Why is the Natural Foods Sector Decelerating?
Here’s a teaser for my free webinar this Wednesday – What Has Changed Since 2019?
The latest data I have on hand shows that, across food/beverage/personal care and supplements, natural and organic product dollars only grew 3% in 2023, which is more or less on track with inflation.
What is going on? What happened to the double-digit growth engine of the 2000s?
It matured. The market’s leading brands in food and beverage were reformulated. A lot. For example, here’s what Kraft did with its Blue Box mac-n-cheese after General Mills bought Annie’s in 2014.
As of 2010:
ENRICHED MACARONI PRODUCT (WHEAT FLOUR, NIACIN, FERROUS SULFATE [IRON], THIAMIN MONONITRATE [VITAMIN B1], RIBOFLAVIN [VITAMIN B2], FOLIC ACID); CHEESE SAUCE MIX (WHEY, MILKFAT, MILK PROTEIN CONCENTRATE, SALT, SODIUM TRIPOLYPHOSPHATE, CONTAINS LESS THAN 2% OF CITRIC ACID, LACTIC ACID, SODIUM PHOSPHATE, CALCIUM PHOSPHATE, MILK, YELLOW 5, YELLOW 6, ENZYMES, CHEESE CULTURE).
As of 2024:
ENRICHED MACARONI (WHEAT FLOUR, DURUM FLOUR, NIACIN, FERROUS SULFATE [IRON], THIAMIN MONONITRATE [VITAMIN B1], RIBOFLAVIN [VITAMIN B2], FOLIC ACID), CHEESE SAUCE MIX (WHEY, MILKFAT, SALT, MILK PROTEIN CONCENTRATE, SODIUM TRIPHOSPHATE, CONTAINS LESS THAN 2% OF TAPIOCA FLOUR, CITRIC ACID, CALCIUM PHOSPHATE, SODIUM PHOSPHATE, LACTIC ACID, WITH PAPRIKA, TURMERIC, AND ANNATTO ADDED FOR COLOR, CHEESE CULTURE, ENZYMES).
Although Kraft does not use organic pasta, the primary ‘issue’ keeping consumers from seeing Kraft as a natural product was the artificial colors used. They replaced these with plant-based colorings, primarily turmeric.
Now the average consumer interested in avoiding synthetic ingredients has no need for Annie’s. This has happened for thousands of legacy branded, processed food products in the past 10-15 years. The result is that there is simply not a huge distinction any more between BigCo products and ‘natural’ ones. And, ‘organic’ has never been and still remains a weak purchase driver in center-store food and beverage categories.
So, the burden for early-stage brands is much higher than a ‘natural’ version or one with ‘limited ingredients.’ Brands need more technical insulation than this and more innovation.