Organic and Healthy Foods Impacting CPG Growth

One significant trend that continues to drive the consumer packaged goods industry is the growth of the organic and healthy foods movement. Grocery stores around the globe are trying to meet the growing demand by expanding the number of organic products on their shelves. Even a variety of fast food restaurants are offering organic & healthy foods on their menus.

Special Diets

A growing number of consumers are choosing special diets for environmental, ethical, or health reasons. Popular regimens include: Paleo, organic-only, gluten-free, GMO-free, nut-free, vegetarian, and vegan. The demand for foods that can be eaten on these special diets helps drive the availability of organic and healthy food options. Dehydrated and raw vegetable snacks, natural teas, and organic burgers are just a few of the products that are currently popular in the industry right now.

The Influence of Doctors & Educators

Educators are quick to point out that buying organic foods can help protect you from pesticides and other contaminants. Since pesticides can be difficult to wash off food items, the Environmental Working Group recommends purchasing organic when buying certain types of fruits and vegetables such as strawberries, spinach and nectarines that normally are sprayed with pesticides to prevent contamination and pests; they call this list the “Dirty Dozen.” While other low-pesticide produce such as avocados, pineapples, and cabbage can be purchased conventionally; this list is titled the “Clean Fifteen.” Public educators are also working to inform consumers about the benefits of organic farming methods. For instance, it’s more sustainable, uses less energy, produces less waste and is less harmful to local water supplies. Some people even claim that organic food tastes better than traditional options that are on the market.

Natural Food Company Acquisitions

Big food companies are also trying to accommodate this demand by creating healthy divisions and brands. Many major food and beverage corporations have even purchased smaller companies that specialize in providing consumers with natural products. Some noteworthy acquisitions include:

• J.M. Smucker acquired Sahale Snacks – The acquisition instantly brought Smucker a line of popular, natural snacks to its portfolio of food products.
• Peet’s Coffee & Tea purchased Mighty Leaf Tea Company – The owners of Peet’s Coffee made the deal in an effort to strengthen and accelerate the company’s growth in the premium tea market.
• Annie’s Homegrown – Sold to General Mills for $820 million in 2014.
• Honest Tea – Acquired by beverage producer Coca-Cola.
• Naked Juice – Fruit juice company known for catchy flavors like “Blue Machine” and “Mighty Mango” sold to PepsiCo for a reported $450 million price tag.
• Kashi – The Kellogg Company bought this pioneering natural foods brand back in 2000.

The demand for healthy, convenient foods is higher now than ever before, and buyers are more informed and know what they want. As consumers continue on the path to more health-conscious lifestyles, food brands, grocers, and manufacturers will remain steadfast in their strategies to meet those needs.

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