Noting that “I have some good news, I have some bad news and I have some good news,” Nutrition Business Journal Publisher and Editorial Director Patrick Rea kicked off Friday morning’s presentation “State of the Industry” with a look at the current market for natural and organic products and expert forecasts for the future.

Panelists Mark Fergusson, CEO, Down to Earth Market; John Foraker, CEO, Annie’s Homegrown; Todd Norton, chief operating officer, A.M. Todd Botanicals; Julie Smolyansky, CEO, Lifeway Foods; Carlotta Mast, editor, Nutrition Business Journal ; Nancy Coulter-Parker, editor, Delicious Living; and Tom Aarts, founder,Nutrition Business Journal , led a discussion about the factors influencing economic recovery in the natural and organics industry, which Rea said totaled $110 billion in sales in 2009, with 5 percent growth.

Rea’s good news was in the supplements section of the market. In 2009, he predicts sales will total $27 billion—an increase of about 8 percent compared to a 6 percent increase in 2008 and an average of 5 percent in the three years going back to 2005. “One of the things we didn’t foresee was the impact of H1N1,” especially on echinacea, probiotics, vitamin C and children’s multivitamin sales, Rea said.

The bad news was in the rest of the industry, Rea said.

  • The natural and organic food and beverage market, which totaled $34 billion, saw 5 percent to 6 percent growth in 2009, down from 10 percent to 12 percent in 2008. However, the market is still better than mainstream food sales, which decreased 1 percent in 2009, Rea said. Another silver lining: “Hopefully this will inspire some fiscal discipline” for retailers and manufacturers to tighten up their business models, he said.

  • The $11 billion natural and organic personal care market dropped 3 percent in 2009. “PC in mass [markets] did OK, but natural markets really struggled,” Rea said.

  • The $38 billion functional foods and beverages market saw 2009 growth of 3 percent, down from 8 percent in 2008. Rea said growth trends include naturally functional foods, immunity, fiber and omega-3s.

NBJ’s estimates for overall natural and organics sales growth in 2009 include:

  • Mass market: 10 percent

  • Natural: 3.5 percent

  • Network marketing: 1 percent to 3 percent

  • Internet: 15 percent to 25 percent

  • Practitioner: 10 percent to 15 percent

  • Direct response: 4 percent to 7 percent

The takeaway? Rea said analyst Scott Van Winkle of Canaccord Adams told him: “The closer you are to the community, the faster you’ll see a recovery,” so retailers will recover quicker than larger manufacturers