2017 was a year of “tectonic shifts” for the $149 billion US natural products market and “radical disruption” for the wider grocery market, concludes a new survey by leading trade magazine Natural Foods Merchandiser (NFM).
Amazon’s summer acquisition of Whole Foods Market for $13.4 billion was the biggest of a series of big ticket deals that marked 2017 out as a year of consolidation in the global natural market.
But the so-called ‘Amazon effect’ seems to have been impacting conventional retail most forcefully to date, with shoppers from Walmart, Target and Kroger the first to switch loyalty. And, as a commentary in NFM’s 2018 Market Overview notes, specialist independents could end up being beneficiaries of the Amazon deal. One indie retailer relates how “people are walking away from Whole Foods and walking in to my store”.
Overall 2017 was a year of more modest growth compared to recent years, with total market value up 6% on 2016.
The specialist natural products channel and conventional grocery command the bulk of retail sales (at 38% and 44% respectively), while practitioners, online and mail order take 4% each and multi-level marketing grabs a useful 7% of the market.
Bricks and mortar indies has to settle for a comparatively disappointing 3% year-on-year growth rate, with a third of stores reporting a decline in sales. But, according to NFM, independents “with courage and capital” continued to thrive. As Jay Jacobwitz, from consulting firm Retail Insights, commented: “The surviving independents who have figured out how to compete in this environment are actually doing really well”.
The survey shows that innovation in the supplements sector is helping to keep the category on a growth trajectory, although that growth (at +3.8%) is down from the 2016 rate (+5.3%). CBD products were the star performer of 2017, and rated the top supplement category by 90% of retailers.
The survey confirms that 2017 was the 20th year of consecutive growth for America’s organic market, with a growth of 6.4% taking total market value to $49.4 billion.