Sales in the wellness category remain strong, despite recent research questioning organics’ health benefits.
Ever since organic foods made it onto retailer shelves, all but the dyed-in-the-wool organic consumers have been asking, is organic food really better for you?
Not according to research published this summer by Stanford University scientists. A paper published in the Sept. 4 issue of Annals of Internal Medicine, concluded that after reviewing data from 237 studies that took place over more than a decade, the researchers did not find strong evidence that organic foods are more nutritious or carry fewer health risks than conventional foods.
The report goes on to say consumers might perceive organic foods to be more healthful, perhaps based on the higher price, but the health benefit “remains an open question.”
Yet industry observers say consumers are still buying the higher priced organic products, and retailers are expanding their selection of organics, as well as natural foods, vitamins and supplements. The wellness category, as it turns out, remains strong no matter what the science says.
Armed with this new information however, are consumers about to abandon the organics category? Will there be a negative effect on sales of naturals, supplements and anything else wellness-related? Not likely, say observers.
Steve Lutz, executive vice president of Nielsen Perishables Group, based in Chicago, says it is hard to predict what effect, if any, the Stanford study will have on sales of organics. He adds that previous studies with similar findings did no damage. “There have been articles that have come out over the years, some endorsing organics, and some suggesting they are of questionable choice and not worth the money,” says Lutz. “The sort of collective response in the past has been not much.”
Actually consumer response in the past has been to keep buying organics. According to the FreshFacts on Retail report, produced by United Fresh and the Nielsen Perishables Group and sponsored by Del Monte Fresh Produce, in the second quarter of 2012 sales of organic produce had double-digit increases. Dollar sales of organic vegetables increased nearly 15% and dollar sales of organic fruit increased more than 20% compared to second quarter 2011.
The FreshFacts report reflected produce sales before the Stanford study was released, but observers say there is little reason to believe organics will suffer now. Lutz says true core consumers of organics will shrug off the Stanford study. “People who are really committed to buying organics are ideologically committed to those products,” he says.
Those core consumers likely focused more on the study’s positive news concerning organics. Among the findings: organic foods have 31% lower levels of pesticides, fewer food-borne pathogens and more cancer-fighting phenols. Also, organic milk has more omega-3 fatty acids, which are reportedly good for heart health.
Whether beneficial or not, organics are still hot. According to data from SPINS, for the 52 weeks ended August 4, supermarket sales of organic foods and beverages totaled more than $7.5 billion, up more than 10% compared to the same period the previous year. The sales totals are for frozen, grocery, packaged produce and refrigerated organic foods in conventional supermarkets excluding Walmart, and in natural supermarkets excluding Whole Foods.
Organics are not the only wellness category that has grown. SPINS also reports sales of products in categories such as Fair Trade certified, B Corp certified (sustainable business), and Non-GMO (genetically modified organisms) are also up this year. The biggest percentage boost was among vegan foods, which totaled $16.1 million in sales in combined conventional and natural supermarkets, up more than 58% compared to the same period the previous year. Gluten-free also saw a big jump to nearly $4 billion, an increase of more than 23%.
Consumers are determined to buy products they associate with wellness. “They like the word ‘natural’ and they like the word ‘organic’ because they represent a whole host of things,” says Lutz. “People are making healthy choices and being content conscious and being nutrient conscious. That continues to pick up speed and gain momentum.”
Organics are not the only growing area in the wellness category. The center store has its own healthful offerings, and shoppers are walking the aisles and reading labels. According to Mintel’s Attitudes Toward Healthy Food report, 64% of women and 56% of men say they read nutritional information on packaged goods. They are looking at “low or no” claims as well as “high in” claims, says John N. Frank, category manager for CPG food and drink reports for the Chicago-based research firm. The top “low or no” claim was reduced sodium, with 54% of consumers saying they look for that claim. Second was low or no sugar, at 51% and third was low or no fat, with 49%. Consumers also looked for foods that are high in fiber, vitamins and minerals, and whole grains, all tied at 65%.
“The ‘high in’ claims were more important than ‘low in’ claims,” says Frank. “I think people are confused about labels, and that’s why they are looking for ‘high in’ things. They know whole grains are good for example.”
This eagerness to read labels has given rise to another trend in wellness, says Frank. Shoppers are looking for ingredients with which they can identify. That has led to the growth of so-called clean labels, which indicate the food contains few ingredients.
Consumers cite various reasons for buying wellness-related items. Also according to Mintel, the top driver for healthy food usage was “to stay well and fight off sickness and disease,” with 67% of people choosing their foods for that reason. The second most popular reason was “to live longer,” with 49%, and third was, “because I feel better throughout the day,” at 46%. Relatively few, 31%, said they choose healthy foods to lose weight.
Steve Mister, president and CEO of the Washington D.C.-based Council for Responsible Nutrition, points to another reason why consumers are buying wellness products. Even though there are signs the economy is on its way to recovery, people still have a recession mindset when it comes to getting sick. “People think, ‘I don’t want to miss a day at work because that might put me at the top of the list when they have cutbacks,’” says Mister. “People find ways to stay healthy.”
One way to stay healthy is to take vitamins. According to Nielsen, for the 52 weeks ended September 1, sales of vitamins in food/drug/mass stores including Walmart totaled $9.08 billion, an increase of 8.2% compared to the same period the previous year.
Manufacturers are eager to cash in on this trend. Earlier this year Cincinnati-based Procter & Gamble announced it had purchased Brattleboro, Vt.-based New Chapter, a manufacturer of vitamins, minerals and supplements. “Entering the VMS category is key to delivering on P&G’s growth goals for our health care business,” P&G said in a statement. The company also indicated that the VMS category is the largest in the over-the-counter industry, and is also one of the fastest growing at 6% a year.
Retailers sharing the wellness
Much of this sales growth is a result of consumers being more knowledgeable about wellness. Mister says retailers are helping too. “Some grocery stores are really starting to put more emphasis on their wellness category,” he says. “They are developing regular parts of their circular for wellness, they do in-store promotions and they do creative things such as an endcap of omega-3 in February for Heart Health Month.”
Mister says in addition to omega-3 fatty acids, vitamin D is becoming more popular, so retailers should develop promotions such as merchandising vitamin D with calcium. He adds that 68% of American adults say they use dietary supplements, many sporadically, so there is opportunity there. “If you have someone who takes a multivitamin four days a week, you can increase compliance to seven days,” says Mister. “I do think there is a lot that retailers can do to educate consumers on the value of wellness.”
Retailers are indeed educating consumers. Some use the Nuval Nutritional Scoring System, which gives supermarket products a score of 1 to 100, with 100 being the most nutritious. More than 1,600 supermarkets in 31 states have Nuval scores on their shelves. When the company launched in 2009, it was in about 350 supermarkets.
Other retailers are boosting their wellness programs by emphasizing its affordability through private label. Safeway launched Open Nature, a line of 180 products that are 100% natural and do not contain artificial ingredients. In September The Kroger Co. announced nationwide availability of its new Simple Truth and Simple Truth Organic brands. Supervalu offers Wild Harvest organics, a line of 200 products and Aldi developed Fit & Active healthier foods with more than 90 products.
Other stores are finding new ways to display their private label items. Giant has a private label brand called Nature’s Promise, which features natural, organic and gluten-free items. The chain, part of Ahold USA, is testing a Nature’s Promise section in a store in Perry Hall, Md. The section, a prototype for other stores, features large signage and a refrigerated section in the aisle.
Hy-Vee, in partnership with an initiative called Blue Zones Project, announced its store in Spencer, Iowa, had become a Blue Zones certified store, which means it is helping residents achieve a healthier lifestyle. The store increased its produce section and installed Blue Zones checkout lanes that feature granola bars and fruit instead of candy. In February, Walmart introduced its Great For You icon on labels of Great Value and Marketside items, as well as on fresh and packaged fruits and vegetables.
The list will continue to grow, says Lutz. “You are seeing different retail executions, and the statistics all say you have significant numbers of consumers seeking out health in their own way.”