Growth of natural, organic products slows, but bright spots include functional ingredients

During the first year of the pandemic, sales growth of natural and organic products shot up 10% to about $250b in 2020 from pre-pandemic year-over-year levels of about 6% in 2019, representing about $225b in sales, according to SPINS data and analysis by New Hope. But since then, sales growth has steadily declined to 7.7% in 2021 and is projected to climb only about 6% in 2022 before it is expected to bottom out at about 4% in 2023 before slowly starting to climb again to around 5% growth in 2024.

While the sales growth is declining, total industry sales are still on the rise – reaching a record $272b in 2021 and projected to hit $300b by 2023, Carlotta Mast, SVP and market leader at New Hope, told attended at Expo East.

The continual growth, while slowing, is notable because it is on top of the dollar highs from early in the pandemic, which suggests that many of the consumers who came to the natural and organic industry for the first time in 2020 because they needed to stock their pantries, continue to shop the segment even as they have other choices again, Mast said.

This is reflected in data from SPINS showing shoppers buying natural products at a higher rate than other product sales growth. Across all retail channels, shoppers purchased natural products at a rate that outpaced that of other product sales growth from April 2020 through May 2022. The gap between the two were often in the high single digits, but in recent months has tightened so that in August, the sales growth rate of all other products overtook those of natural products at 7.4% vs 6.7% year-over-year growth rate, the data revealed.

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