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Expo West Showcases Bright Future for Organics, Functional Foods

Category enthusiasts flocked to Anaheim for the annual confab
Photograph: Shutterstock

Natural, organic and healthy product enthusiasts from around the world descended on Anaheim, Calif.,  for the 39th annual Natural Products Expo West, which was on track to welcome about 88,000 attendees and more than 3,600 exhibiting companies.

Urging attendees and exhibitors alike to use the newly created #StepUpToOrganic to spotlight certified organic products, Carlotta Mast, SVP and market leader for the New Hope Network, shared newly released data showing sales of U.S. natural and organic products up 6.9% last year, with food and beverage driving growth at 70% of total sales.

Total food and beverage sales hit $152 billion, with organic food and beverage accounting for $45 billion of that, Mast reported.

Produce is the largest category within natural/organic, representing 24% of sales. Meat, fish and poultry, though just 7% of the natural/organic food and beverage category, saw the largest growth last year, she said.

While natural and organic continues to expand, New Hope finds that sales of conventional products continue to decline. According to the Nutrition Business Journal, sales of natural, organic and functional products grew 6.6%, while sales of conventional products declined 0.2%.

However, organic dairy is one category that continues to face challenges, said Mast, who pointed to oversupply and the growth in plant-based alternatives to dairy as causes of the category’s plateauing sales.

Functional F&B

Sales of functional food and beverages continue to surge, with the category growing 7.5% to $68 billion in 2018. “As consumers increasingly seek [functional] ingredients in noncapsule delivery form,” the highest growth categories in 2018 were beverages and snacks, Mast said. Hot functional ingredients include mushrooms, hemp and CBD, ashwagandha and probiotics.

protein shake
Photograph by Jennifer Strailey

Fido Goes Natural

Sales of natural supplements, natural living and household products, and natural and organic pet products were all up last year. Citing a stat from the American Pet Products Association, Mast said 73% of millennials own a pet.

These consumers tend to be more concerned about products that are healthy for their pets and the planet. As a result, natural/organic pet products far outpaced conventional last year—up 10.2% to $7 billion vs. only 1.9% growth in conventional pet products.

Mast also said traditional CPG companies such as Minneapolis-based General Mills are getting into the natural pet game. General Mills acquired Blue Buffalo Pet Products for $8 billion last year.

When it comes to e-commerce growth in the natural/organic arena, e-commerce outpaces brick-and-mortar, but it is still driving less than 5% of industry sales. “That is changing,” said Mast, who pointed out that more than half of new to 3-year-old natural and organic companies launch products online first.

Hemp Is Hot

Hemp-based CBD supplements are another fast-growing category. Mast cited the passage of the 2018 Farm Bill and CBD curiosity as category drivers. A recent New Hope survey of more than 2,700 consumers found that 47% of U.S. consumers have some familiarity with CBD. Of those familiar, 57% have considered purchasing a CBD product and 30% have purchased a product containing CBD.

hemp pie charts
Photograph by Jennifer Strailey

And while a New Hope survey of 230 natural brands in January 2019 revealed that most (71%) do not currently sell a hemp/CBD product, 65% indicated that they plan to launch one in the next one to two years.

From lemonade to tinctures to edible oils and more, CBD/hemp products were all the rage at this year’s Expo West. RE: Bontanicals took home New Hope’s Nexty Award for Best New Hemp/CBD Product for its CBD Tinctures.

cdb lemonade
Photograph by Jennifer Strailey

Growth in Natural/Organic

Conventional grocery products are not faring as well as their natural/organic counterparts. Nick McCoy, managing director and co-founder of Whipstitch Capital in Framingham, Mass., examined the most notable declining categories in conventional grocery products, including functional beverages, bread and baked goods, and shelf-stable fruits and vegetables.

Interestingly, a look at the fastest-growing categories in natural products includes many of the products in decline on the conventional side, McCoy said. Shelf-stable functional beverages, produce, and bread and baked goods were among the top 10 fastest growth categories in natural.

Slumping sales in certain conventional categories are “not necessarily dietary-trend related, because these same categories are actually growing in natural,” said McCoy. “These growth numbers [in organic and natural] are bigger in total than the declines in conventional grocery products.”

When it comes to what’s motivating consumers to spend in the natural/organic categories, he sees health as a compelling factor: “[People] are moving [to the natural/organic space] for health reasons and other reasons that aren’t financial.”

Other Hot Trends

Tasty plant-based proteins, dairy alternatives and meat substitutes were sampled and savored throughout the show. New plant-based milk and creamer substitutes were featured by numerous exhibitors, including Elmhurst (which launched a hemp-based creamer), Malk, Califia Farms, Forager Project, Oatly and many others.

plant-based dairy
Photograph by Jennifer Strailey

Grain-free, pasture-raised and healthy snacking were also hot trends on the floor.

Going beyond gluten-free, a multitude of exhibitors showcased new grain-free products, including Eat My Waffles, Cappello’s grain-free pizza, and Pamela’s grain-free nut and cassava flours.

organic valley
Photograph by Jennifer Strailey

Humanely raised and healthfully fed meat and dairy products was another hot trend at Expo West. Organic Valley gave attendees a firsthand look at its farms and farmers, who supply its milk from 100% grass-fed cows. A live broadcast at the Organic Valley booth allowed attendees to ask Organic Valley farmers questions that were answered live from the farm. A video at the Handsome Brook Farm booth allowed visitors to watch its hens roaming freely on ample pastureland.

pasture raised
Photograph by Jennifer Strailey

The healthful snacking trend is here to stay. Expo exhibitors offered up scores of new snack sensations that satisfy today’s top consumer cravings, from protein to plant-based to probiotic and more. Olly Protein Bars, Saffron Road Chickpea Chickbean Crisps, and RW Garcia Organic, Non-GMO Corn Chips were among the snacks available for sampling.

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