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Natural/Organic Sales Top $91B: Survey

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Natural Foods Merchandiser is a companion publication of Supermarket News, published by the New Hope division of Penton Media. This article was written by the NFM staff. A link to the entire report can be found in the first paragraph.

Natural Foods Merchandiser’s 2012 Market Overview Natural Retailers Survey shows that nationwide, sales of all natural and organic products (including dietary supplements) within all channels jumped 10% to nearly $91 billion last year.

The natural channel (which includes independent and chain natural products retailers) continued to generate the lion’s share of sales in 2011, growing 9% to $37 billion. Although growth in the natural channel was better last year than in 2010 (when sales expanded just 7%), mass market retailers — particularly club stores — remain hot on the heels of the naturals stores and, in fact, grew their sales of natural and organic products by 11.2%, to $36 billion, in 2011, according to NFM’s Market Overview survey.

Conducted in collaboration with Nutrition Business Journal, a sister publication, NFM’s research shows that growth of natural and organic products sales in all channels is being fueled by a variety of factors: consumers who are becoming more educated about health and environmental issues; foods that taste as good or better than their conventional counterparts; consistent, favorable media attention about the merits of natural and organic products; the growing foodie and farm-to-table movements; and even the rising popularity of yoga. 

NFM’s 2012 Market Overview compiled responses from 370 retailers to create a snapshot of the industry. Among the highlights:

• Average net store sales increased 7.4% last year, to $1.6 million per store.

• Almost 70 percent of retailers reported an increase in natural and organic product sales from 2010.

• Gross profit margins for natural channel retailers were down slightly: 30.5% compared with 31% in 2010.

• Not suprisingly, the Pacific region led all other parts of the country in total store sales and growth last year. But surprisingly, the South Atlantic region had the largest growth. This region encompasses Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia, Maryland, Delaware and Washington, D.C.

• Sales growth for food products in the natural retail channel (nearly 10%) was below the 13% growth experienced in the mass channel. However, supplement sales growth was stronger in the natural channel — 7% vs. 6%.

Analysts say four key factors are influencing the growth in naturals retailing: the millennial generation, value-driven consumers and investors, changes in conventional markets, and increased online retailing.

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