Increased consumer interest in health and wellness has helped boost central store organic sales during the pandemic, and the trend is expected to continue.
Additionally, the expansion of retailers’ private label organic assortments is making organic options more competitive and attracting more consumers. This not only drives sales of organic products, but leads to more innovation from national organic brands looking to differentiate their offerings.
“As the world experiences a global pandemic, consumers have heightened awareness of their health and well-being,” said Rebekah Nasralla, growth solutions manager at KeHE, a leading nationwide distributor of organic and natural products. “Given that organic is generally perceived to be healthier than non-organic offerings, we can expect organic to continue to grow in-store and over the coming year.”
Consumer interest in wellness has extended beyond personal health to include concern for the health of the planet and the fair treatment of workers, she said.
“Consumers now expect brands to communicate the purpose of their purchase beyond immediate consumption,” says Nasralla.
This demand will lead to an increase in organic certifications, she predicted, as well as more calls on packaging about a product’s origin or culture, such as “no preservatives” or “free of added hormones, or “sustainably sourced.”
The fastest growing organic store categories over the past year in natural, specialty and conventional groceries include wellness bars, baby/toddler foods, baked goods, chocolate and frozen breakfast foods, Nasralla said, citing data from research firm SPINS.
Organic frozen breakfast foods set the tone among frozen foods, she said, with dollar sales growth of 42% for the 52 weeks ending Nov. 28. In shelf-stable groceries, sales of organic chocolate increased 16%, and Nasralla said consumers also focused more on sustainable and fair-trade ingredients in the chocolate category.
Dollar sales of organic wellness bars and organic baby and toddler foods were both up more than 10% for the year, and bread and baked goods, one of the large segments of the organic store, recorded sales growth in dollars of 4%.
The gains follow a banner year in 2020, when overall organic food sales rose nearly 13%, to $56.5 billion, according to Organic’s 2021 Organic Industry Survey. Trade Association (OTA).
Brands refresh and reformulate
Many organic in-store brands that have seen sales soar during the busy pantry periods of 2020 – categories such as soup, dried beans, pasta and frozen foods including fruit and frozen vegetables – have enhanced their products with new ingredients and formulations, said Angela Jagiello, director of education and insights at OTA.
“Brands reinvested earnings to update these categories, resulting in a refreshed version of old favourites,” she said, citing the soup category as an example, where brands launched new organic varieties. with packaging and ingredient upgrades.
“Now it’s not just made with organic broth, but organic bone broth,” Jagiellon says. “Even salt has a story.”
Additionally, the latest packaging for organic brands is fresh, more eye-catching and modern, she said.
“For years, investments in innovation and marketing have been diverted from shelf-stable soups and into fresh, chilled products,” says Jagiellon. “Now we see the tide turning towards rebuilding on the other side of the business.”
Another key trend in organic grocery categories has been the increasing availability of organic products tailored to specific diets, such as plant-based, keto, paleo, and grain-free or gluten-free.
“Buyers [previously] have had to choose between embracing the latest food thinking and their desire to support a production system that benefits the planet,” says Jagiellon. “Increasingly, buyers can have all the nutritional attributes they want with the assurance of a certified organic product.”
Private labels go organic
In recent years, retailers have aggressively expanded their assortments of private label organic products. Brands such as Kroger’s Simple Truth Organics, Aldi’s Simply Nature and Raley’s Purely Made expanded with new SKUs, while other retailers added new lines, such as the Natural Grocers line from Natural Grocers by Vitamin Cottage and Kitchen Originals by Organic Garage.
This growth of organic private label has pushed branded organic makers to differentiate themselves even more, Nasralla said.
Particularly at a time when consumers are experiencing widespread inflation, private label organic products can “address the need of the health-conscious and budget-conscious consumer, helping them justify their decision to spend a little more on an offering organic,” she said.
“This drives organic sales overall, helps the retailer retain shoppers by building confidence in the quality of its product line, but challenges branded offerings to further differentiate beyond organic, Nasralla said.
Additionally, organic materials can have a “halo effect” throughout the store, she says, reinforcing the perception of quality.
Jagiello agreed that retailers are embracing organic in their premium private label lines and leveraging the organic nature of products to differentiate them from traditional national brands. In many stores, private label organic products are the only organic option, she pointed out.
“Private label products aren’t usually where the most innovation happens, but the benefit to shoppers is the chance to try an organic item from a brand they already trust, at a price affordable,” says Jagiellon.
Organic price increases in line with global inflation
A new data report from the Organic Trade Association (OTA) shows that price increases for organic food products have been in line with those for the rest of the food industry in the current inflationary environment.
The OTA’s Organic Consumer Basket, which measures dollar and unit sales changes and retail price changes for 20 organic products across the store, found that the average retail price of the full basket of organic had increased by 3.5% in November, compared to a year. since.
Among organic dry grocery products, the average retail price for pasta increased by 5.8%, the largest of any product in the basket, followed by coffee, with an average retail price increase of 4.8%. %. In frozen foods, the average retail price for peas increased 5.4% year over year.
Retail prices for chilled food and organic products have been relatively stable compared to dry grocery and frozen foods, with many actually posting slight declines.
The consumer basket also showed the steep declines in sales that some central store products experienced after the 2020 inventory boom, with dollar sales of organic chicken broth down 26.5% and pasta down. 24.2%, for example.
This piece originally appeared on Supermarket News, a sister website to New Hope Network. Visit the site for more grocery trends and insights.