Natural products scored huge wins in stock-up period, and gains persist, report finds

“Dollar sales for natural products continue to grow over one year ago, as much as an astounding 78% in the middle of March during consumers’ initial stock-up period and continuing in the high teens at present,”​ said Steve Ramsey, executive vice president and general manager, Strategic Accounts, IRI. “Given that natural products represent more than 8% of total store sales year-to-date and are outpacing sales of conventional products, there are significant opportunities for manufacturers and retailers alike to show support for consumers.”​

 “We continue to see an ongoing shift in shopper thinking when selecting from natural and conventional products,”​ said Kathryn Peters, executive vice president at SPINS and 25-year veteran of the grocery industry. “As the pandemic dominates the news and the focus remains on health and well-being, natural products will continue to outperform other products.”​

Natural products growth outpaces conventional

The latest report from the market intelligence groups was issued at the end of May under the title “COVID-19 and Navigating the Path Ahead, Supporting the Natural Products Consumer.”​

The report found that natural products led the charge in the hyper phase of the stock up period as consumers looked to load their pantries in advance of the stay-at-home policies that swept around the country. In mid March, sales of natural products were up more than 78% over the same period a year previously, as opposed to a 71% rise for conventional products.

And that allegiance seems to be holding during the post-stock up phase. Sales of natural products were up more than 15% year over year in the most recent reporting period that ended on April 19.  That compares to a 5.8% gain for conventional products.

Immune health, anxiety drive huge gains

For supplements, the big gains were in the categories of immune health and mood and anxiety support. For many of these products, the enthusiasm continues to build and there has been no post pantry loading hangover.

For example, in the category ‘mushrooms-other’ the growth year over year in the four weeks ending on March 22 was 674%, while it climbed to 876% in the four weeks ending on April 19. Other ingredients showed similar spectacular gains in the same reporting periods.

For example:

• Elderberry:  312%;  426%.
• Echinacea:  164%;  221%.
• Chinese Herbs: 119%;  222%.

The report noted that buyer behavior is likely to change in the coming weeks in response to developing economic pressures. This is combined with a trend toward higher unit prices, which the report attributed to both reduced promotional activity combined with higher production costs related to coronavirus plant shutdowns and dislocations.  Manufacturers have been adapting to the new way of working, but so far the social distancing and increased sanitation guidelines are proving costly to implement.

The report predicts that private label products will likely see more demand in the coming months.  And the report postulates that innovation will decline as manufacturers refocus on proven products with predictable bottom lines.

Crystal ball even more clouded than usual

Marc Brush, an industry strategy consultant and principal in the firm Bend LLC, said predicting anything in today’s climate is fraught with more peril than usual.

“I'd tread carefully with the data coming out of the pandemic. Not only is it more challenging to know the sales trajectories through some of these black boxes in e-commerce, like Amazon, but the real drivers are unknown. We now have police brutality and racism as a massive overlay to the pandemic. What's next? This is a period of uncertainty with asynchronous and asymmetrical social drivers that we just can't parse well in the moment,”​ Brush told NutraIngredients-USA.

“Stress and anxiety are already up, and they're going even higher. After immunity, easy solutions to manage stress are the right place to be. I'm watching a lot of the nervines inside the botanicals category,” ​he added.

Managing inflationary pressures

Brush said the inflationary pressures outlined in the report signals a troubling trend. He said it might behoove brands to consider eating as much of these costs as possible in order to be seen as being helpful, as opposed to appearing to make as much hay as possible while the pandemic sun shines.

“The inflationary trends around natural products are troubling. I get the retreat to quality, I get the safe harbor in a storm offer by health products, but this is a time to serve the masses, not the elites. Brands would do well to figure out how to serve and stay relevant to the consumers who most need their products, consumers who often can't afford them,”​ Brush said.

To read the full report, click here​​.