As more consumers purchase natural food products, the pressure is on manufacturers in this highly competitive space to identify early on whether their new products have a chance to resonate with the mainstream consumer.
Increasingly, shoppers are not only considering the functional use of a product, but whether it possesses traits they value personally, including transparency, social purpose, nutrition and environmental stewardship, according to research presented by market research and consulting firm New Hope Network at the Natural Products Expo East conference in Baltimore.
The firm found that the products with the best chance to succeed catered to two specific groups representing 44% of the population — a promise that gives natural and organic products plenty of room for growth. The first group is the so-called chief health officer — a label-reading, family-focused individual concerned about their well-being as well as the environment. The second category, the #young4ever segment, caters to people who take aggressive actions toward health and wellness, and tend to be early adopters and impulsive brand switchers.
“This renewed awareness among consumers is driving the emergence of socially-minded entrepreneurs to take on the mission of changing the world by changing the status quo,” said Eric Pierce, director of business insights at New Hope Network. “These are conscious businesses that are .... practicing and redefining business in a way that is creating opportunity in the marketplace to do more good."
New Hope Network identified in detail eight natural food trends at Thursday’s conference that have the best chance of succeeding with consumers, as well as a list of companies that perform well within each category. To come up with its list, the firm determined a market prediction score by asking consumers whether they thought other people would buy a product, as well as a purchase intent score by asking if that specific person would buy the product. Items that tallied a response rate of more than 75% for market prediction and 16% or higher for purchase intent on a 100-point scale had the best chance to connect with the mainstream shopper.
“We think there is still a tremendous amount of growth potential for our industry,” said Deanna Pogorelc, senior content producer at New Hope Network. “With the opportunities to scale, of course, there is the opportunity to cut corners and stray a little bit from the values that we've been built on. The way forward is to focus on maintaining our authenticity and our values.”
After often burying or hiding their sense of obligation to be responsible environmental stewards, companies are coming under pressure by consumers to be more transparent. Shoppers, especially millennials and younger individuals, who grew up with practices such as recycling and discussions about climate change, are expecting businesses to do more to help the environment and reflect that in the products they make.
“They are the ones that are now poised to drive environmental concerns deep into commerce,” Pierce said of these shoppers. “What we’re seeing increasingly now is that consumers are beginning to expect or demand, or at the very least appreciate, and set apart those companies that make [their commitment to the environment] a part of their business ... .”
The better-performing products in this category include Bare, which makes cocoa banana chips with carbon neutral practices; Quinn, a maker of ready-to-pop popcorn that comes in a compostable bag; and Method, which sets itself apart with packaging for its soap made from recovered ocean plastic.
Waste not, want not
In much the same way that businesses have had to become more conscious of their environmental footprint, food waste has taken hold as another major issue on their radar. With people going hungry and the world’s population growing, there is more demand for innovative products from consumers that curtail the amount of food that goes unused.
Businesses are beginning to respond. The top scorer in this segment was Full Circle Feed, a producer of sustainably produced dog treats that uses leftover food from restaurant buffets. It posted a market prediction score of 88, but a purchase intent score of just 8. Forager, which produces chips using leftover pulp from making juice, and Bee’s Wrap, a maker of beeswax-coated cotton used to seal food, also did well.
The world’s population is expected to reach nearly 10 billion people by 2050, which will require significantly more food than is being produced today. But this production increase must be done with the Earth in mind, prompting calls from the public to use less water, land and other resources while dealing with the looming issue of climate change.
“This is driving innovation within our industry,” Pierce said. “It’s a common point of rally for many consumers, for many entrepreneurs, who are driving innovation. These kind of products, these innovative products that are designed to solve this issue again resonate with consumers.”
Pierce pointed to Thrive, an ultra omega-9 algae cooking oil maker, and Ripple, a plant-based milk made using pea protein, as two companies that did well in its analysis. The third company that performed well, Lotus Foods, grows rice on volcanic soils using resource-conserving practices — a process that allows it to double or triple yields while using up to 90% less seed and 50% less water.
Even as companies strive to meet the demands of the consumer by helping to solve problems that concern them, some businesses are finding they can do more by taking a collaborative approach. Pierce said fixing problems in the food system isn't the responsibility of one group, but rather requires the help of many stakeholders in the supply chain, including farmers, manufacturers and retailers.
“Together, through collaboration, we can expand organic acreage, improve access to food, create health care products, reduce food waste and basically improve our food system in all sorts of ways,” Pierce said. “The natural products industry is full of many outstanding companies doing really incredible work to solve some of these problems.”
New Hope Network noted chocolate maker Endangered Species, which gives 10% of its profits to partners who protect wildlife. It also gave high marks to Teatulia, a tea maker that helps rehabilitate land in Bangladesh where its product comes from, and Community Seafood, a frozen fish filet producer whose product is harvested by local fishermen.
Speed and scratch
Food manufacturers are focusing more of their product development efforts these days on satisfying the public’s insatiable demand to snack. But Pogorelc said there also is an appreciation among some innovators within the food industry that many consumers crave a hot, sit-down meal. These products performed particularly well among people in the chief health officer category.
“[Some manufacturers] really are rising to the occasion with a variety of healthy, quick-cooking meals that are more convenient like a snack but are also satisfying as a hot meal,” she said.
Ellyndale Naturals was one example of a company doing well in this area. It scored high marks with its savory garlic and mushroom quinoa in a cup. Also doing well were Grainful, a maker of a heat-and-serve starter dish kit with oats, spices and vegetables, and Sweet Earth. Nestle USA last week acquired Sweet Earth, a plant-based foods manufacturer based in California with nearly 50 products, including Harmless Ham and Benevolent Bacon.
Nestle’s purchase “really provides further support for the potential of that space,” Pierce said.
Putting a face on farmers in the food system
New Hope Network found that the most progressive companies don’t just tell a story like what country the product came from. They take it one step further by reaching out to consumers to tell a fuller story. Technology is one way manufacturers are attempting to start this dialogue through applications like allowing the shopper to scan a package and learn, in the case of a fish, when it was caught, on what boat and what the name of the fisherman is.
“The idea here is really connecting consumers to the source of their food in a deeper and richer way,” Pierce said.
One Degree Organics, which earned a market prediction score of 91 and a purchase intent figure of 21, uses an on-package QR code that shows farmer profiles. Bellucci, another company mentioned, lists the harvest date, types of olives and lot number on its extra virgin olive oil bottles. Safe Catch Tuna, the third product listed, is traceable and undergoes testing standards that are even stricter than what is required by the U.S. Food and Drug Administration. It had a market prediction score of 88 and a remarkable 32 on purchase intent.
One of the most powerful trends among progressive consumers is regenerative agriculture, Pierce said. The process of producing livestock and other commodities is one of the biggest contributors of greenhouse gas emissions and climate change — damaging soil, water and the air. At the same time that it is being vilified for its negative impact, the sector has a chance to undo some of that harm through practices such as capturing and storing carbon in the soil.
“I’m personally wildly excited about this,” Pierce said. “This might be one of the most important and exciting opportunities.”
While regenerative agriculture is not being widely talked about among consumers, New Hope Network found in its tests that it almost immediately resonated with people it talked to — giving products that take advantage of this a boost in the marketplace, Pierce said. RareEssence, which uses plant-based scents and alcohol from biodynamic grapes to make an inhaler for stress, posted a 94 in market prediction and 19 in purchase intent. Similar success was found in Epic, a General Mills brand that produces meat and nut trail mix, and Back to the Roots — both of which use regenerative practices.
A purposeful food system
What started out largely in products like fair trade coffee or chocolate has blossomed into a burgeoning industry of brands with a purpose, giving birth to companies created with a social cause they hope to fix.
“We’re seeing a whole new generation of social brands coming up,” Pogorelc said.
She highlighted three products doing particularly well in this space. Sol Simple, a maker of dried fruits and cashews, knows each of its small farmers in Nicaragua by name and can trace where each fruit or nut came from. The company posted a market prediction score of 87 and a purchase intent number of 24.
Other brands that scored well include the Sunshine Nut Company, which sources its products from Mozambique Farms where 90% of the profits are returned to local communities, and Mavuno Fruit, an organic dried fruit maker that gets its product and works with farmers in Africa.