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Natural and Organic Food and Beverage: The Market - US - October 2011

The $18.9 billion natural and organic food and beverage (NOFB) market is one of the few bright spots in a generally dreary consumer economy. Strong opportunities for innovation and growth remain in this market, even as the food industry as a whole is struggling. This report examines how the NOFB market is growing and evolving, and identifies key trends that are likely to shape its future, including:

  • Examining the growth of the market over the past three years, and what factors have contributed to this growth, as well as what will influence future growth
  • Identifying market segments that show the most potential for growth in the coming three to four years, and how savvy brands can capitalize on that potential
  • Looking at how natural and organic consumers have adapted to current economic conditions, and implications for NOFB producers
  • Analyzing the most important drivers of growth and change in the NOFB landscape, including how consumers’ changing eating habits and increased concern about health and nutrition will shape the future market
  • Identifying key players in the overall NOFB market in 10 leading segments, and examining how changing market conditions have impacted the leading companies and brands
  • Tracking the hottest marketing trends and analyzing recent successful campaigns in both traditional and new media advertising for NOFB brands

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
          • Figure 1: SPINS market definitions for natural and organic products, 2011
        • Data sources
          • Sales data
            • Advertising clips
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • NOFB market shows strong growth despite sluggish economy
                      • Increased interest in healthy eating positive driver for NOFB market
                        • Local food movement and food safety concerns boost NOFB market
                          • Consumers traded down from organic to natural in 2009-11
                            • Yogurt and beverages among fastest-growing NOFB segments
                              • Natural specialist companies hold their own against diversified CPGs
                                • Performance across 10 key NOFB segments
                                  • Yogurt and kefir
                                    • Milk
                                      • Chips, pretzels, and snacks
                                        • Bread and baked goods
                                          • Refrigerated juices and functional beverages
                                            • Energy bars and gels
                                              • Refrigerated non-dairy beverages
                                                • Cold cereals
                                                  • Frozen lunch and dinner entrées
                                                    • Cookies and snack bars
                                                      • Whole Foods Market and Trader Joe’s positioned for continued growth
                                                        • “GMO-free” is fastest-growing NOFB new product claim
                                                          • Eco-friendly daily deal sites offer new marketing possibilities for NOFB brands
                                                          • Insights and Opportunities

                                                            • Focus on value creates opportunities in natural and private label sectors
                                                              • Less mature categories likely to benefit from growth of natural markets
                                                                • Traditional retailers can benefit from ties with farmers markets
                                                                  • Luring new categories of shoppers to NOFB
                                                                  • Inspire Insights

                                                                      • Trend: Secret, Secret
                                                                        • Trend: Minimize Me
                                                                        • Market Size and Forecast

                                                                          • Key points
                                                                            • NOFB sales show faster growth than conventional food despite difficult economic conditions
                                                                              • Sales and forecast of NOFB
                                                                                • Figure 2: Retail sales of NOFB, at current prices, 2009-13
                                                                                • Figure 3: Retail sales of NOFB, at inflation-adjusted prices, 2009-13
                                                                              • Sales and forecast of natural food and beverages
                                                                                • Figure 4: Retail sales of natural food and beverages*, at current prices, 2009-13
                                                                                • Figure 5: Retail sales of natural food and beverages*, at inflation-adjusted prices, 2009-13
                                                                              • Sales and forecast of organic (70%+) food and beverages
                                                                                • Figure 6: Retail sales of organic (70%+) food and beverages, at current prices, 2009-13
                                                                                • Figure 7: Retail sales of organic (70%+) food and beverages, at inflation-adjusted prices, 2009-13
                                                                              • Fan-chart forecast
                                                                                • Figure 8: Fan chart forecast of NOFB, 2009-13
                                                                            • Market Drivers

                                                                              • Key points
                                                                                • Aging Baby Boomers should drive demand for natural and organic food
                                                                                  • Figure 9: Population, by age, 2009-13
                                                                                • Economic woes continue to pressure NOFB shoppers
                                                                                    • Figure 10: Real disposable income, 2007-11*
                                                                                    • Figure 11: Consumer sentiment index, January 2007–July 2011
                                                                                  • Rising food prices strain consumer budgets
                                                                                    • Food inflation and income stagnation limit growth prospects for NOFB
                                                                                      • Figure 12: Changes in food price indexes, 2009-12
                                                                                  • Competitive Context

                                                                                    • Key points
                                                                                      • Increased interest in healthier food helps drive demand for NOFB
                                                                                        • Concerns about food safety lead some to choose natural foods
                                                                                          • Snacks now make a fourth meal
                                                                                            • Farmers market movement continues to grow
                                                                                              • “Light green” consumers more likely to abandon NOFB when budgets are tight
                                                                                              • Segment Performance

                                                                                                • Key points
                                                                                                  • Consumers trading down from organic to natural
                                                                                                    • Sales of NOFB, by department
                                                                                                      • Figure 13: Sales of NOFB, by department, 2009-11
                                                                                                    • 2011 sees big gains for yogurt, beverages
                                                                                                      • Sales of NOFB, by segment
                                                                                                        • Figure 14: Sales of NOFB, by top 30 segments, 2009-11
                                                                                                        • Figure 15: Sales of NOFB, by next 30 segments, 2009-11
                                                                                                      • Top 15 organic and natural segments
                                                                                                        • Organic food and beverages (70%+)
                                                                                                          • Figure 16: Top 15 organic food and beverage segments, 2009-11
                                                                                                        • Natural food and beverages
                                                                                                          • Figure 17: Top 15 natural food and beverage segments, 2009-11
                                                                                                      • Leading Companies

                                                                                                        • Key points
                                                                                                          • More large diversified players taking leading positions in the NOFB market
                                                                                                            • Major corporations grow NOFB lines and green efforts
                                                                                                              • Top 10 natural and organic food and beverage companies
                                                                                                                • Figure 18: Top 10 natural and organic food and beverage companies, 2010-11
                                                                                                            • Segment Performance and Brand Share—Yogurt and Kefir

                                                                                                              • Key points
                                                                                                                • Rise of Greek-style yogurt drives growth in natural category
                                                                                                                  • Sales of yogurt and kefir
                                                                                                                    • Figure 19: Sales of yogurt and kefir, 2009-11
                                                                                                                  • Manufacturer and brand sales of yogurt and kefir
                                                                                                                    • Natural and organic combined
                                                                                                                      • Figure 20: Selected brand sales of natural and organic yogurt and kefir, 2010-11
                                                                                                                    • Organic (70%+)
                                                                                                                      • Figure 21: Selected brand sales of organic yogurt and kefir, 2010-11
                                                                                                                  • Segment Performance and Brand Share—Milk

                                                                                                                    • Key points
                                                                                                                      • Consumers remain loyal to organic milk despite high prices
                                                                                                                        • Sales of milk
                                                                                                                          • Figure 22: Sales of milk, at current prices, 2009-11
                                                                                                                        • Manufacturer and brand sales of milk
                                                                                                                          • Natural and organic combined
                                                                                                                            • Figure 23: Selected brand sales of natural and organic milk, 2010-11
                                                                                                                        • Segment Performance and Brand Share—Chips, Pretzels, and Snacks

                                                                                                                          • Key points
                                                                                                                            • Push for healthier snacks boosts segment
                                                                                                                              • Sales of chips, pretzels, and snacks
                                                                                                                                • Figure 24: Sales of chips, pretzels, and snacks, at current prices, 2009-11
                                                                                                                              • Manufacturer and brand sales of chips, pretzels, and snacks
                                                                                                                                • Natural and organic combined
                                                                                                                                  • Figure 25: Selected brand sales of natural and organic chips, pretzels, and snacks, 2010-11
                                                                                                                                • Organic (70%+)
                                                                                                                                  • Figure 26: Selected brand sales of organic chips, pretzels, and snacks, 2010-11
                                                                                                                              • Segment Performance—Bread and Baked Goods

                                                                                                                                • Key points
                                                                                                                                  • Natural and private label organics lead growth in segment
                                                                                                                                    • Sales of bread and baked goods
                                                                                                                                      • Figure 27: Sales of bread and baked goods, at current prices, 2009-11
                                                                                                                                    • Manufacturer and brand sales of bread and baked goods
                                                                                                                                      • Natural and organic combined
                                                                                                                                        • Figure 28: Selected brand sales of natural and organic bread and baked goods, 2010-11
                                                                                                                                      • Organic (70%+)
                                                                                                                                        • Figure 29: Selected brand sales of organic bread and baked goods, 2010-11
                                                                                                                                    • Segment Performance and Brand Share—Refrigerated Juices and Functional Beverages

                                                                                                                                      • Key points
                                                                                                                                        • Consumers trade down to private label organic refrigerated juices
                                                                                                                                          • Sales of refrigerated juices and functional beverages
                                                                                                                                            • Figure 30: Sales of refrigerated juices and functional beverages, at current prices, 2009-11
                                                                                                                                          • Manufacturer and brand sales of refrigerated juices and functional beverages
                                                                                                                                            • Natural and organic combined
                                                                                                                                              • Figure 31: Selected brand sales of natural and organic refrigerated juices and functional beverages, 2010-11
                                                                                                                                            • Organic (70%+)
                                                                                                                                              • Figure 32: Selected brand sales of organic refrigerated juices and functional beverages, 2010-11
                                                                                                                                          • Segment Performance and Brand Share—Energy Bars and Gels

                                                                                                                                            • Key points
                                                                                                                                              • Clif Bar Inc.’s organic lines lead growth in natural and organic energy bars
                                                                                                                                                • Sales of energy bars and gels
                                                                                                                                                  • Figure 33: Sales of energy bars and gels, at current prices, 2009-11
                                                                                                                                                • Manufacturer and brand sales of energy bars and gels
                                                                                                                                                  • Natural and organic combined
                                                                                                                                                    • Figure 34: Selected brand sales of natural and organic energy bars and gels, 2010-11
                                                                                                                                                • Segment Performance and Brand Share—Refrigerated Non-dairy Beverages

                                                                                                                                                  • Key points
                                                                                                                                                    • Non-soy beverages drive growth in the refrigerated non-dairy segment
                                                                                                                                                      • Sales of refrigerated non-dairy beverages
                                                                                                                                                        • Figure 35: Sales of refrigerated non-dairy beverages, at current prices, 2009-11
                                                                                                                                                      • Manufacturer and brand sales of refrigerated non-dairy beverages
                                                                                                                                                        • Natural and organic combined
                                                                                                                                                          • Figure 36: Selected brand sales of natural and organic refrigerated non-dairy beverages, 2010-11
                                                                                                                                                        • Organic (70%+)
                                                                                                                                                          • Figure 37: Selected brand sales of organic refrigerated non-dairy beverages, 2010-11
                                                                                                                                                      • Segment Performance and Brand Share—Cold Cereals

                                                                                                                                                        • Key points
                                                                                                                                                          • Natural and organic cold cereals show lackluster growth
                                                                                                                                                            • Sales of cold cereals
                                                                                                                                                              • Figure 38: Sales of cold cereals, at current prices, 2009-11
                                                                                                                                                            • Manufacturer and brand sales of cold cereals
                                                                                                                                                              • Natural and organic combined
                                                                                                                                                                • Figure 39: Selected brand sales of natural and organic cold cereals, 2010-11
                                                                                                                                                              • Organic (70%+)
                                                                                                                                                                • Figure 40: Selected brand sales of organic cold cereals, 2010-11
                                                                                                                                                            • Segment Performance and Brand Share—Frozen Lunch and Dinner Entrées

                                                                                                                                                              • Key points
                                                                                                                                                                • Consumers return to natural and organic frozen meals in 2011
                                                                                                                                                                  • Sales of frozen lunch and dinner entrées
                                                                                                                                                                    • Figure 41: Sales of frozen lunch and dinner entrées, at current prices, 2009-11
                                                                                                                                                                  • Manufacturer and brand sales of frozen lunch and dinner entrées
                                                                                                                                                                    • Natural and organic combined
                                                                                                                                                                      • Figure 42: Selected brand sales of natural and organic frozen lunch and dinner entrées, 2010-11
                                                                                                                                                                  • Segment Performance and Brand Share—Cookies and Snack Bars

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Cookies and snack bar segment may be on the rebound
                                                                                                                                                                        • Sales of cookies and snack bars
                                                                                                                                                                          • Figure 43: Sales of cookies and snack bars, at current prices, 2009-11
                                                                                                                                                                        • Manufacturer and brand sales of cookies and snack bars
                                                                                                                                                                          • Natural and organic combined
                                                                                                                                                                            • Figure 44: Selected brand sales of natural and organic cookies and snack bars, 2010-11
                                                                                                                                                                          • Organic (70%+)
                                                                                                                                                                            • Figure 45: Selected brand sales of organic cookies and snack bars, 2010-11
                                                                                                                                                                        • Retail Channels

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Mass market retailers gain NOFB shoppers
                                                                                                                                                                              • Retailers ramp up focus on health
                                                                                                                                                                                • Drug stores and Target expand fresh food offerings
                                                                                                                                                                                  • Sales of NOFB, by channel
                                                                                                                                                                                    • Figure 46: Retail sales of NOFB, by channel, 2009 and 2011
                                                                                                                                                                                  • FDMx sales of NOFB
                                                                                                                                                                                    • Figure 47: FDMx sales of NOFB, at current prices, 2009-11
                                                                                                                                                                                  • Natural and specialty food retailers’ sales of NOFB
                                                                                                                                                                                    • Figure 48: Natural and specialty food retailers’ sales of NOFB, at current prices, 2009-11
                                                                                                                                                                                • Retailer Case Studies

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Overview
                                                                                                                                                                                      • Whole Foods Market
                                                                                                                                                                                        • Focus on value
                                                                                                                                                                                          • Smaller stores, urban locations
                                                                                                                                                                                            • Health Starts Here
                                                                                                                                                                                              • New animal welfare standards
                                                                                                                                                                                                • Whole Foods Market well-positioned with its core customer base
                                                                                                                                                                                                  • Whole Foods Market sales
                                                                                                                                                                                                    • Figure 49: Whole Foods Market total and comparable store sales, 2005-12
                                                                                                                                                                                                    • Figure 50: Whole Foods Market total and comparable store sales, by department, 2008-10
                                                                                                                                                                                                  • Trader Joe’s
                                                                                                                                                                                                    • Duane Reade/Walgreens
                                                                                                                                                                                                    • Innovations and Innovators

                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                        • Snacks and beverages lead new product introductions
                                                                                                                                                                                                          • Figure 51: Natural and organic food and beverage product launches, by category, 2007-11
                                                                                                                                                                                                        • Growing claims
                                                                                                                                                                                                          • All natural
                                                                                                                                                                                                            • GMO-free
                                                                                                                                                                                                              • Fair trade organics
                                                                                                                                                                                                                • Figure 52: Natural and organic food and beverage product launches, by top claims, 2007-11
                                                                                                                                                                                                              • Private label innovations taper off
                                                                                                                                                                                                                • Figure 53: Natural and organic food and beverage product launches, by private label, 2007-11
                                                                                                                                                                                                                • Figure 54: Natural and organic food and beverage product launches, by top five companies/brands, 2007-11
                                                                                                                                                                                                                • Figure 55: Natural and organic food and beverage product launches, by next five companies/brands, 2007-11
                                                                                                                                                                                                              • Product innovations
                                                                                                                                                                                                                • GMO-free
                                                                                                                                                                                                                  • Better-for-you snacks
                                                                                                                                                                                                                    • Indulgent snacks
                                                                                                                                                                                                                      • Private label natural
                                                                                                                                                                                                                        • Functional foods and beverages
                                                                                                                                                                                                                        • Marketing Strategies

                                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                                            • Social media and alternative campaigns
                                                                                                                                                                                                                              • Daily deal coupon sites move into grocery marketing
                                                                                                                                                                                                                                • Chip brands make creative use of social media and integrated marketing
                                                                                                                                                                                                                                  • Traditional media and integrated campaigns
                                                                                                                                                                                                                                    • Greek-style yogurt ad wars begin
                                                                                                                                                                                                                                        • Figure 56: Chobani. Man rides bike to plant, television ad, 2011
                                                                                                                                                                                                                                      • Green ads for green products
                                                                                                                                                                                                                                        • Coke and Pepsi push their natural brands
                                                                                                                                                                                                                                          • Figure 57: Frito-Lay. Tostitos surprisingly simple, television ad, 2011
                                                                                                                                                                                                                                          • Figure 58: Glaceau VitaminWater Zero Glow. Toad kisses woman, television ad, 2011
                                                                                                                                                                                                                                          • Figure 59: Glaceau VitaminWater Revive. Boy recalls night out, television ad, 2011
                                                                                                                                                                                                                                      • Appendix—Trade Associations

                                                                                                                                                                                                                                        Companies Covered

                                                                                                                                                                                                                                        • Abbott Laboratories
                                                                                                                                                                                                                                        • ABC, Inc.
                                                                                                                                                                                                                                        • Aldi (USA)
                                                                                                                                                                                                                                        • Amazon North America
                                                                                                                                                                                                                                        • American Institute of Food Distribution
                                                                                                                                                                                                                                        • American Nutraceutical Association (ANA)
                                                                                                                                                                                                                                        • Amy's Kitchen Inc.
                                                                                                                                                                                                                                        • Annie's Homegrown Inc.
                                                                                                                                                                                                                                        • Barbara's Bakery Inc.
                                                                                                                                                                                                                                        • Ben & Jerry's Homemade Inc.
                                                                                                                                                                                                                                        • Blue Diamond Growers
                                                                                                                                                                                                                                        • Campanile
                                                                                                                                                                                                                                        • Campbell Soup Company
                                                                                                                                                                                                                                        • Cape Cod Potato Chip Company, The
                                                                                                                                                                                                                                        • CBS Corporation
                                                                                                                                                                                                                                        • Clif Bar Inc.
                                                                                                                                                                                                                                        • Coca-Cola Company (The) (USA)
                                                                                                                                                                                                                                        • Community Alliance with Family Farmers
                                                                                                                                                                                                                                        • ConAgra Foods, Inc
                                                                                                                                                                                                                                        • Cooperative Regions of Organic Producers
                                                                                                                                                                                                                                        • Costco Wholesale Corporation
                                                                                                                                                                                                                                        • CVS Caremark Corporation
                                                                                                                                                                                                                                        • Dannon Co
                                                                                                                                                                                                                                        • Dean Foods Company
                                                                                                                                                                                                                                        • Delhaize America
                                                                                                                                                                                                                                        • Diamond Foods, Inc.
                                                                                                                                                                                                                                        • Duane Reade, Inc
                                                                                                                                                                                                                                        • Energy Brands Inc.
                                                                                                                                                                                                                                        • Facebook, Inc.
                                                                                                                                                                                                                                        • FAGE UK
                                                                                                                                                                                                                                        • Food and Drug Administration
                                                                                                                                                                                                                                        • Food Institute
                                                                                                                                                                                                                                        • Food Lion
                                                                                                                                                                                                                                        • Food Marketing Institute
                                                                                                                                                                                                                                        • Frito-Lay, Inc
                                                                                                                                                                                                                                        • General Mills Inc
                                                                                                                                                                                                                                        • Grocery Manufacturers Association (GMA)
                                                                                                                                                                                                                                        • Groupe Danone
                                                                                                                                                                                                                                        • Groupon, Inc.
                                                                                                                                                                                                                                        • Häagen-Dazs
                                                                                                                                                                                                                                        • HJ Heinz Company
                                                                                                                                                                                                                                        • Honest Tea Inc.
                                                                                                                                                                                                                                        • Horizon Organic
                                                                                                                                                                                                                                        • Institute of Food Technologists (IFT)
                                                                                                                                                                                                                                        • International Federation of Organic Agricultural Movements
                                                                                                                                                                                                                                        • International Food Information Council Foundation (IFIC)
                                                                                                                                                                                                                                        • Interstate Bakeries Corporation
                                                                                                                                                                                                                                        • Jones Soda Co.
                                                                                                                                                                                                                                        • Kashi Co. Inc.
                                                                                                                                                                                                                                        • Kellogg Company
                                                                                                                                                                                                                                        • Kettle Foods, Inc.
                                                                                                                                                                                                                                        • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                                                                                                        • La Brea Holdings, Inc.
                                                                                                                                                                                                                                        • LivingSocial
                                                                                                                                                                                                                                        • McDonald's U.S.A.
                                                                                                                                                                                                                                        • Mott's LLP
                                                                                                                                                                                                                                        • Naked Juice Company
                                                                                                                                                                                                                                        • Natural Products Association
                                                                                                                                                                                                                                        • Natural Selection Foods
                                                                                                                                                                                                                                        • Nature Valley
                                                                                                                                                                                                                                        • Nature's Path Foods Inc
                                                                                                                                                                                                                                        • Nestlé USA
                                                                                                                                                                                                                                        • Newman's Own Inc.
                                                                                                                                                                                                                                        • Odwalla Inc.
                                                                                                                                                                                                                                        • Organic Consumers Association
                                                                                                                                                                                                                                        • Organic Trade Association
                                                                                                                                                                                                                                        • Organic Valley Family of Farms
                                                                                                                                                                                                                                        • Pepsi-Cola North America
                                                                                                                                                                                                                                        • PowerBar Inc.
                                                                                                                                                                                                                                        • Private Label Manufacturers Association (PLMA)
                                                                                                                                                                                                                                        • Roundy's, Inc
                                                                                                                                                                                                                                        • Rudi's Organic Bakery, Inc.
                                                                                                                                                                                                                                        • Safeway Inc
                                                                                                                                                                                                                                        • Seventh Generation Inc.
                                                                                                                                                                                                                                        • Small Planet Foods Inc. (Cascadian Farms)
                                                                                                                                                                                                                                        • Stacy's Pita Chip Co Inc
                                                                                                                                                                                                                                        • Starbucks Corporation
                                                                                                                                                                                                                                        • Stonyfield Farm
                                                                                                                                                                                                                                        • Stop & Shop/Giant-Landover Arena (Ahold)
                                                                                                                                                                                                                                        • Supervalu Inc
                                                                                                                                                                                                                                        • Target Corporation
                                                                                                                                                                                                                                        • The Hain Celestial Group, Inc.
                                                                                                                                                                                                                                        • The Kroger Co.
                                                                                                                                                                                                                                        • The New York Times Company
                                                                                                                                                                                                                                        • Tops
                                                                                                                                                                                                                                        • Trader Joe's Company Inc
                                                                                                                                                                                                                                        • Twitter, Inc.
                                                                                                                                                                                                                                        • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                                        • U.S. Bureau of the Census
                                                                                                                                                                                                                                        • U.S. Department of Agriculture
                                                                                                                                                                                                                                        • Unilever USA
                                                                                                                                                                                                                                        • University of Michigan, The
                                                                                                                                                                                                                                        • US Department of Commerce
                                                                                                                                                                                                                                        • Walgreen Co
                                                                                                                                                                                                                                        • Walmart Stores (USA)
                                                                                                                                                                                                                                        • Weetabix Ltd.
                                                                                                                                                                                                                                        • Wegmans Food Markets, Inc
                                                                                                                                                                                                                                        • Weight Watchers International Inc.
                                                                                                                                                                                                                                        • Whole Foods Market Inc
                                                                                                                                                                                                                                        • Winn-Dixie Stores
                                                                                                                                                                                                                                        • Wm. Bolthouse Farms Inc.
                                                                                                                                                                                                                                        • World Wildlife Fund
                                                                                                                                                                                                                                        • Yoplait USA
                                                                                                                                                                                                                                        • YouTube, Inc.

                                                                                                                                                                                                                                        Natural and Organic Food and Beverage: The Market - US - October 2011

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