The big news from the 2015 Natural Products Expo West was that the American consumer is buying healthy foods at volumes never seen before. Health and wellness products are achieving three times the sales growth as conventional food products.
A survey conducted by SuperMarket News found that 80 percent of surveyed food-industry wholesalers and retailers had sales growth in health and wellness products. A third of survey respondents reported an astounding 20 percent increase in annual sales!
For retailers, the key fact is that 55 percent of gluten-free consumers spend 30 percent or more of their grocery budget on gluten-free foods. These foods typically cost more and carry higher profit margins than conventional food products. This growing consumer segment is challenging the food industry to provide better tasting gluten-free food, lower prices and more selection. In search of a better experience, 57 percent of these consumers have tried 10 or more gluten-free products in the last year.
To win today's food consumers, a food company's messaging must align with these key product attributes:
Organic and non-GMO product claims are another area of consumer confusion. By definition an organic food is non-GMO. Consumers still do not make this connection.
The term 'local' is also confusing to both consumers and food sellers. How to define local is the key question. Some consumers define local as food sourced from neighboring counties. Others define it as food from the same state or within a few hundred miles of their homes. What food sellers are now beginning to accept is that the “correct” definition of local is the definition used by their customers.
Conventional food companies, like Dupont, Monsanto, Coca-Cola, General Mills, Hershey, Nestel and Kellogg, that have poured millions of dollars into campaigns to successfully fight state initiatives on GMO labeling are winning the battle but losing the war. Media reporting on both GMO labeling initiatives and the efforts by conventional food companies has raised consumer awareness to levels that has sparked consumer buying of non-GMO products.
This accelerating consumer awareness is placing tremendous pressure on food retailers to keep pace. Grocery stores are re-allocating their food merchandising mix toward healthier foods, manufacturers are redesigning their foods to remove preservative chemicals, and retail stores are increasing their refrigeration displays as a storage alternative to food preservatives. But the pace of change is not keeping up with the growing demand by the health-conscious American consumers.
The bottom line for the American food industry is that the American consumer is in revolt. They are using their smartphones and social media to figure out who is telling them the truth. They are using their buying power to demand sustainably-sourced and healthier food. The use of marketing power and political campaign contributions by conventional food corporations are, at best, slowing the inevitable. Americans want to eat healthy food, produced sustainably and sourced from trustworthy businesses. And they want it now!
Image credit: Bill Roth
Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017
Bill Roth is a cleantech business pioneer having led teams that developed the first hydrogen fueled Prius and a utility scale, non-thermal solar power plant. Using his CEO and senior officer experiences, Roth has coached hundreds of CEOs and business owners on how to develop and implement projects that win customers and cut costs while reducing environmental impacts. As a professional economist, Roth has written numerous books including his best selling The Secret Green Sauce (available on Amazon) that profiles proven sustainable best practices in pricing, marketing and operations. His most recent book, The Boomer Generation Diet (available on Amazon) profiles his humorous personal story on how he used sustainable best practices to lose 40 pounds and still enjoy Happy Hour!