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NBJ's Tom Aarts on Trends in Natural Products Industry |
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Written by John Weeks
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Nutrition Business Journal's Aarts on Trends in Natural Products Sales
Natural Products EXPO West, the largest
annual gathering of the healthy foods and natural products industry,
convened 45,000 people and 3000 exhibitors in Anaheim, California between March
23-26, 2006. The 25th anniversary trade show broke records for attendance and
exhibits. Thomas Aarts, co-founder and executive editor of the industry bible Nutrition Business Journal, offered his annual overview of data and developments in the industry.  Thomas Aarts, Co-Founder
Overall, growth was strongest 2004/2003 in the area of natural and organic foods (13.2%) followed by personal care products (11.3%), and functional foods (7.0%). Supplements lagged, at a 2.6% growth. Functional foods and natural/organics now each represent roughly 4% of total food sales in the United States.
The rate of growth in supplement sales was the lowest in the last decade. Boom years immediately followed the 1994 passage of the Dietary Supplement Health and Education Act. From 1995-1998, sales jumped each year at 10%-14%, particularly as mass market channels opened. Sales tapered immediately after, then jumped to a nearly 6% annual growth in 2003, before the present low year. The biggest hit in sales was in mass market outlets, where sales fell by 3.2%. Practitioner sales, though representing only 7% of the total, continued to jump, increasing by 10.5%.
| Product |
Change
2004/2003
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| Vitamins |
3.7% |
| Herbs/Botanicals |
2.9% |
Sports Nutrition
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6.0% |
Minerals
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-1.5% |
Meal Supplements
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-8.0% |
| Specialty/Other |
9.8% |
Total
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2.6% |
Growth Products The individual categories with the strongest growth were fish/animal oils (37%) and plant oils (16%). Homeopathics were also strong, at 16% increase, with probiotic products and digestive enzymes both at 14% and bee products at 12% growth. Coenzyme Q10 grew at 7% in 2004 and 10% in 2005. Among herbs, green tea shot up 94% in 2005, and cranberry up 17% the same year.
Market Losses Negative research findings drove sales of Vitamin E down 42% in 2005 and glucosamine/chondroitin to a -3% growth rate in 2004, though these rebounded to a 4% growth in 2005. Sales of supplement stallwarts such as calcium (-7%), Vitamin C (-5%) and iron (-5%) also fell off. The data for 2005 also saw sales of a number of herbs falling significantly, including Ginkgo biloba (15%), soy (17%), black cohosh (19%) and echinacea (11%).
NBJ is projecting the growth rate in sales of vitamins and herbs to remain low between 2005-2008, at 2-4% for the former and 1-2% for the later. Natural and functional foods will remain strong, at 8-10% and 6-8% annual growth, respectively.
Threats and Opportunities
Aarts also provided a look at the industry through an NBJ survey of
industry leaders at the publication's annual industry leadership summit. Among the findings:
- Only 14% view the FDA as the
biggest threat to their business. Domestic and international
competition were viewed as the strongest challenges, by 40% and 30%,
respectively.
- Enhanced
functional foods and organic foods were viewed as the strongest
 opportunities for food manufacturers, with 30% of the executives choosing each.
- 60%
thought that the government should "restrict marketing/advertising of
higher calories/less nutrient defense food for children."
Nutrition Business Journal is a 24-48 page monthly which has been published since 1996. Since 2001, the NBJ has been a part of Penton/New Hope Natural Media. The firm also produces the annual trade show EXPOs at which Aarts spoke.
Comment: Mass market sales have something of the last hired, first fired character: sales soared rapidly on positive media and dove as quickly with more recent negative media. Traditional natural products outlets did not climb as quickly in sales volume or dive as deeply, suggesting a customer whose purchase patterns for health products may not be so fickle. Growth in practitioner sales suggests that efforts by the AMA and some state medical societies to curb in-office sales of natural products have had little effect on practice patterns.
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