Store Brands

APR 2016

Store Brands delivers unprecedented strategic and tactical information needed by retail executives to develop and support compelling, differentiated store brand programs to build customer loyalty.

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Special Report: Center-Store Natural and Organic Products 4 2 Store Brands / April 2016 / www.storebrands.info ales within the U.S. center-store shelf-stable grocery segment have grown 10 percent since 2010, according to "Center of the Store — U.S.," a January report from global market research firm Mintel. New introductions have succeeded by catering to consumer health and wellness demands, including demands for natural and organic products. Most U.S. consumers now buy natural and/or organic foods and beverages, states "Natural and Organic Foods and Beverages in the U.S.," a July 2014 from the Packaged Facts division of Rockville, Md.-based MarketResearch.com. But there's a wrinkle, at least on the organic side. While some folks consider organic foods essential, especially for baby food and other children's food products, others feel they're an unnecessary indulgence that can be ignored should food money become tight, relays "Organic Packaged Food in the US," published in April 2015 by London-headquartered market research firm Euromonitor International. Although natural and organic food and beverage sales are hard to calculate since this market includes every food category — with natural or organic defining products in varying manners and degrees — sales are increasing. Between 2014 and 2019, the U.S. retail market for natural and organic foods and beverages is expected to grow by 62.1 percent, with total annual sales increasing from $53.5 billion in 2014 to $86.7 billion in 2019, for a compound annual growth rate of 10.1 percent, Packaged Facts predicts. Organic packaged food increased 6 percent in value sales in 2015, reaching $14.8 billion, adds Emily Balsamo, Euromonitor research analyst. Although products certified organic under USDA's National Organic Program (NOP) as containing 70 percent or more organic ingredients contribute to 34 percent of the natural channel and are growing almost on par with the natural channel overall, their growth in the specialty and conventional channels outpaces overall channel growth, says Kora Lazarski, strategic alliance manager for Chicago-based SPINS LLC. The company is a provider of retail consumer insights, analytics and consulting for the natural, organic and specialty products industry. Last year, the specialty channel grew 7.4 percent, while organics in the specialty channel grew 9 percent. The conventional channel grew 2 percent last year, while organics grew 12.4 percent, she adds. Private brands making headway Although natural and organic food and beverages certainly mesh with the mega trend of health and wellness, staying abreast of what other attributes define "healthy" is tough. Shoppers constantly redefine their ideas of healthful eating — plus they are reading ingredient labels more scrupulously. "Shoppers are seeking out relatively short ingredient lists containing only items they know and can easily pronounce," Balsamo says. "Many count ingredients, not calories," she adds. Private label remains a driving force behind organic's growth in many categories, says Mike Hackbarth, vice president, private brand and customer demand, The Fremont Co., Fremont, Ohio. "Private brand organic ketchup represents over 60 percent of all organic ketchup sold in 2015," he adds. "Private brand organic has filled the consumer need for a high-quality organic offering at a significant savings versus organic brands." Mainstream … and building Center-store shelf-stable natural and organic foods offer retailers sales and growth potential. By Bryan Salvage

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