By Lynn A. Kuntz, Editor-in-Chief
Given the slow economic recovery and rising raw material prices, food manufacturers are looking for a competitive edge in the products they offer to maintain profits and grow market share. Two increasingly popular, and often convergent, paths are incorporating natural and/or green into the product-development objectives.
Products marketed as natural or green provide added appeal despite their somewhat fuzzy definitions. In 2009, 23% of new food and beverage products carried “natural" on the label, according to Chicago-based Mintel’s Global New Products Database, making it the year’s No. 1 new-product label claim. Foods carrying a “natural" label rang up an impressive $22.3 billion in sales in 2008, up 10% from the previous year, and organic foods garnered $4.9 billion in 2008 sales, rising 16% from the prior year, according to “Healthy Eating Report for 2008" from The Nielsen Company, New York.
While organic was on the market fast track in the last decade, racking up yearly double-digit growth from 2000 to 2008, sales of organic products leveled off significantly in 2009, say Nielsen analysts. In fact, the percentage of U.S. organic-product consumers has not increased significantly over the past three years, remaining at 38% to 39%, according to researchers at TABS Group, Inc., Shelton, CT. However, the market hasn’t stalled completely; according to the “2010 Organic Industry Survey" from the Organic Trade Association, Greenfield, MA, organic food sales rose 5.1% in 2009 to $26.6 billion, compared to the total food sales increase of 1.6%.
One ingredient showing a clear shift to natural is colors, according to RTS Resources Ltd., Wolverhampton, England. The firm estimates the global food and beverage colors market is at $1.7 billion, and natural colors make up approximately 38% ($650 million). While total color usage has been growing by about 4% per year, naturals are growing by 6.5%.
Green products, which address environmental and social problems, also have shown strong market gains. Packaged Facts, Rockville, MD, defines these ethical products as those that use terms such as “biodegradable," “cage-free," “earth-friendly," “eco-friendly, “ethical," “fair trade," “humane," “local," “locally," “organic," “organically," “sustainable" or “sustainably" in product descriptions or marketing positioning. In both 2007 and 2008, over 2,100 new U.S. product launches carried ethical claims, with food and beverage launches representing 64% and 61%, respectively, according to Packaged Facts’ analysis of data from New York–based Datamonitor’s Product Launch Analytics (PLA) service. Through 2014, these foods should see a 57% growth rate, projects Packaged Facts. The Natural Marketing Institute (NMI), Harleysville, PA, estimates the size of the total (food and nonfood) green marketplace will reach $420 billion by 2010. NMI says significant market opportunities exist in refrigerated, frozen and shelf-stable foods, and pet products; interest is above average in these categories. Further, researchers at Ohio State University, Columbus, found that more than 8 out of 10 restaurant goers surveyed in that city said they would pay more to dine at “green" restaurants.
In the end, the success of green and natural products depends on whether consumer expectations are met, as well as whether the perceived value, especially for more-expensive products, encourages them to open their wallets.
