the state of natural - naturally bay area · e-commerce - third party natural e-commerce - company...

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©2017 New Hope Network. All Rights Reserved

Zeroing in on the changing retail & distribution landscape

The State of Natural

Carlotta Mast

Senior VP, Content & Insights

New Hope Network

[email protected]

Maryellen Molyneaux

Managing Partner

Natural Marketing Institute

[email protected]

Bob Burke

Principal

Natural Products Consulting

[email protected]

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Speakers

Carlotta MastSenior Vice President

of Content & Insights,

New Hope Network

Bob BurkePrincipal,


Maryellen MolyneauxPresident, Managing Partner,

NMI, Natural Marketing

Institute

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#ExpoWestTrends

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Expo West 2018: Another record breaker!

• 38th annual

• 3,500+ exhibitors

• 400 more exhibitors

than in 2017

• 600+ first-time

exhibitors

• 82,000+ attendees

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©2017 All Rights Reserved

2017 sales estimates

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U.S. Natural and Organic Product Industry sales grew 6.5% to $207B

in 2017. Natural, organic and functional F&B sales = 70% of sales.

U.S. NP industry passed $200 billion in 2017

Source: Nutrition Business Journal (2017 preliminary estimates; $mil, consumer sales)

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

-

50,000

100,000

150,000

200,000

250,000

300,000

2014 2015 2016 2017e 2018e 2019e 2020e 2021e

©2018 New Hope Network | Informa

39%

31%

21%

9%Natural & OrganicFoods

Functional Foods

Supplements

Natural Living

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U.S. Natural, Organic, and Functional Food and Beverage sales grew

6.7% to $144B in 2017, down from 8% growth in 2016.

Food growth slows as mass market levels off


0%

2%

4%

6%

8%

10%

12%

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e


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U.S. Natural, Organic & Functional Food Sales vs. Total Food Sales

We are still growing ~10x faster than total food


0%

2%

4%

6%

8%

10%

12%

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2009 2010 2011 2012 2013 2014 2015 2016 2017e

Total Food Sales Natural, Organic and Functional Food Sales

Total Food Growth Natural, Organic and Functional Food Growth


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U.S. Supplement sales grew 6.1% to $44B in 2017, buoyed by herbs &

botanicals, sports nutrition and specialty products such as collagen

Supplements growth remains steady


0%

1%

2%

3%

4%

5%

6%

7%

8%

-

10,000

20,000

30,000

40,000

50,000

60,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e


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U.S. Natural Living sales grew 5.9% to $20B in 2017, with growth down

from 6.7% in 2016. Pet products a rising category for all of CPG.

Natural Living growth continues to slow


0%

2%

4%

6%

8%

10%

12%

14%

-

5,000

10,000

15,000

20,000

25,000

30,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e


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Plant

RevolutionRegeneration

The World

Traveler

NAUGHTY NOAH’SFRILL

Hot trends shaping Expo West 2018

PATAGONIA PROVISIONS


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Waste NotHave It Your

Way

Buzzing

for CBD

WILDWAY SAGELY NATURALSALVARADO ST. BAKERY

Hot trends shaping Expo West 2018


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Sales by channel

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U.S. Natural and Organic Products Industry by channel

Mass market and natural channel growth

slows; 59% of all sales still rung up in mass


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2015 2016 2017e

Mass Market Natural and Specialty MLM/Network Internet Practitioner Mail Order, DRTV, Radio

59%

27%

5%

4%

3%

2%


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U.S. Natural Products Industry Internet Sales Growth

vs. Total Industry Growth

Internet growth 2X total industry sales growth


0%

5%

10%

15%

20%

25%

30%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e

Internet Total


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U.S. Natural, Organic and Functional F&B sales by channel

Mass market slowdown most impacting F&B


72%

23%

2%1%1%

1%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2014 2015 2016 2017e 2018e 2019e 2020e 2021e


Growth by channel Market share by channel, 2017e


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0%

2%

4%

6%

8%

10%

12%

14%

2014 2015 2016 2017e 2018e 2019e 2020e 2021e

U.S. Supplement sales by channel

Natural & specialty still leads supplements




37%

26%

16%

9%

7%

5%


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0%

2%

4%

6%

8%

10%

12%

14%

16%

2014 2015 2016 2017e 2018e 2019e 2020e 2021e

U.S. Natural Living sales by channel

Internet drives Natural Living category




39%

35%13%

5%

4%

4%


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CPG brand survey

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Source: New Hope Network survey conducted Q1 2018, All Manufacturer Results. Survey question: “Through which channel(s) did your company’s product(s) launch?”

54% 52% 51%

23%19%

24%

14%11%

38%45% 46%

77% 79%

66%71%

83%

8%3% 3%

0% 2%

11%14%

6%

0-1Years 1-2 Years 2-3 Years 3-5 Years 5-10 Years 10-15 Years 15-20 Years 20+ Years

Survey question: “Through which channel(s) did your company’s product(s) launch?”

Over half of 0-3-year-old companies launched

online

Brick and Mortar Food ServiceE-Commerce


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Survey question: “Through which channel(s) did your company’s product(s) launch?”

Fewer food companies launch online than

supplements, personal care, or pets

21%

36%42%

36%40%

72%

61% 58%64%

60%

7%4%

0% 0% 0%

Natural & organic food andbeverage product

manufacturer

Functional food andbeverage product

manufacturer

Branded supplementmanufacturer

Personal care productmanufacturer

Pet foods / petsupplements manufacturer


Source: New Hope Network survey conducted Q1 2018, All Manufacturer Results. Survey question: “Through which channel(s) did your company’s product(s) launch?”

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Source: New Hope Network survey conducted Q1 2018. . Survey question: “What percentage of your product sales occur in each channel?”


Percentage of sales in each channel by product launch date

Brick and mortar still drives majority of sales

for older brands. Will this change?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

0-1Years

1-2 Years

2-3 Years

3-5 Years

5-10 Years

10-15 Years

15-20 Years

20+ Years

Grand Total


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Top five channels by 2017 growth

E-commerce - third party

Natural

E-commerce - Company website

Grocery

Specialty

Source: New Hope Network survey conducted Q1 2018. Survey question: “Based on 2017 sales growth over 2016, rank the following channels in which you have distribution from strongest to least strong growth or decline.”

All Survey Respondents


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Natural

E-Commerce – Third Party

Grocery

E-Commerce – Company Website

Specialty

Top five channels by 2017 growthNatural and Organic Food and Beverage Brands



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Natural

Specialty

Grocery

Top five channels by 2017 growthFunctional Food and Beverage Brands


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Top five channels by 2017 growthBranded Supplement Brands



Natural

Supplement Store

Specialty



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Natural

Supplement Store

Specialty


Top five channels by 2017 growthPet Product Brands


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Natural


Supplement Store

Specialty

Top five channels by 2017 growthPersonal Care Brands


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Top challenges of brick and mortar

Source: New Hope Network survey conducted Q1 2018. Survey question: “Select the top three challenges of brick and mortar retail.”

Getting into new retail accounts

Managing distributor relationships

Executing and affording promotional commitments

Finding the right retail partners

Growing within current retail accounts


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Driving awareness of product

Navigating Amazon

Standing out

Harmonizing e-commerce and brick and mortar

Driving sales of product without sampling

Top challenges of e-commerce

Source: New Hope Network survey conducted Q1 2018. Survey question: “Select the top three challenges of ecommerce retail.”


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Brands placing greater importance

on e-commerce over next 5 years

5%4%

7%

24%60%

E-commerce

Not at all important

Not very important

Neutral

Somewhat important

Very important

20%

7%

15%

27%

31%

Brick and Mortar

Not at all important

Not very important

Neutral

Somewhat important

Very important

Source: New Hope Network survey conducted Q1 2018. Survey question: “How would you rate the importance of each channel over the next five years of your business?”


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Thank you!

Carlotta Mast

Senior VP, Content & Insights

New Hope Network

[email protected]

Maryellen Molyneaux

Managing Partner

Natural Marketing Institute

[email protected]

Bob Burke

Principal


[email protected]

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