The 2016 Natural Products Expo West in Anaheim, CA took place earlier this month. It’s a huge show – 3,000 exhibitors and 75,000 attendees representing the entire value chain of healthy products – across food & beverage, dietary supplements, natural beauty & personal care, showcasing today’s hottest new natural brands and tomorrows developing trends. For Trajectory, it’s really inspiring, as we work at the intersection of healthcare and consumer health and wellness.
My top three takeaways include:
1. The impressive and sustained growth across all Natural Products categories
2. Current state of consumer trust (or distrust), skepticism and anxiety
3. The three macro forces that will shape the future of the food & beverage, supplement, natural beauty & personal care industries and the smart brands that are successfully harnessing these forces.
The State of the U.S. Natural Products Industry (*NMI, New Hope Network data)
“Natural” is no longer niche. Rather, as these numbers indicate, we see it as the wave of the future. Overall the U.S. Natural Products Industry, which includes Food & Beverage, Supplements and Natural Living, grew 9.5% to almost $180B in 2015. Organic is growing faster than natural and of all categories Natural Living: Natural Beauty & Personal Care is the fastest growing and poised to continue this trend. Segment performance 2015 over prior year below:
Natural & Organic Food and Beverage: $67.2 Billion, + 10.7% increase
Functional Food and Beverage: $54.6 Billion, + 6.9% increase
Dietary Supplements: $39 Billion, +6.2% increase
Natural Living: Natural Beauty & Personal Care: $18 Billion, +13.4% increase
State of the U.S. Consumer
Overall, the U.S. consumer is distrustful of many mainstream products and their associated industrial processes. As an illustration, New Hope research indicates that OTC has the lowest trust profile of supplements, pharmaceuticals and OTC. Meanwhile the sales of natural herbs and botanical supplements are quite strong (nearly $7B/2015). Innovative combination herb products, formulated for specific health conditions are doing very well – and brands like Zarbees, herbal cold & flu products for children – appear to be filling the trust void.
These statistics from NMI/New Hope Network reveal just how skeptical and anxious the U.S. consumer is about their products and their lives:
• 63% read food labels before purchase
• 54% select food based on ingredient list
• 46% concerned about chemicals in personal care products
• 34% concerned about chemicals in laundry products
• 76% believe most manufacturers are focused more on profit than health
• 77% indicate relieving stress would increase the quality of life
• 33% indicate increasing level of stress over last 10 years (over 50% for Millennials)
The 3 Macro Forces Favorably Impacting Consumer Trust
New Hope Network has identified 3 macro forces that are working to increase consumer trust and will keep the Natural Products industry growing at double digits into the foreseeable future. Cited from Natural Products EXPO West – State of the Industry Keynote as follows:
• Ancient Wisdom
• Rehabilitation of Science
• Value(s) Shoppers
Harkening back to the days of pre-industrialized foods and a simpler way of life, the focus here lies on whole, nutrient-dense ingredients and a “closer to nature” approach to processing. Driven by a great awakening of the consumer, Ancient Wisdom appears to be the most powerful macro force.
Trends connected to Ancient Wisdom:
Superfoods – Fermented – Natural Fats, Vinegar – Adaptogenic Herbs
Clean Labels – Healthy Sweetners – Sophisticated Flavors, Pulses & Beans
Consumers are no longer afraid of all fats. There is growing consumer interest in Natural plant-based fats like coconut and avocado as well as new animal based sources that provide nutrition like lard and duck fat. (Brand example: Epic Duck Fat)
Adaptogenic Herbs: Adaptogens are a group of herbal ingredients used to improve adrenal health and help strengthen the body’s response to stress. There is strong interest in adaptogenic herb powered products, from supplements to food that will help consumers deal with stress management. (Brand example: Four Sigmatic Mushroom Hot Cacao Mix, with Chill Out Vibes & Reishi)
Rehabilitation of Science
The role of food science is being reframed to embrace the spirit of natural products while addressing societal concerns – it’s a pivot that moves toward rebuilding consumer confidence and represents new alignment for science and the industry.
Trends connected to Rehabilitation of Science:
Green Chemistry – HPP (High Pressure Pasteurization) – Nourish Tech
Brain Health – Clean Energy – Probiotics – Beauty From Within
Green Chemistry: Growing fear of chemicals causing people to prefer imagery of aprons over lab coats. Some companies are figuring out how to put science to good use in ways that fits with consumer’s new preference for clean and more natural products. Consumers are ready for cleaner health & beauty. Brands meeting that challenge include: Scotch Naturals (salon quality nail polish, minus all of the endocrine disrupting ingredients) and a Trajectory favorite; Suki Skincare
The Value(s) Shopper
Consumers are moving beyond price as their single purchasing filter as a new and complex world of values now influences purchasing decisions.
Trends connected to Value(s) Shopper macro trend:
Mission-Based Brands – Repurposed – Ingredients: Grass-Fed Dairy & Meat
Ethical & Sustainable Protein – Sourcing Local – Food As Medicine – B Corps
Mission-Based Brands: Help consumers do good with their purchasing power. Conscious consumers can help others through the products they choose to buy. Stand for something more than the product. Building mission and purpose into the DNA of the company. Started, in great part, to achieve a mission.
(Brand example: SoapBox Soap)
The Expo West Experience
The “experience” of Expo West is a blog post unto itself… or a conversation over a La COLOMBE Draft Latte (on-trend). The people and conversations were stimulating, smart and friendly. The products were very cool. In short, Expo West is educational and inspiring. Looking forward to Expo West 2017.