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Natural Products Marketplace Review: Beverages - US - December 2009


Natural and organic food and drink sales experienced strong growth over the last decade, and in particular in the last five years as mainstream FDM aggressively started stocking natural/organic name and private label brands. The recession has curtailed growth in the short term, and in this report Mintel discusses how consumer trends, the economy and new product trends are influencing the market. In addition to presenting sales data by segment, supplier and brand, the report considers a range of topics, including:

  • The size of the natural/organic beverages market in FDMx and natural supermarkets, and Mintel’s forecast through 2012
  • How the economic recession, and a shift towards frugality has hurt certain sectors of the natural/organic beverages market, and how retailers and manufacturers alike have responded
  • The rise of natural/organic private label brands as consumers trade down, but not out, of the organic marketplace
  • The latest new product trends that are going “beyond natural/organic” with other feature sets appealing to the natural and organic consumer
  • To what extent confusion over “natural” and “organic” terms are impacting the market
  • Changes in shopping behavior versus last year among consumers who buy natural and organic products

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Organic definition
          • Natural definition
            • Data sources
              • Sales data
                • Consumer survey data
                  • Advertising clips
                    • Abbreviations and terms
                      • Abbreviations
                        • Terms
                        • Executive Summary

                            • The $3.5 billion natural/organic beverage market hurt most by recession
                              • Segment performance
                                • Retailer performance
                                  • Leading companies
                                    • Innovations
                                      • Consumer attitudes and behavior
                                      • Insights and Opportunities

                                        • Starting kids early may inspire natural beverage purchases for life
                                        • Inspire Insights

                                            • Cause and Consistency
                                              • After summer comes to a close
                                                • It’s a thin line between love and hate
                                                  • A World of Good
                                                    • Label claims sound good, but are they?
                                                      • It’s still about selling product
                                                      • Market Size and Forecast

                                                        • Beverage sales drop in 2009 but rebound is expected through 2012
                                                          • Sales and forecast of natural/organic beverages
                                                            • Figure 1: U.S. FDMx and natural supermarket sales and forecast of natural/organic beverages, at current prices, 2006-12
                                                            • Figure 2: U.S. FDMx and natural supermarket sales and forecast of natural/organic beverages, at inflation-adjusted prices, 2006-12
                                                        • Segment Performance

                                                          • Natural/organic milk gains market share 2007-09
                                                            • Sales of natural/organic beverages, by segment
                                                              • Figure 3: U.S. FDMx and natural supermarket sales of natural/organic beverages, by type, 2007 and 2009
                                                          • Segment Performance—Natural/Organic Juices and Functional Drinks

                                                            • Largest beverage segment weathers 2009 but modest growth ahead
                                                              • Sales and forecast of natural/organic juices and functional drinks
                                                                • Figure 4: U.S. FDMx and natural supermarket sales and forecast of natural/organic juices and functional drinks, 2006-12
                                                            • Segment Performance—Natural/Organic Milk

                                                              • Milk segment will rebound faster than other beverage segments
                                                                • Sales and forecast of natural/organic milk
                                                                  • Figure 5: U.S. FDMx and natural supermarket sales and forecast of natural/organic milk, at current prices, 2006-12
                                                              • Segment Performance—Natural/Organic Non-dairy Beverages

                                                                  • Slower yet steadier dairy alternatives hold on with solid performance
                                                                    • Sales and forecast of natural/organic non-dairy beverages
                                                                      • Figure 6: U.S. FDMx and natural supermarket sales and forecast of natural/organic non-dairy beverages, at current prices, 2006-12
                                                                  • Segment Performance—Other RTD Beverages

                                                                      • Recession hurts tumultuous segment’s performance in the short term
                                                                        • Sales and forecast of natural/organic other RTD beverages
                                                                          • Figure 7: U.S. FDMx and natural supermarket sales and forecast of natural/organic other RTD beverages, at current prices, 2006-12
                                                                      • Retail Channels

                                                                        • Natural markets fair better than mainstream FDMx
                                                                          • Sales of natural/organic beverages, by channel
                                                                            • Figure 8: FDMx and natural supermarket sales of natural/organic beverages, by channel, 2006-09
                                                                        • Retail Channels—Supermarkets

                                                                          • Supermarkets see slow down and decline in natural/organic beverage sales
                                                                            • Supermarket/food stores’ sales of natural/organic beverages
                                                                              • Figure 9: Conventional supermarket sales of natural/organic beverages, 2006-09
                                                                          • Retail Channels—Natural Foods Supermarkets

                                                                            • Solid performance driven by consumer commitment
                                                                              • Natural supermarket sales of natural/organic beverages
                                                                                • Figure 10: Natural supermarket sales of natural/organic beverages, 2006-09
                                                                            • Market Drivers

                                                                              • Unemployment spurs consumers to scale back on expensive natural/organic drinks
                                                                                • Better-for-you offerings that may not be all-natural hit consumer sweet spot
                                                                                  • Guilt by association hurts natural/organic beverage sales
                                                                                    • Lower food prices also deter natural/organic purchases
                                                                                    • Leading Companies

                                                                                      • Key points
                                                                                        • Leading companies and store brands fare well in 2009
                                                                                          • Manufacturer sales of natural/organic beverages - FDMx
                                                                                            • Figure 11: FDMx sales of natural/organic beverages, by manufacturer and brand, 2008-09
                                                                                          • Natural channel leaders exemplify the channel’s unique character
                                                                                            • Manufacturer sales of natural/organic beverages - natural supermarkets
                                                                                              • Figure 12: Natural supermarket sales of natural/organic beverages, by manufacturer, 2008-09
                                                                                          • Brand Share—Natural/Organic Juices and Functional Drinks

                                                                                            • Key points
                                                                                              • Stevia-sweetened orange juice catapults PepsiCo
                                                                                                • Manufacturer sales of natural/organic juices and functional drinks - FDMx
                                                                                                  • Figure 13: FDMx sales of natural/organic juices and functional drinks, by manufacturer and brand, 2008-09
                                                                                                • In natural markets, shelf-stable juices dominate
                                                                                                  • Manufacturer sales of natural/organic juices and functional drinks - natural supermarkets
                                                                                                    • Figure 14: Natural supermarket sales of natural/organic juices and functional drinks, by manufacturer and brand, 2008-09
                                                                                                • Brand Share—Natural/Organic Milk

                                                                                                  • Key points
                                                                                                    • Trade out for private label brands widespread in the segment
                                                                                                      • Manufacturer sales of natural/organic milk - FDMx
                                                                                                        • Figure 15: FDMx sales of natural/organic milk, by manufacturer and brand, 2008-09
                                                                                                      • Consumers loyal to many brands in natural markets
                                                                                                        • Manufacturer sales of natural/organic milk - natural supermarkets
                                                                                                          • Figure 16: Natural supermarket sales of natural/organic milk, by manufacturer and brand, 2008-09
                                                                                                      • Brand Share—Natural/Organic Non-dairy Beverages

                                                                                                        • Key points
                                                                                                          • Leading soy milk companies in decline in 2009
                                                                                                            • Manufacturer sales of natural/organic non-dairy beverages - FDMx
                                                                                                              • Figure 17: FDMx sales of natural/organic non-dairy beverages, by manufacturer and brand, 2008-09
                                                                                                            • Hain tops Dean Foods in natural outlets
                                                                                                              • Manufacturer sales of natural/organic non-dairy beverages - natural supermarkets
                                                                                                                • Figure 18: Natural supermarket sales of natural/organic non-dairy beverages, by manufacturer and brand, 2008-09
                                                                                                            • Brand Share—Natural/Organic Other RTD Beverages

                                                                                                                • Key points
                                                                                                                  • Coca-Cola leads the natural/organic segment with 52% of sales
                                                                                                                    • Manufacturer sales of natural/organic other RTD beverages - FDMx
                                                                                                                      • Figure 19: FDMx sales of natural/organic other RTD beverages, by manufacturer and brand, 2008-09
                                                                                                                    • Natural outlets far more fragmented
                                                                                                                      • Manufacturer sales of natural/organic other RTD beverages - natural supermarkets
                                                                                                                        • Figure 20: Natural supermarket sales of natural/organic other RTD beverages, by manufacturer and brand, 2008-09
                                                                                                                    • Innovations and Innovators

                                                                                                                        • Key points
                                                                                                                          • Organic beverages
                                                                                                                            • Figure 21: Organic beverages new product launches, by beverage type, 1998-2009*
                                                                                                                          • Natural beverages
                                                                                                                            • Figure 22: Natural* beverages new product launches, by beverage type, 1998-2009**
                                                                                                                          • Organic beverage innovations
                                                                                                                            • Beverage with a cause
                                                                                                                              • Green shoots
                                                                                                                                • Private label excitement
                                                                                                                                  • Organic and natural analogs
                                                                                                                                    • Premium and gourmet
                                                                                                                                    • Advertising and Promotion

                                                                                                                                      • Overview
                                                                                                                                        • Silk appeals to men and women seeking heart health without marketing “natural”
                                                                                                                                          • Figure 23: Dean Foods/Silk television ad, “Woman Psyches Out Husband On Tennis Court,” 2009
                                                                                                                                          • Figure 24: Dean Foods/Silk television ad, “Ralphs markets silk ad,” 2009
                                                                                                                                        • Pom continues its whimsical campaign
                                                                                                                                          • Companies compete for market share with “feel good” marketing plans
                                                                                                                                          • The Consumer and the Natural/Organic Foods Market

                                                                                                                                            • Key points
                                                                                                                                              • Trust and understanding of natural and organic terms
                                                                                                                                                  • Figure 25: Trust and understanding of the terms “natural” and “organic”, September 2009
                                                                                                                                                • Attitudes towards natural/organic products
                                                                                                                                                  • Figure 26: Factors influencing decision to buy natural/organic food and beverages, September 2009
                                                                                                                                                • Consumer attitudes towards price, healthfulness and label claims
                                                                                                                                                    • Figure 27: Willingness to pay for natural/organic products, and attitudes towards healthfulness and belief in natural and organic claims, by age, September 2009
                                                                                                                                                • Natural/Organic Purchase Behavior

                                                                                                                                                  • Key points
                                                                                                                                                    • Outlets where consumers purchase natural/organic products
                                                                                                                                                      • Figure 28: Where people buy organic food and beverages, September 2009
                                                                                                                                                    • Incidence of buying natural/organic products
                                                                                                                                                      • Figure 29: Incidence of buying organic and natural food and beverages, September 2009
                                                                                                                                                    • Impact of recession on consumer purchases of natural/organic products
                                                                                                                                                        • Figure 30: Impact of recession on purchase of natural products, by age, September 2009
                                                                                                                                                        • Figure 31: Impact of recession on purchase of organic products, by age, September 2009
                                                                                                                                                      • Purchase behavior by sector
                                                                                                                                                        • Figure 32: Change in incidence of buying organic food and drink, this year compared to last, September 2009
                                                                                                                                                      • Popular brands of natural and organic foods/beverages
                                                                                                                                                        • Figure 33: Brands of organic and natural food and drink purchased in the past year, September 2009
                                                                                                                                                    • Natural/Organic Beverage Consumption

                                                                                                                                                        • Key points
                                                                                                                                                          • Purchase of natural and organic beverages in past year
                                                                                                                                                            • Figure 34: Organic and natural drink purchases in past year, by sub-category, September 2009
                                                                                                                                                          • Purchase of natural milk alternatives in past year
                                                                                                                                                            • Figure 35: Soy, rice, and other non-dairy milk purchases in the last year, September 2009
                                                                                                                                                          • Changes in natural/organic beverage purchase behavior in past year
                                                                                                                                                            • Figure 36: Change in purchase of natural and organic beverages in past year, by gender, age, race/Hispanic origin and HH income, September 2009
                                                                                                                                                            • Figure 37: Change in purchase of natural and organic beverages in past year, by region, presence of children and number of people in household, September 2009
                                                                                                                                                        • Cluster Analysis

                                                                                                                                                            • Maintainers
                                                                                                                                                              • Opportunity
                                                                                                                                                                • Rearrangers
                                                                                                                                                                  • Hard Drivers
                                                                                                                                                                    • Cluster characteristics
                                                                                                                                                                      • Figure 38: Natural products clusters, September 2009
                                                                                                                                                                      • Figure 39: Factors influencing decision to buy natural/organic food and beverages, by natural products clusters, September 2009
                                                                                                                                                                      • Figure 40: Impact of recession on purchase of natural/organic products, by natural products clusters, September 2009
                                                                                                                                                                      • Figure 41: Willingness to pay for natural/organic products, and attitudes towards healthfulness and belief in natural and organic claims, by natural products clusters, September 2009
                                                                                                                                                                      • Figure 42: Brands of organic and natural food and drink purchased in the past year, by natural products clusters, September 2009
                                                                                                                                                                      • Figure 43: Organic drink purchases in past year, by sub-category, by natural products clusters, September 2009
                                                                                                                                                                      • Figure 44: Natural drink purchases in past year, by sub-category, by natural products clusters, September 2009
                                                                                                                                                                    • Cluster demographics
                                                                                                                                                                      • Figure 45: Natural products clusters, by gender, September 2009
                                                                                                                                                                      • Figure 46: Natural products clusters, by age group, September 2009
                                                                                                                                                                      • Figure 47: Natural products clusters, by household income, September 2009
                                                                                                                                                                      • Figure 48: Natural products clusters, by race, September 2009
                                                                                                                                                                      • Figure 49: Natural products clusters, by Hispanic origin, September 2009
                                                                                                                                                                    • Cluster methodology
                                                                                                                                                                    • Appendix: Trade Associations

                                                                                                                                                                      Companies Covered

                                                                                                                                                                      • American Heart Association, Inc.
                                                                                                                                                                      • American Herbal Products Association
                                                                                                                                                                      • Amy's Kitchen Inc.
                                                                                                                                                                      • Boca Foods Company
                                                                                                                                                                      • Campbell Soup Company
                                                                                                                                                                      • Co-operative Group
                                                                                                                                                                      • Coca-Cola Company (The) (USA)
                                                                                                                                                                      • Crystal Geyser Alpine Spring Water
                                                                                                                                                                      • Dean Foods Company
                                                                                                                                                                      • Dr Pepper Snapple Group, Inc.
                                                                                                                                                                      • Eden Foods Inc.
                                                                                                                                                                      • Federal Trade Commission
                                                                                                                                                                      • Food and Drug Administration
                                                                                                                                                                      • Food Marketing Institute
                                                                                                                                                                      • Greenfield Online
                                                                                                                                                                      • Grocery Manufacturers of America (GMA)
                                                                                                                                                                      • Groupe Danone
                                                                                                                                                                      • Kashi Co. Inc.
                                                                                                                                                                      • Kellogg Company
                                                                                                                                                                      • Kettle Foods, Inc.
                                                                                                                                                                      • National Nutritional Foods Association
                                                                                                                                                                      • Nestlé USA
                                                                                                                                                                      • Organic Alliance
                                                                                                                                                                      • Organic Consumers Association
                                                                                                                                                                      • Organic Trade Association
                                                                                                                                                                      • Pepsi-Cola North America
                                                                                                                                                                      • Roll International Corporation
                                                                                                                                                                      • Starbucks Corporation
                                                                                                                                                                      • Stonyfield Farm
                                                                                                                                                                      • Stremicks Heritage Foods, LLC
                                                                                                                                                                      • Supervalu Inc
                                                                                                                                                                      • Tesco (US)
                                                                                                                                                                      • The Hain Celestial Group, Inc.
                                                                                                                                                                      • Trader Joe's Company Inc
                                                                                                                                                                      • Twitter, Inc.
                                                                                                                                                                      • U.S. Bureau of Labor Statistics
                                                                                                                                                                      • U.S. Department of Agriculture
                                                                                                                                                                      • Walmart Stores (USA)
                                                                                                                                                                      • Whole Foods Market Inc
                                                                                                                                                                      • Winn-Dixie Stores
                                                                                                                                                                      • Wm. Bolthouse Farms Inc.

                                                                                                                                                                      Natural Products Marketplace Review: Beverages - US - December 2009

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