The State of the Industry - New Hope Network · 2017-03-24 · The State of the Industry. Carlotta Mast . Executive Director of Content New Hope Network . [email protected] . @carlottamast

1 ©2017 New Hope Network. All Rights Reserved

How We Will Fuel Growth and Change the World

The State of the Industry

Carlotta Mast Executive Director of Content New Hope Network [email protected] @carlottamast

Eric Pierce Director of Business Insights New Hope Network [email protected] @EricsBites

Maryellen Molyneaux President, Managing Partner Natural Marketing Institute [email protected] @NMITweets


Speakers Carlotta Mast Executive Director of Content & Insights, New Hope Network @carlottamast

Eric Pierce Director of Business Insights, New Hope Network @EricsBites

Maryellen Molyneaux President, Managing Partner, NMI, Natural Marketing Institute @NMITweets


#ExpoWestTrends

4 ©2016 All Rights Reserved

Source: Nutrition Business Journal (2016 preliminary estimates; $mil, consumer sales)

0%

2%

4%

6%

8%

10%

12%

14%

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e

Supplements Natural & Organic Foods Functional Foods Natural & Organic Personal Care Growth

U.S. natural products sales grew 7.7% to $195B in 2016—adding $14B in sales


Natural & Organic Food and Bev

$68.9 BILLION

+8.5%

2016 growth estimates

Source: Nutrition Business Journal (preliminary 2016 estimates)

FUNCTIONAL

SUPPLEMENTS

NATURAL

LIVING

+7.6%

+6.6%

+7.5%

$59.7 B

$41.4 B

$18.7 B

Natural & Organic Food and Bev

$74.8 BILLION



0%

2%

4%

6%

8%

10%

12%

14%

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

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

U.S. natural & organic food and beverage sales grew 8.5% to $75B in 2016



U.S. functional food & beverage sales hit $59.7B in 2016, on estimated 7.6% growth

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

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


Total food growth lagging behind U.S. Natural, Organic & Functional Food Sales

vs. Total Food Sales


$0

$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 20160%

2%

4%

6%

8%

10%

12%



Total U.S. supplement sales grew 6.6% to $41B in 2016—adding $2.6B in new sales

0%

1%

2%

3%

4%

5%

6%

7%

8%

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

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



Supplement bright spot: herbs & botanicals up 7.7% to $7.5B in 2016, outpacing category

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e



Natural Living sales grow 7.5% to $19B in 2016 for this small but influential category

0%

2%

4%

6%

8%

10%

12%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

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


Source: Nutrition Business Journal (2015 estimates; $mil, consumer sales)

U.S. Natural Products Industry Sales by Channel

Mass market dominates, Internet booms, Costco surges and WFM shrinks


MACRO FORCES



Our Changing Food, CPG and Retail Landscape



CONSCIOUSNESS RISING

Fueled by growing consumer demand for purpose-driven products and the emergence of socially minded entrepreneurs driven to change the world, a new wave of conscious business practices is defining what business can look like in the future.

TRENDS

The Purposeful Brand Environmental Expectations

The B Corp Revolution

OPPORTUNITIES

The Values Connection Regeneration

Waste Not, Want Not LEAN, Green, &

Waste Stream The Collaboration Economy


The Purposeful Brand Aligning with a social cause can deepen a company’s ethical roots—and the closer that cause is to the heart of the business, the more lasting the impression.

NUMI TEA

SOULFULL PROJECT

TRENDS CULTURAL AWAKENING | Macro Force: Conscious Consumption

LOVETHEWILD FISH KITS

VITAL FARMS


LEAN, Green & Waste-Stream Consciousness can manifest itself in many ways throughout the product value chain—ethical sourcing, triple bottom lines, charitable donations. But how can we inject consciousness into the very engineering and production of goods?

GENYSIS BRAND SOLUTIONS REGRAINED BARS

OPPORTUNITY CULTURAL AWAKENING | Macro Force: Conscious Consumption

SAINT BENOIT CREAMERY

MAPLE GUILD


Collaboration Economy

GOOD SPREAD FURTHER PRODUCTS HAND SOAP

COCOBURG COCONUT JERKY

THRIVE TRIBE with MEGAFOOD

OPPORTUNITY MODERN LIFE | Macro Force: Disruption Through Fragmentation

v

The natural products industry comprises many outstanding companies and individuals, but it’s collaboration between them—and with those outside of the industry—that paves the good-food future.

21 ©2017 NMI and New Hope Network. All Rights Reserved

Corporate values produce R.O.I. with consumers

52% 59%

53% 44% 47%

GP Millennials Gen X Boomers Matures

I will usually buy products from companies whose values aremost like my own

% consumers who indicate, that when given the choice to buy a product or service…


Keep jobs in the US 7% Treat animals humanely 24%

Reduce trash/ waste they produce 10% Support the community 5%

Create a safer workplace 12% Use more recycled content in products & packaging 8%

Increase access to clean water 28% Use less packaging -5%

Increase use of renewable energy 3% Reduce energy consumption -5%

Prevent global warming/ 13% Support community children's education 20%

Promote gender equality and empower women 21%

66% 54%

51% 46% 45% 44% 43% 43% 43% 41% 40% 40% 39%

Consumers are interested in corporate environmental and social efforts

% general population indicating they are interested in learning about what companies are doing to… % Total Growth

‘12-’16


52% 48% 40% 25%

60% 58% 44%

33%

2009 2016

Companies which keep sustainability as a focus are viewed in a more positive light over the past 7 years

% GP who agree that knowing a company is mindful of its impact on the environment and society…

Makes me more likely to TRY their products or services

Makes me more likely

to BUY their products REPEATEDLY

Makes me more likely

to TALK with friends and family

about the company

Makes me LESS concerned with

the PRICE of their products


While consumers want more corporate action to protect society/ environment, few believe they currently take the lead

44% 42% 41%

22% 15% 13% 8% 5% 5% 4%

50%

24% 21% 8%

64%

26%

53%

22% 26% 35%

Individualpeople

Non-profitorganizations

Volunteergroups

No one USgov't

Schools/universities

Corporations Hollywood/celebrities

Media Foreign gov'ts

Current leaderShould be doing more

In protecting the environment, who is a current leader and who should be doing more?

Should be doing more

Currently doing the most


These efforts can have a positive impact on the bottom line % GP who agree completely/somewhat that they would pay 10% more

for foods/beverages that are made by companies with the following characteristics

34%

37%

38%

43%

44%

45%

Have public social goals

Fight global warming

Have public environmental goals

Provide safe working environments

Support causes I believe in

Pay their workers fairly


Today’s consumer demands are different

Today’s consumers demand: authenticity, transparency, proactivity, engagement and connection


Today’s consumer values leadership

Today’s more conscious, engaged consumer is extending you an invitation to be transparent, to demonstrate and be authentic and

consistent in with a clearly stated set of values


It is time for us to lead

It is our responsibility to lead


Here’s what you should do

Identify your values

Make them central to culture

Hire people with passion

Explore all aspects of business

Identify commitments

Implement changes

Engage others in you efforts

Keep moving, keep progressing

Remain authentic



A CLIMATE OF CHANGE Food and agriculture enter climate change discussions as victim, villain and solution—just in time to feed an exponentially growing population.

TRENDS

Feed Me! Climate-Changed

Supply Chains The Plant Revolution

OPPORTUNITIES

Eat Less Meat & Dairy

The Climate-Friendly Foods Movement


GOOD KARMA DAIRY-FREE YOGURT

The Plant Revolution

KITE HILL MYRTLE GREENS

VEGAN JERKY

TREND MODERN LIFE | Macro Force: A Climate of Change

Whether for heart health, climate health, ecological efficiency, or animal welfare, plants are fast becoming man’s best friend and providing consumers with more delicious and healthy alternatives for eating fewer animal products.

SEAMORE I SEA PASTA


Climate-Changed Supply Chains

TREEHOUSE ALMONDS

ORA ORGANICS

ANNEMARIE BORLIND

10TH AVENUE TEA

TREND MODERN LIFE | Macro Force: A Climate of Change

As climates shift and impact ingredient supply networks across the globe, brands are faced with both a challenge and an opportunity to innovate.


The Climate-Friendly Products Movement

BITTY FOODS OREGON’S WILD

HARVEST

HONEST KITCHEN NICE MUSSELS

OPPORTUNITY MODERN LIFE | Macro Force: A Climate of Change

v

As the public’s grasp on the connection between agriculture and climate change continues to improve, it will become all the more critical that products distinguish themselves as climate-kind.

LOTUS FOODS


My World

My Country

My Community

My Family & My Home

ME What goes in and on my body

Consumers exhibit a hierarchy of concern about sustainable products

General Hierarchy

of Consumer Concern

How does this affect me?


The preference for sustainable products grew 21%

48% 53% 51%

53% 53% 53% 57%

59% 58% 58%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

% GP who agree… “I prefer to purchase products that are manufactured in a sustainable manner”


9% 15% 51% 11% 2% 1%

17% 12% 27% 10% 10%

Consumer interest in green versions of many CPG categories is strong and growing

41% 38% 38%

35% 34% 33%

32% 31%

28% 22% 21%

FoodsPet Products

Disposable diapersPersonal care products

Household paper productsLaundry detergent

Gardening productsBeverages

Home fragranceClothing/apparel

Home linen/furnishings

% GP who are VERY interested in purchasing the following products in green or e-friendly versions Total growth

’12-’16


Consumers are looking for a sustainable label that ensures safety for themselves and the environment

50% 56% 53% 44% 36%

I would trust a product sustainability scoring system offered by a respected national retailer.

GP

Millennials

Gen X

Boomers

Matures

69% 68% 72% 69% 66%

I would like to see a product label that conveys information about a product’s safety, environmental impact and

performance to help me make comparisons and decisions.


Concerns about manufacturing and content may fuel a willingness to pay a premium for products

made with characteristics that help alleviate the concern

Made in the USA

Made in an environmentally

friendly and sustainable way

GP 39% 27% LOHAS 51% 49%

Millennials 40% 35% Gen X 42% 25%

Boomers 37% 21% Matures 38% 17%

% consumers indicating they would pay 20% more for products that are…


Consumer concern and willingness to engage is strong and growing


Mother Earth is in danger

We need to engage consumers


Consumer Packaged Goods are the new entry point to engaging consumers in

climate action


It’s time we connect consumerism to climate activism

Our brands and products can be the catalyst for change



OUR FLAT EARTH An increasingly complex global food and ingredient supply chain means more food experimentation but also more need for traceability and the rise of powerful new consumer influencers.

TRENDS

The World Traveler Adventurous Palates

OPPORTUNITIES

Putting a Face on Our Farmers

and Food System The New Influencers


The World Traveler

ICELANDIC PROVISIONS SKYR MATCHA LOVE ALAFFIA

TREND TECH ENABLERS| Macro Force: Our Flat Earth

Natural products entrepreneurs turn their worldly experiences into businesses with passion and authenticity at their core. Their brands cater to consumers’ increasingly adventurous palates.

BURMA LOVE


Putting a Face on Our Suppliers

SOL SIMPLE OPEN FARM PET FOOD

LILY FARM FRESH SKIN CARE

OPPORTUNITY TECH ENABLERS| Macro Force: Our Flat Earth

The most progressive companies don’t just tell a story about their products, but rather start a dialog about the possibility of a better food system.

WIZE MONKEY


The New Influencers

SHIFTCON VEGA BACK TO THE ROOTS PROTECT OUR

BREASTS

TREND TECH ENABLERS| Macro Force: A Connected World

When it comes to shaping consumer attitudes, habits and loyalties, traditional media is fighting a losing battle to new forces powered by word of mouth and amplified through countless technological advances and consumer hunger for authentic voices and visions.


Influencers offer prime opportunities to engage consumers % GP Top Two Box influence on their purchase of healthy and natural products

TOP 10 INFLUENCERS 74% Package label

72% Physicians/Doctors

71% Friends/Relatives

69% Sales/reduced pricing

66% Coupons

63% Spouse/Significant other

61% Shelf tag with nutrition information

56% Internet/Websites

53% Television

51% In-store signage

+6%

+14%

OTHER KEY INFLUENCERS 49% Third party seals/certifications

44% Product brochures

43% Nutritionist

41% Social media

38% Store personnel

37% Kids in household

35% Dietician

33% Corporate/brand websites

30% Blogs

26% Phone apps

+49%

+19%

+26%

+61%


There is a global culture of label reading

More than six out of ten U.S. consumers are reading labels – up 5% since

2006

Brazil: 82% China: 90% India: 88% South Africa: 69%

Even higher in developing countries


Trusted sources of influence vary widely

TRUSTED SOURCES

provide consumer confidence in product usage

Recommended by my… • Doctor, hair dresser,

dermatologist…

“Granola” Friends • Educated on topic,

conduct own research • Heightened awareness

& concern

Longevity/familiarity with product • Used product for years;

trust their own use

Personal Social groups • Peer groups • Word of mouth


Some sources are used for quick, convenient information, often tipping the scale for a borderline purchase decision

POLARIZING SOURCES

Provide trust for some, raise concern and

skepticism for others

Online consumer reviews • Vast array of personal

reviews of any product

‘Google it’ • Quick & common source,

but how to determine the validity of information?

Retailers • Seen as product

gatekeepers, OR • Seen as ‘big business’

only interested in profits

Media • Social – growing and can be

powerful • Mainstream – fake or real? • Online – Newsletters, Docs


But beware, consumers are not willing to sacrifice when buying environmentally-friendly products

73% 61%

50% 44%

Quality Price Anything Convenience

% GP who agree that they do not want to sacrifice…


Engagement must be a bigger part of your marketing budget


The common thread

Leadership


We need to lead

Our businesses can lead the change we want in the world


It is our responsibility to lead!


THANK YOU!

Carlotta Mast Executive Director of Content

New Hope Network @carlottamast

Eric Pierce Director Business Insights NEXT, New Hope Network

@EricsBites

Maryellen Molyneaux President, Managing Partner

NMI, Natural Marketing Institute @NMITweets

Documents

The State of the Industry - New Hope Network · 2017-03-24 · The State of the Industry. Carlotta Mast . Executive Director of Content New Hope Network . [email protected] . @carlottamast