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Health Food Retailing - UK - April 2010

This report concentrates on products traditionally sold through health food stores. Functional foods, ie those with added ingredients that are of benefit to health (eg cholesterol-reducing margarine), are not strictly health foods but are discussed throughout the report as an associated category.

  • Convenience is key to store choice for ten million health food users. Steps to making a shop more easily accessible, including online, can tap into the spending of this sizeable group.
  • Price drives the store choice of less than two in five health food shoppers, suggesting that the other 19 million respond firstly to other, less blunt tools.
  • Almost four million people in the 25-34-year-old age group feel they are too busy to take care of themselves as well as they should. Tangible ideas of how health foods can boost well-being with little effort could loosen the purse strings of this potentially high-spending segment of the health food market.
  • In-store information and support can drive additional sales among the 21 million health food shoppers who are not adverse to advice.
  • A high proportion of regular grocery shoppers at M&S, Waitrose and the Co-op are heavy users of health foods, suggesting potential to drive sales through a wider health food offering at these stores, or for collaboration between these supermarkets and health food specialists.
  • Loyalty schemes or exclusive brands targeting 25-34-year-olds could drive sales by coaxing greater store loyalty among this group: an age group which has a relatively high proportion of users of health foods, but which also is more promiscuous in its shopping habits than other age groups.

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definitions
          • Abbreviations
          • Future Opportunities

              • The local health shop
                • (Not just) hemp seeds and apple cider vinegar
                  • A back-to-basics approach to beauty
                    • Beauty from the outside in
                      • Earthy beauty
                      • Market in Brief

                        • Sector size and forecast
                          • New EU regulation impacts health claims
                            • Demographic changes benefit health foods
                              • Health foods vs healthy foods
                                • Health food sector lacks innovation
                                  • A fragmented sector under pressure from non-specialists
                                    • Nuts and seeds top, VMS second
                                      • Tesco and Holland & Barrett top outlets for health food
                                        • Price and convenience drive choice of outlet
                                          • Health foods are discretionary
                                          • Internal Market Environment

                                            • Key points
                                              • Regulatory changes
                                                • EFSA steps in to regulate health claims
                                                  • The food supplements directive
                                                    • The Traditional Herbal Medicinal Products Directive
                                                      • Recession exacerbates busy lifestyles
                                                          • Figure 1: Attitudes to personal health, 2007-09
                                                        • Alternative medicine small but steady
                                                          • Figure 2: Attitudes to alternative medicine and health foods, 2007-09
                                                        • The press effect
                                                          • Figure 3: Agreement with the statement that “News on food influences my dietary habits”, 2009
                                                      • Broader Market Environment

                                                        • Key points
                                                          • One in four in healthy finances
                                                              • Figure 4: Trends in how respondents describe their financial situation
                                                            • Demographics to boost health foods
                                                              • Figure 5: Trends in the age structure of the UK population, 2010-15
                                                            • Growth in health-aware ABs
                                                                • Figure 6: Changes in adult population, by socio-economic group, 2010-15
                                                            • Competitive Context

                                                              • Key points
                                                                • Figure 7: UK retail sales of various health foods and products that compete with them, 2005-09
                                                              • A healthy diet
                                                                  • Figure 8: Change in intakes of selected nutrients derived from food and drink for UK households, 2001-08
                                                                • Functional food
                                                                  • OTC medication
                                                                  • Strengths and Weaknesses

                                                                    • Strengths
                                                                      • Weaknesses
                                                                      • Who’s Innovating

                                                                        • Key points
                                                                          • Holland & Barrett tests new format
                                                                            • Not just a store
                                                                              • Online space underused
                                                                              • Sector Size and Forecast

                                                                                • Key points
                                                                                  • Health food specialists’ sales grow
                                                                                    • Figure 9: UK health food retailers' sales, and index of growth, 2005-15
                                                                                    • Figure 10: UK health food retailers' sales, at current and constant prices, 2005-15
                                                                                    • Figure 11: Estimated sales growth in key product categories sold at health food stores, 2005-10
                                                                                  • Strong growth forecast in key product segments
                                                                                      • Figure 12: Forecast growth in key product categories sold at health food stores and for all retail, 2009-14
                                                                                    • ...but can the specialists tap into it?
                                                                                      • Factors used in the forecast
                                                                                      • Retail Competitor Analysis

                                                                                        • Key points
                                                                                          • Health food – a sector of two halves
                                                                                            • Grocery multiples dominate health foods
                                                                                              • Chemists add to pressure on specialists
                                                                                                  • Figure 13: Leading retailers’ store numbers in the health food sector and competing areas, 2007-09
                                                                                              • Companies and Products

                                                                                                • Holland and Barrett
                                                                                                  • Figure 14: Holland & Barrett background Information, 1997-2009
                                                                                                  • Figure 15: Holland & Barrett key financial performance, 2004-08
                                                                                                  • Figure 16: Holland & Barrett: UK Outlet data, 2004-08
                                                                                                • Julian Graves
                                                                                                    • Figure 17: Julian Graves: key financial performance, 2004-08
                                                                                                    • Figure 18: Julian Graves: Stores, 2004-08
                                                                                                  • Boots
                                                                                                      • Figure 19: Alliance Boots UK Health and Beauty Division: Financial performance, 2004-08
                                                                                                      • Figure 20: Alliance Boots UK Health and Beauty Division: Outlet data, 2004-08
                                                                                                      • Figure 21: Alliance Boots UK Health and Beauty: Sales mix by major product category, 2008/09
                                                                                                    • Superdrug
                                                                                                      • Nutri Centre @ Tesco
                                                                                                        • National Association of Health Stores
                                                                                                          • The Health Store
                                                                                                            • Alternative medicines specialists
                                                                                                              • Few online health food retailers of size
                                                                                                                • Less familiar e-tailers strong in visit numbers
                                                                                                                  • Figure 22: Top 20 health care retail websites visited by UK residents, February 2010
                                                                                                              • Consumer – Health Food Purchases

                                                                                                                • Key points
                                                                                                                  • Nuts and vitamins are top purchases
                                                                                                                      • Figure 23: Products bought in the last 12 months, December 2009
                                                                                                                    • Nuts, seeds, dried fruit
                                                                                                                      • Vitamins and mineral supplements
                                                                                                                        • Tea
                                                                                                                          • Speciality foods
                                                                                                                            • Quarter use four or more health foods
                                                                                                                              • Figure 24: Repertoire of products bought in the last 12 months, December 2009
                                                                                                                            • Preferences of light and heavy users differ
                                                                                                                              • Figure 25: Products bought from health food stores in the last 12 months, by light users (1 type) and heavy users (5+ types), December 2009
                                                                                                                          • Consumer – Outlets Used for Health Food Purchases

                                                                                                                            • Key points
                                                                                                                              • Outlets used for health food purchases
                                                                                                                                  • Figure 26: Shops visited to buy health food products in last 12 months, December 2009
                                                                                                                                • Convenience makes grocers popular
                                                                                                                                    • Figure 27: Stores regularly used for grocery shopping, December 2009
                                                                                                                                  • Health specialists lag in ranges
                                                                                                                                    • Online still niche
                                                                                                                                      • Who shops where?
                                                                                                                                          • Figure 28: Repertoire of shops visited to buy health food products in the last 12 months, December 2009
                                                                                                                                      • Consumer – Attitudes to Shopping for Health Food

                                                                                                                                        • Key points
                                                                                                                                          • Attitudes to shopping for health foods
                                                                                                                                              • Figure 29: Attitudes towards shopping for health foods, December 2009
                                                                                                                                            • Price and convenience drive choice of store
                                                                                                                                                • Figure 30: Demographic groups most and least likely to agree on selected statements on price, convenience and special offers when shopping for health foods, December 2009
                                                                                                                                              • Own-label trusted more than bought
                                                                                                                                                  • Figure 31: The demographic groups most and least likely to agree on selected statements on own-label products when shopping for health foods, December 2009
                                                                                                                                                • Advice is for the minority
                                                                                                                                                  • Ranges a non-issue
                                                                                                                                                  • Consumer – Attitudes to Health Food

                                                                                                                                                    • Key points
                                                                                                                                                      • Attitudes to health food
                                                                                                                                                        • Figure 32: Attitudes towards health foods, December 2009
                                                                                                                                                      • Price perception an issue
                                                                                                                                                        • Health food and healthy food
                                                                                                                                                        • Target Groups

                                                                                                                                                          • Key points
                                                                                                                                                            • Positives (13%)
                                                                                                                                                              • Holistic healthy (28%)
                                                                                                                                                                • Apathetic (59%)
                                                                                                                                                                • Appendix – Internal and Broader Market Environment

                                                                                                                                                                    • Figure 33: Agreement with selected lifestyle statements on health, by gender, 2007-09
                                                                                                                                                                    • Figure 34: Agreement with selected lifestyle statements on health, by demographics, 2009
                                                                                                                                                                    • Figure 35: Trends in how respondents describe their financial situation
                                                                                                                                                                    • Figure 36: Trends in how respondents describe their financial situation (Continued)
                                                                                                                                                                  • Age
                                                                                                                                                                    • Figure 37: Trends in the age structure of the UK population, by gender, 2005-15
                                                                                                                                                                  • Socio-economic groups
                                                                                                                                                                    • Figure 38: Forecast adult population trends, by socio-economic group, 2005-15
                                                                                                                                                                • Appendix – Consumer: Health Food Purchases

                                                                                                                                                                    • Figure 39: Products bought in the last 12 months, December 2009
                                                                                                                                                                    • Figure 40: Most popular products bought in the last 12 months, by demographics, December 2009
                                                                                                                                                                    • Figure 41: Next most popular products bought in the last 12 months, by demographics, December 2009
                                                                                                                                                                    • Figure 42: Repertoire of products bought in the last 12 months, December 2009
                                                                                                                                                                    • Figure 43: Repertoire of products bought in the last 12 months, by demographics, December 2009
                                                                                                                                                                    • Figure 44: Types of products bought in the last 12 months, by repertoire of products bought in the last 12 months, December 2009
                                                                                                                                                                • Appendix – Consumer – Outlets Used for Health Food Purchases

                                                                                                                                                                    • Figure 45: Shops used to buy health food products in last 12 months, December 2009
                                                                                                                                                                    • Figure 46: Most popular shops used to buy health food products in last 12 months, by demographics, December 2009
                                                                                                                                                                    • Figure 47: Next most popular shops used to buy health food products in last 12 months, by demographics, December 2009
                                                                                                                                                                    • Figure 48: Repertoire of shops used to buy health food products in last 12 months, December 2009
                                                                                                                                                                    • Figure 49: Repertoire of shops used to buy health food products in last 12 months, by demographics, December 2009
                                                                                                                                                                    • Figure 50: Shops used to buy health food products in last 12 months, by repertoire of shops used to buy health food products in last 12 months, December 2009
                                                                                                                                                                • Appendix – Consumer Attitudes towards Shopping for Health Food

                                                                                                                                                                    • Figure 51: Attitudes towards shopping for health foods, December 2009
                                                                                                                                                                    • Figure 52: Most popular attitudes towards shopping for health foods, by demographics, December 2009
                                                                                                                                                                    • Figure 53: Next most popular attitudes towards shopping for health foods, by demographics, December 2009
                                                                                                                                                                • Appendix – Consumer Attitudes to Health Foods

                                                                                                                                                                    • Figure 54: Attitudes towards health foods, December 2009
                                                                                                                                                                    • Figure 55: Most popular attitudes towards health foods, by demographics, December 2009
                                                                                                                                                                    • Figure 56: Next most popular attitudes towards health foods, by demographics, December 2009
                                                                                                                                                                • Appendix – Target Groups

                                                                                                                                                                    • Figure 57: Attitudes towards health foods, by target groups, December 2009
                                                                                                                                                                    • Figure 58: Target groups, by demographics, December 2009
                                                                                                                                                                    • Figure 59: Statements on healthy lifestyles, by target groups, December 2009
                                                                                                                                                                    • Figure 60: Attitudes towards shopping for health foods, by target groups, December 2009

                                                                                                                                                                Companies Covered

                                                                                                                                                                • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                • Alliance Boots
                                                                                                                                                                • Asda Group Ltd
                                                                                                                                                                • British Market Research Bureau (BMRB)
                                                                                                                                                                • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                                                • Co-operative Group
                                                                                                                                                                • Competition Commission
                                                                                                                                                                • Department for Environment, Food & Rural Affairs
                                                                                                                                                                • Ella's Kitchen Ltd
                                                                                                                                                                • Food Standards Agency
                                                                                                                                                                • Government Actuary's Department (GAD)
                                                                                                                                                                • H&M Hennes & Mauritz
                                                                                                                                                                • Holland & Barrett Retail Ltd
                                                                                                                                                                • Hutchison Whampoa Limited
                                                                                                                                                                • J. Sainsbury
                                                                                                                                                                • Julian Graves Ltd
                                                                                                                                                                • L'Oréal SA
                                                                                                                                                                • Lidl (UK)
                                                                                                                                                                • Marks & Spencer
                                                                                                                                                                • NBTY
                                                                                                                                                                • Office for National Statistics
                                                                                                                                                                • Office of Fair Trading
                                                                                                                                                                • Planet Organic Ltd
                                                                                                                                                                • T-Mobile (UK) Ltd
                                                                                                                                                                • Tesco Plc
                                                                                                                                                                • The Nutri Centre
                                                                                                                                                                • The Perfume Shop Ltd
                                                                                                                                                                • Virgin Media Ltd
                                                                                                                                                                • Virgin Mobile
                                                                                                                                                                • Vodafone Group Plc (UK)
                                                                                                                                                                • Waitrose
                                                                                                                                                                • Wm Morrison Supermarkets

                                                                                                                                                                Health Food Retailing - UK - April 2010

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