Natural, Organic HBC Sees 17% Jump

DAN ALAIMO

BOULDER, Colo. — With big consumer goods companies set to make acquisitions, the natural and organic personal care products market should see strong growth in the years ahead.

This segment grew to $7.3 billion in 2007, a 17% increase over the year before, Patrick Rea, publisher and editorial director of Nutrition Business Journal here told SN. There is caution over growth prospects for 2008 because of the weak economy, but after it recovers, this double-digit growth should continue, hitting $22.4 billion by 2017, he said.

NBJ recently issued the results of its annual study on personal care, better known to the supermarket trade as health and beauty care. Like SN, NBJ is owned by Penton Media, New York.

“The next couple of years will be pretty exciting,” Rea said. “We don't even have standards set yet. It's like the organic industry: It grew for quite a while and then, when they set standards, it really grew because it was clear to the marketers what messages to use, and what standards they could put their brands up against. That gave consumers a lot of confidence.”

Currently, the hair and skin care categories represent about 60% of the natural and organic personal care market, growing about 16% and 22% respectively last year. While other categories are smaller, they also are growing strongly, with shaving products up 15%, deodorant up 14% and cosmetics up 12%.

“The higher-growth categories are more related to beauty,” Rea noted.

For supermarkets, the key to selling these categories is informing and educating the consumer. “The reason Whole Foods and Wild Oats have been so successful at selling these products is not necessarily because they have them, it's because the people in the aisle can explain to these consumers what the products are, and why they should buy them, and which ones are better,” he said.

“It is easy to look at this market and its growth, and think that it has arrived. But really it is still just scratching the surface. We're still looking at growth up in the high double digits in the next couple of years, so the opportunity isn't past, it's still coming,” Rea said.

One thing that could inhibit the growth is “greenwashing,” or making natural or organic claims that are not substantiated. Natural product standards will help to keep this from happening, Rea said. “We are seeing a little bit of fear from the core brands that this is going to dilute the market and the image of these products, and undermine the current stability and future growth prospects of this industry.”

A number of companies and other entities are working toward setting these standards, he noted. For example, he pointed to Whole Foods' “Premium Body Care” standards (see “Whole Foods' Own Standards,” Page 15), and efforts by NSF International, Ann Arbor, Mich.