 4-49: Earth's Best Organic Gluten Free Hot Cereal
Illustration 4-50: Plum Organics Mighty 4 for Tots Essential Nutrition Bars
Illustration 4-51: Happy Family Happy Tot Best Friends Toddler Cookies
Illustration 4-52: Sprout Smash Organic Kids Snack Pouches
Illustration 4-53: Sprout Rise Morning Smoothies
Illustration 4-54: Annie's Cheddar Squares
Heads Up: TummyTickler and Bellywashers Rebrands as good2grow
Illustration 4-55: good2grow Juices for Kids
Illustration 4-56: Clif Kid Zbar Protein
Beverages
What Will Be the Next 'Hot' Water?
Illustration 4-57: Maple. Brand Maple Water from DrinkMaple
Illustration 4-58: True Nopal Cactus Water
Illustration 4-59: Love Birch Birch Drinks
Illustration 4-60: Arty Artichoke Water
Illustration 4-61: Taste Nirvana Coconut Water with Thai Chili Extract
Coffee and Tea
Illustration 4-62: Blue Bottle New Orleans Iced Coffee
Illustration 4-63: Celestial Seasonings Organic Fair Trade Certified Estate Teas
Illustration 4-64: Honest Tea Honest Refreshers
Sodas
Illustration 4-65: AriZona Soda Shaq Cream Soda
Functional Drinks
Illustration 4-66: Healthee Organic Turmeric Drink
Illustration 4-67: Bundle Organics Prenatal Beverages
Chapter 5: Retail Trends
Chapter 5 Highlights
Overview
Upsurge of Competition in Natural Foods
Table 5-1: Selected Fresh and Natural Foods Competitors, 2014
Store-within-a-Store Merchandising vs. Integration
Retailer Profile: The Kroger Co.
Chapter 5: Retail Trends [Continued]
Illustration 5-1: Kroger Simple Truth and Simple Truth Organic
Retailer Profile: Safeway Inc.
Natural Food Stores
Table 5-2: Trader Joe's vs. Whole Foods Market, 2013
Figure 5-1: Characteristics Sought Out by Consumers When Food Shopping,
2014 (percent)
Retailer Profile: Whole Foods Market Feeling the Heat
Retailer Profile: Trader Joe's
Smaller Natural Foods Chains and Independents Booming
Retailer Profile: Sprouts Farmers Market
Illustration 5-2: Sprouts Farmers Market, Storewide Interior
Retailer Profile: Natural Grocers by Vitamin Cottage Planning Major Expansion
Illustration 5-3: Natural Grocers by Vitamin Cottage, Billings, MT
Retailer Profile: Fresh Thyme Farmers Market Starting Up
Illustration 5-4: Fresh Thyme Farmers Market
Natural Food Co-ops
Retailer Profile: PCC Natural Markets
Illustration 5-5: PCC Natural Markets, Greenlake Village, Seattle
Retailer Profile: Park Slope Food Coop
Mass Merchandisers and Supercenters
Retailer Profile: Walmart Forays into Organic Foods—Again
Illustration 5-6: Walmart-Wild Oats Infographic
Illustration 5-7: Fresh & Easy's New Commercial
Retailer Profile: Target Corp. Is Also Targeting Natural and Organic Products
Illustration 5-8: Target "Made to Matter"
Warehouse Clubs
Retailer Profile: Costco Wholesale Corp.
Illustration 5-9: Costco Flyer for Organic Groceries
Retailer Profile: Sam's Club
Convenience Stores
Drugstores Making a Play for Food
Retailer Profile: Walgreens Has Three Different Food Strategies
More than 8,100 Farmers' Markets Nationwide
Figure 5-2: Growth in the Number of Farmers Markets, 1994-2013
Two Types of Farmers' Markets
Community Supported Agriculture Programs (CSAs)
Internet and Mail Order
Retailer Profile: AmazonFresh
Illustration 5-10: AmazonFresh Delivery Truck in Los Angeles
Retailer Profile: FreshDirect Focuses on Premium Fresh Foods
Retailer Profile: Peapod Uses Supermarkets to Fulfill Orders
Chapter 6: Consumer Trends
Chapter 6 Highlights
Organic Purchasing Patterns
One in Four Households Buy Organic Foods
Table 6-1: Consumer Base for Organic Foods, 2010-2013 (percent and number in millions of U.S. households)
Asian-American, Upscale Consumers Are Prime Organic Shoppers
Table 6-2: Top Demographics for Household Purchasing of Organic Foods, 2010 vs. 2013 (percent and index among U.S. households)
Yogurt, Meat/Poultry Are Top Organic Categories by Usage Rate
Table 6-3: Top Product Categories for Household Purchasing of Organic Foods, 2010 vs. 2013 (percent and index among U.S. households)
A Broader Look at Natural Foods
Nearly Half Prefer Foods Without Artificial Additives
Table 6-4: Percent of Consumers Who Look for Organic/Natural Foods and Who Prefer Foods Without Artificial Additives, 2007-2013 (U.S. Adults)
Race, Socio-Economics Differentiate Natural Food Shoppers
Table 6-5: High-Index Demographics for Consumers Who Agree a Lot with the Statement, "When Shopping for Food, I Especially Look for Organic or Natural Foods," 2013
Table 6-6: High-Index Demographics for Consumers Who Agree a Little with the Statement, "When Shopping for Food, I Especially Look for Organic or Natural Foods," 2013
Table 6-7: Demographic Overview of Consumers Who Agree with the Statement, "When Shopping for Food, I Especially Look for Organic or Natural Foods," 2013 (percent, number and index among U.S. adults)
Older Consumers More Strongly Avoid Artificial Additives
Table 6-8: High-Index Demographics for Consumers Who Agree a Lot with the Statement, "I Prefer to Eat Foods Without Artificial Additives," 2013
Table 6-9: High-Index Demographics for Consumers Who Agree a Little with the Statement, "I Prefer to Eat Foods Without Artificial Additives," 2013
Table 6-10: Demographic Overview of Consumers Who Agree with the Statement, "I Prefer to Eat Foods Without Artificial Additives," 2013 (percent, number and index among U.S. adults)
Food and Shopping Psychographics
Attitudes Toward Food and Cooking
Attitudes Toward Nutrition
Table 6-11: Food and Cooking Psychographics: Overall, Consumers Who Shop for Organic/ Natural Foods, and Consumers Who Prefer Foods Without Artificial Additives, 2013 (U.S. adults)
Table 6-12: Nutrition and Diet Psychographics: Overall, Consumers Who Shop for Organic/ Natural Foods, and Consumers Who Prefer Foods Without Artificial Additives, 2013 (U.S. adults)
Shopper Attitudes and Behavior
Table 6-13: Selected Shopping Psychographics: Overall, Consumers Who Shop for Organic/ Natural Foods, and Consumers Who Prefer Foods Without Artificial Additives, 2013 (U.S. adults)
Table 6-14: Selected Media Psychographics: Overall, Consumers Who Shop for Organic/ Natural Foods, and Consumers Who Prefer Foods Without Artificial Additives, 2013 (U.S. adults)
Retail Shopping Trends
Trader Joe's and Whole Foods
Figure 6-1: Share of U.S. Adults Who Shop in Trader Joe's, Whole Foods, and Independent Natural Food Channel, 2014 (percent)
Figure 6-2: Share of U.S. Population Shopping at Trader Joe's or Whole Foods, 2013 (percent)
Organic/Natural Shopper Indexes by Top Grocery Retailers
Table 6-15: Natural and Organic Consumer Shopping Patterns in Selected
Grocery Retailers, 2013 (overall, consumers who look for organic/natural foods and consumers who prefer foods without artificial additives)