6 natural & organic food trends to watch

By Connor Link

Nutrition Business Journal just published its 2011 Natural & Organic Food & Beverage issue this October. NBJ data shows that natural & organic sales grew 8% to $41 billion in 2010 and have stayed growing throughout the recession. Many factors are driving (and hindering) growth of natural & organic food in the United States. Here are six high-level natural & organic trends that decision makers in the nutrition industry ought to keep in mind.

Non-GMO takes center stage

Following the highly publicized deregulation of genetically modified alfalfa and sugar beets, the GMO issue has become firmly entrenched in the natural products news flow. The Non-GMO Project Verified label has signed up numerous new participant companies, and petition initiatives like the Right2Know March and Just Label It have upped the volume of the conversation on Capitol Hill. Organic producers have found cause to rally behind non-GMO, putting the freaky story on the frontlines and allowing organic to bask, simple and unadulterated, in the background.

Organic dairy may face tough 2012

Low prices for conventional dairy products sucked the sales out of the organic market in 2009, as retail price gaps prompted recession-weary consumers to trade down. Sales have since rebounded mightily. Conventional prices rose, the retail gap shrank, and organic dairy grew 9% in 2010, with similar growth projected through 2011, according to Nutrition Business Journal data.

But high prices for organic feed stock and decreased milk production through the sweltering summer of 2011 may push up organic dairy prices heading into 2012. Competition stands to increase, with market leaders like Horizon and Organic Valley looking to differentiate with branded kids' products and added-value goods, like DHA-enhanced milk. Fringe trends, like raw and fine-filtered milk, have yet to pick up much steam.

The "natural" debacle

Take heed, manufacturers of food & beverage products with "natural" and "all-natural" label claims. The class-action spotlight appears to be swinging back in your direction, with recent filings against Wesson, Kashi and Bear Naked making headlines. This is an old story, and a cyclical one that renders evident time and again the inherent weaknesses in a category suffering from a lack of adequate definition. Whether or not these particular cases have merit, the lack of definition around "natural" continues to permit deceptive marketing claims on grocery store shelves that diminish the message and import of the overall category.

Got organic?

Last March, at Expo West 2011, advertising-kingpin-turned-consumer-advocate Alex Bogusky argued in a presentation that all the organic industry needed to do to reach 15 percent of the food supply was a large-scale ad campaign a la "got milk?" or "Beef, it's what's for dinner." Funded through checkoff programs—i.e., a penny comes off of every gallon of milk sold and is dumped into a council-controlled money pool—these research and promotion orders have a marked history of success for numerous commodity products, Bogusky noted, such as beef, milk, Florida orange juice, eggs and pistachios.

NBJ was enchanted by the thought of such a research and promotion order for the organic industry, and, as it turned out, the folks at the Organic Trade Association (OTA) already had the topic queued up, with plans to explore and vote on a program in January 2012. Sarah Bird, senior VP of marketing at Annie's and vice-chairman of the board at OTA, recently spoke to NBJ of the progress and vision of the campaign.

Growing organic inside the belly of the beast

How do you make organic a more sizable chunk of the U.S. food chain? Sometimes it takes unlikely allies.

Such is the case for Bethesda, Maryland–based Honest Tea, an organic ready-to-drink tea brand now owned by the Coca-Cola Company. The acquisition, inked on March 1, 2011, left Honest Tea founder Seth Goldman still in control of the brand, a wise move on Coke's part since natural brands often lose their verve when swallowed by CPGs. Some die-hard natural retailers decried Goldman for selling out, but to date he's kept the mission intact. Also, Honest Tea's sales have tripled and its distribution has expanded five-fold since 2008, bringing organic to a much broader, diversified audience.

Capitalizing on a confluence of trends

Without a doubt, there's room for more growth and new products in the natural products industry, but there are clearer and clearer trends now driving that growth. Demand for organic ingredients remains high, gluten-free is on the rise, raw and vegan just keep getting bigger, and the use of ancient grains has become increasingly popular. Some of these categories have been around for years and are just now entering a mainstream consciousness.

Hitting all the right buttons at the same time—natural, vegan, gluten-free, raw, ancient—is on trend, exemplified by two high-growth brands in the natural breads & grains market, Hail Merry and Purely Elizabeth.