Natural and organic products continue momentum

Sales of natural, organic and functional food and beverage products grew 6.6% to $199 billion last year, according to Nutrition Business Journal estimates.

“We are a sizable, impactful, meaningful industry,” said Carlotta Mast, senior vice president and market leader at New Hope Network, during a March 8 presentation at Natural Products Expo West in Anaheim. “We’re not a fad anymore… We’re very mainstream.”

While the impacts of inflation slowed natural products industry growth in the past year, overall sales volume remains above pre-pandemic projections, Ms. Mast said, noting changing consumer needs that fueled healthier habits in the wake of the virus have strengthened the sector.

“We got this big boost during the pandemic, and we’re projecting we’ll continue to see the positive impacts of that boost well into the future,” she said.

Top growth categories include carbonated drinks, dairy alternatives, sweeteners, baby products and canned and dry soup.

“All of those gut-healthy sodas hitting the market … those are bubbling up to the top of the best food and beverage categories in terms of sales,” Ms. Mast said.

Kathryn Peters, chief of staff at market researcher SPINS, pointed to double-digit growth in sales of natural shelf-stable beans and soup mixes, up 15% and 21%, respectively, from last year, as shoppers sought nutrient-dense yet budget-friendly pantry staples.

Organic food and beverage sales in the United States increased an estimated 4.6% to reach $51 billion last year, representing a doubling of sales in the past decade. Top growth categories were baby formula, candy, dips, soft drinks and yogurt.

“We continue to see strong, stable growth for organic into the future,” Ms. Mast said.

Beverages and snacks drove functional food and beverage growth up 5.8% to $87.3 billion in sales in 2022, driven by sports and energy drinks, soft drinks, frozen desserts and snack chips. Top functional ingredients include electrolytes, mushrooms, adaptogens, healthy fats and prebiotics.

Ms. Peters called out fiber as a trending attribute. Sales of high-fiber items could represent a $12.3 billion market, she said.

“Fiber is not something we talk about a lot … it’s not the sexiest of ingredients,” she said, noting Americans are falling short of fiber intake goals. “We really believe fiber is going to come more and more to the forefront.”

Sales of snacks and beverages formulated with functional mushrooms, including reishi, lion’s mane and turkey tail, grew 29% to $186 million in sales, Ms. Peters said. Popular functional ingredients, such as cannabis, ashwagandha and turmeric, are growing in the grocery and refrigerated departments while declining in the vitamins and supplements category, she added.

“Watch the ingredients that are starting to pop in supplements and think about how you can apply them in your own brands,” she said.

Meanwhile, conventional food and beverage sales in the United States expanded an estimated 9.3%, exceeding $800 billion last year.

“Typically we have seen over the last decade natural and organic really outpacing conventional in growth, and that’s not what we saw” in 2022, Ms. Mast said. “We are expecting as the economy stabilizes we will once again see natural and organic outpacing conventional food and beverages from a sales growth perspective.”