Progressive Grocer Independent

AUG 2016

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Natural/Organic Departments 32 | Progressive Grocer Independent | August 2016 Beyond probiotics, better beverages is a growing category in the natural market. "We see a huge shift from consumers typically drinking those full-sugar, full-fat beverages, and now they're looking at something that's better for them," Strohbeck says. It can be a switch from a soft drink to an all-natural juice or tea, but plant waters are increasing in popularity. Coconut water is likely the best known, but consumers also are turning to aloe water, cactus water and maple water. Rise of Snacks One area that's really growing is candy and snacking. While it's clearly not a category often associated with natural or organic foods, due to its propensity toward sweet products, health-conscious consumers still need a treat and are gravitating toward op- tions that have cleaner labels. While the natural channel makes up only $816 million of the more than $85 billion snacking segment, according to Schaumburg, Ill.-based SPINS, it grew the most — 7 percent — out of all of the snacking channels for the 52 weeks ending April 17. "We see a lot of organic making its way into the non-chocolate candy space with gummies, hard candies and that type of thing," Strohbeck notes. Non-chocolate candy has been especially successful in cleaning up the ingredient label. ese products traditionally have used a lot of artificial colors and flavors, but manufactur- ers are making the switch to natural alternatives to create the short clean-ingredient label that consumers are looking for. On the chocolate side, manufacturers are integrat- ing superfoods such as quinoa and ancient grains. "Even categories where you think natural or organic re- ally wouldn't resonate, it is," Strohbeck adds. Merchandising Options Retailers often struggle with how to merchandise natural/organic products: Should they call them out in a store- within-a-store format so customers know exactly where to go, or integrate them within conventional categories so customers find them as they shop? Strohbeck notes that the products sell well when they're integrated within categories, but store-within-a-store formats do have benefits. "If you have a store-within-a-store, you have that consumer perception that you're a retailer that really focuses on natural/organic; you're dedicated to it and are willing to put it out there," she adds. e format allows retail- ers to make a statement of dedication and also spread the image of having a larger assortment or bigger variety of products. However, some chal- lenges come along with the format. For the store-with- in-a-store to be successful, it needs to be properly staffed — the personnel have to be educated in the category and understand the trends, Strohbeck says, suggest- ing that retailers thinking of going this route have a dietitian or nutritionist on site. An integrated approach allows consumers to trade off or compare. Some customers may never go in the area if you have a store-within- a-store, but having the products integrated gives customers the chance to compare the natural/organic ver- sions with their conventional coun- terparts. "It allows them to look for the certifications, read the ingredient listings. And as consumers become more knowledgeable on those things, it's becoming more important," she adds. "You get that potential shopper to trade up when you go with that merchandising technique." Price Concern e growth in natural and organic sales also can be attributed to the premi- umization of private label products, Strohbeck says. As more private label brands introduce these products, the price differential comes down, making the items more attractive to consumers who may have otherwise been put off by the price. However, the economics behind organic farming and sourcing will most likely keep the prices of these products higher in the years to come. e good news for retailers, ac- cording to Strohbeck, is that Millen- nials, comprising the largest shopping bloc, are more willing than other generations to spend more on natural and organic products. PGI Total U.S. Organic Sales and Growth, 2006-2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Organic Trade Association In Billions Organic Nonfood Sales Organic Food Sales $40 $30 $20 $10 $0 "Most of the trends we see going on are due to the fact that consumers are becoming a lot more proactive in regards to their health and wellness." —Katie Strohbeck, KeHE Distributors

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