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Natural Health Products - United States - California Focus

Delivery Method:

Electronic $599.99 Paper and Electronic $699.99

Published: September 2009

39 Pages

Document type: Adobe PDF

* No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Saskatchewan Trade & Export Partnership (STEP).

Summary

In 2009, STEP undertook a study on marketing natural products into the United States, specifically into the California market.

This report contains the following sections:

• What defines organic and natural products?
• Labeling and Regulatory Requirements and Considerations
• Best Mode of Product Entry
• Distributors and Brokers
• Trade Shows and Expos
• Relevant Industry Associations

In times of recession, one may expect that consumers would become more cautious with their money. This has been the case and the natural products sector is not immune to tough times.  According to a recent report by Packaged Facts, the U.S. natural health and beauty care market grew marginally by 8% approaching $7 billion in 2008. However, same study anticipates that sales will climb towards $12 billion by 2014 as more Americans go natural and organic.

There is no doubt that consumers are continuing to become more concerned about the products they purchase. From skin care and cosmetics to the foods they consume, consumers are educating themselves and making more informed buying decisions. Alive Magazine, based in British Columbia stated that for 2009 (and beyond), we can expect continued growth in consumer consciousness.

A recent study by BrandSpark International suggested that healthy, environmentally-friendly and good value products remain at the top of consumer's priority lists for 2009. The study surveyed 50,000 U.S. shoppers.  Early in 2009, Robert Levy, President and CEO of BrandSpark International offered the following key findings:

Some of the top lifestyle changes consumers are making to cope with the current economic state include: 'eat out less/eat in more,' 'turn down the thermostat,' 'be more efficient with my shopping trips,' and 'buy less name brand products/buy in bulk.'  The bulk category continues to grow as consumers continue to search fro value and price. Shopping in bulk also provides the consumer with a "greener" shopping experience as less packaging is required. This same study also determined:

• 52% of U.S. grocery shoppers said they plan to eat at home more often than last year.
• 96% of shoppers considered it important that any new product provide them value for the dollar.
• Over 80% of consumers said they will spend the same or more on essential personal care products as they did last year. Shoppers also revealed that 68% of those polled expressed increased concern about their health. This is an interesting statistic, showing that despite tough times, people are tending to pay closer attention to their health and will not compromise their health due to the economic crisis. Staying active and capable of weathering the storm is one of the associated trends.
• 58% of shoppers consider it important for a new product they purchase to be 'natural".
• 78% of shoppers believe that manufacturers have a long way to go to reduce the amount of packaging.
• 69% of consumers are increasingly concerned about chemicals in their food products.

The BrandSpark survey also revealed that 'early adopters' show stronger brand loyalty and prefer products that are environmentally friendly and offer improved technology and innovation,' says Levy. 

• 80% of shoppers who qualify as 'early adopters' - first to try new products - are women.
• In relation to the larger shopper demographic, early adopters are more receptive to the influence of internet, social media and magazines: early adopters spend 50% more time per week reading magazines and 50% have downloaded coupons off the internet.

Another report produced by the Hartman Group on Healthy Eating Trends for 2009 said that there would be a stronger interest in less mass produced foods and those that use fewer, but higher quality ingredients. The report also suggested an increased shift towards fresh, local, quality products despite ongoing economic pressures.

In the August 2009 edition of the Natural Foods Merchandiser, an online survey was completed with natural product retailers, manufacturers, distributors and brokers taking part. The study found that gluten free was the most compelling natural food product trend of the past year. The survey also suggested that gluten free, local, organic and stevia were the standout food trends for the past year with probiotics, acai, omega-3s and vitamin D were among the standout industry trends in the past year.

Throughout 2009, there has been a continued emphasis on value with either more frequent and deeper promotions or "every day low price" promotions. Promotion has become increasingly important in natural supermarkets. Additional promotions are being offered and consumers are looking out for them. This trend is a direct result of tough economic conditions in the United States but also shows a reluctance to change to a less healthy lifestyle. This emerging trend is critical for manufacturers, distributors and retailers to be aware of in moving forward. Trends also continue to see a move towards purchasing private label products and there is a continued consumer shift towards mass and club retailers such as Target and Trader Joe's.

With regards to natural skin products, Alive Magazine is reporting that consumers will further seek out naturally soothing ingredients in their skin care products including vitamins C and E, hemp oil, coenzyme Q (CoQ10), sea buckthorn, lotus flower extract and marine minerals. Products with natural antiaging properties are a key for the leading demographic groups.

Organic personal care products also continue to emerge. The general consensus shows that organic body washes, shampoos, conditioners and moisturizers will continue to become more prevalent in the natural product market. It is also interesting to note that the purchase of organic products tends to be a bit higher in Hispanic shoppers, where in California, the Hispanic population is the second largest demographic in the state. Even though many are willing to pay a higher price to go organic, confusion surrounding the value of organics continues to be a challenge, according to WSL Strategic Retail research.

Market penetration of organic products has nearly doubled in the past five years. The Organic Trade Association's 2009 Organic Industry Survey showed that 2008 organic sales represented nearly 3.5% of the total food sales in the United States, a small share but growing at a much faster rate (15.8%) than conventional food sales (4.9%). The shopper base for organics is growing. The survey also showed that companies rely heavily on international trade shows for export business development. At the same time, they cite regulations imposed by other countries as the principal barrier to export activity and growth. This is an interesting finding based on the recent developments with regards to organic certification of Canadian organic products by which the CFIA will consider USDA certification equivalent to its own and vice versa.

Opportunities for manufacturing companies exist in many different natural and organic product categories including: functional foods (whole foods); processed and convenience foods; dietary supplements/nutraceuticals (vitamins, herbal extracts); dermaceuticals (natural skin care products, aromatherapy); and supplements. It is important to consider where your product fits in, to know who the competitors are, to know what your company's capabilities are to service a new market, to have volume and pricing information in hand prior to making initial in market sales calls and to consider travel into the market around an industry specific trade show.

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