The big news from the 2015 Natural Product Expo West was that the American consumer is buying healthy foods at volumes never seen before. Healthy and wellness products are achieving three times the sales growth as conventional food products. A survey conducted by SuperMarket News found that eighty percent of surveyed food industry wholesalers and retailers had sales growth in healthy and wellness products. A third of survey respondents reported an astounding twenty percent increase in annual sales!
Gluten and allergen-free is now top wellness trend
Gluten and allergen-free has jumped to the top of America’s wellness focus. Sales have grown beyond consumers with Celiac disease that are forced to eat a gluten-free diet. Consumers of gluten and allergen-free products are now defined as health-conscious consumers searching for natural and organic ingredients. Interestingly, males are more influenced by gluten-free marketing claims than females. People ages 50–64 plus those 25-34 are most likely to be influenced by gluten-free marketing.
For retailers the key fact is that fifty-five percent of gluten-free consumers spend thirty percent or more of their grocery budget on gluten-free foods. These foods typically cost more and carry higher profit margins than conventional food products. This growing consumer segment is challenging the food industry to provide better tasting gluten-free food, lower prices and more selection. In search of a better experience fifty-seven percent of these consumers have tried ten or more gluten-free products in the last year.
Consumer-confusion defines healthy food marketing
Consumers are plagued with confusions over what to buy and who to buy from. This confusion is being generated by conventional foods’ mass advertising claims, regulatory activity around package labeling and often contradicting health research like the recent removal of dietary cholesterol as a health concern. Consumer are actively using social media and food-assesment smartphone apps to sort through this conflicting messaging in search of foods they can trust.
To win today’s food consumers a food company’s messaging must align with these key product attributes:
- Simple ingredients.
These product attributes, along with gluten/allergen-free, are the sales hot-button for consumers searching for healthier foods.
Consumers are searching for authenticity
The confusion tied to mixed marketing messaging has consumers looking past the front of the package in search of authenticity and transparency. Increasingly, especially among the millennial generation, they are using their smartphones to investigate company and product claims while standing in front of the grocery store shelf. This search for authenticity and trust is driving consumers toward products with simple ingredients. Consumers do not place the same level of trust on products with chemical ingredients as they do for products that have fewer, and all natural, ingredients.
Organic and non-GMO product claims are another area of consumer confusion. By definition an organic food is non-GMO. Consumers still do not make this connection.
Local is also confusing to both consumers and food sellers. How to define local is the key question. Some consumers define local as food sourced from neighboring counties. Others define it as food from the same state or within a few hundred miles of their homes. What food sellers are now beginning to accept is that the “correct” definition of local is the definition used by their customers.
Activism is succeeding!
One huge surprise reported at the Natural Product Expo West was the success activism was having in sparking the sale of non-GMO products. While activism has failed to win GMO labeling legislation it has succeeded in growing consumer awareness around the issue. Conventional food companies like Dupont, Monsanto, Coca-Cola, General Mills, Hershey, Nestel and Kellogg that have poured millions of dollars into campaigns to successfully fight state initiatives on GMO labeling are winning the battle but losing the war. Media reporting on both GMO labeling initiatives, and the efforts by conventional food companies, has raised consumer awareness to levels that has sparked consumer buying of non-GMO products.
Rapid consumer self-education reshaping food industry
At last year’s Healthy Food Expo West the key marketing buzz words were “Healthy Convenience Food.” What a difference a year makes in terms of how quickly consumers are educating themselves on sustainable and healthy food practices. In 2015 the American consumer now associates the word “convenience” with food preservatives.
This accelerating consumer awareness is placing tremendous pressure on food retailers to keep pace. Grocery stores are re-allocating their food merchandising mix toward healthier foods, manufacturers are redesigning their foods to remove preservative chemicals and retail stores are increasing their refrigeration displays as a storage alternative to food preservatives. But the pace of change is not keeping up with the growing demand for change by the health-conscious American consumers.
The bottom line for the American food industry is that the American consumer is in revolt. They are using their smartphones and social media to figure out who is telling them the truth. They are using their buying power to demand sustainably-sourced and healthier food. The use of marketing power and political campaign contributions by conventional food corporations are, at best, slowing the inevitable. Americans want to eat healthy food produced sustainably and sourced from trustworthy businesses. And they want it now!
Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017