Copyright©2012TheNielsenCompany.Confiden:alandproprietary. Organic Produce Trends: Current Drivers and What to Watch Angela Jagiello Associate Director of Conference & Product Development 1 OTA.com Copyright©2012TheNielsenCompany.Confiden:alandproprietary. OTAistheleadingvoicefortheorganictrade intheU.S.,represen:ngover8,500 businessesacross50states. The Organic Trade Association is the LEADING VOICE for the organic trade in the U.S., representing Ourmembersincludegrowers,shippers, 8,500 businesses across 50 states. processors,cer:fiers,farmers'associa:ons, distributors,importers,exporters, Our MEMBERS include growers, shippers, consultants,retailersandmore. processors, certifiers, farmers' associations, distributors, importers, exporters, consultants, retailers and more. OTA’sBoardofDirectorsisdemocra:cally electedbyourmembers. OTA’s Board of Directors is democratically ELECTED by our members. OTA'smissionistopromoteandprotect ORGANICwithaunifyingvoicethatserves OTA's mission is to PROMOTE and PROTECT andengagesitsdiversemembersfromfarm ORGANIC with a unifying voice that serves and tomarketplace. engages its diverse members from farm to marketplace. 2 OTA.com Sales of organic food and non-food products in the U.S. totaled $43.3 billion in 2015 OTA.com A key component of appealing to the “better for you” shopper. Heavy organic users report spending $150 on their weekly groceries (vs $121 for nonbuyers). Millennial parents choose organic more than other generations. We also asked shoppers to say how many stores they typically visited in a week to get the groceries they need. 22% - One store 51% - Two stores 27% - Three or more stores OTA.com HEALTH&WELLNESSDRIVERS IMPLICATIONSFORORGANICPRODUCE OrganicProduceSummit July14th,2016 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. AGENDAFORTODAY’SPRESENTATION CURRENTHEALTH& WELLNESSTRENDS LOOKING AHEAD AmericansaremorefocusedonHealth& Wellness,whichhasbenefiWedorganicproducts DriversofH&W,increasedcompe::on,andkey implica:onsfororganicproducemovingforward 6 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. AMERICANSAREMOREFOCUSEDONHEALTH&WELLNESS Exercising3daysaweek onaverage 63%aretryingto eathealthier 49%areconsciously ea:ngmorefruits andvegetables 45%readfoodlabelsto makehealthierchoices 48%chooselocal, natural&organicwhen possible 53%willpaymorefor foodsthatpromote healthbenefits Preparedfor:StrategicHealthPerspec:ves Base:AllUSAdults(2016n=30049) Source:Q870:Inatypicalweek,onhowmanydaysdoyoudovigorousphysicalexercise?;Q885:Whichofthefollowingdescribesyourapproachtoea:ng? 7 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. DRIVERSOFFOODRELATEDHEALTH&WELLNESS BACKTOBASICS Consumersarefocusedonhealthierfoodswithsimpleringredients.Products thatarelessprocessedwithfeweringredientsareoutpacingthetotalstore. HEALTHYINDULGENCE Consumersaren’tjustea:ngvegetablesallday.Peoples:llwanttoindulge. But,growthiscomingfromH&Wevenwithincategoriesthatareindulgent. FOODFIGHT–CENTERSTOREvsFRESH Salesareshijingtotheperimeter,butcenterstoremaintainsamajorityof foodsales.ThebiggestmanufacturersarefocusingonH&Wasagrowthdriver. FOODASMEDICINE Consumersareusingfoodasmedicine,astheymanageailmentsandmaintain theirgeneralwellness.Func:onalfoodsandmedicalfoodsaregainingtrac:on. 8 DEMANDFORSIMPLERINGREDIENTSHASLEDTOTHEGROWTH OFHEALTHIERFOODCHOICESACROSSTHESTORE Copyright©2016TheNielsenCompany.Confiden:alandproprietary. Dollargrowth%chgvsYA +2% +11% +16% TotalStore Naturalproducts Organicproducts Note:Wellnessclaimsarenotaddi:ve Source:NielsenAnswers,WellnessTrack,TotalU.S.–AllOutletsCombined,,52-weeksending1/23/2016, +17% GMOFreeproducts 9 HEALTHYCLAIMSAREGROWINGINSALES,ANDINITEMCOUNTS Copyright©2012TheNielsenCompany.Confiden:alandproprietary. BIGGESTANDFASTEST GROWINGH&W CLAIMS TOTALFOOD NATURAL GMOFREE +204moreitems NOARTIFICIAL +100moreitems COLORS/ FLAVORS ORGANIC +117moreitems +239moreitems SOY GLUTEN +433moreitems FREE NOHIGH FRUCTOSECORN+82moreitems SYRUP Source:NielsenxAOC.PeriodEndingDecember26,2015;growthsince2012highlightedclaimspresentin>75%categories +170moreitems ANCIENT +34moreitems GRAINS NOARTIFICIAL +52moreitems SWEETENERS 10 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. HEALTH&WELLNESSGROWINGINTRADITIONALLYINDULGENT CATEGORIES Consumerss:llwanttoindulge,butwanttodoitsmartly SALTYSNACKS NOTJUSTMADEFROMPOTATOES…NOWWITH: TOTALCATEGORY $20.4BILLIONINANNUALSALES SALESGROWTH+2.6% ANCIENTGRAINS LENTILS NATURALSALTYSNACKS +8.3%SALESGROWTH 9.3%OFSALTYSNACKSALES ORGANICSALTYSNACKS: +20.7%SALESGROWTH 1.8%OFSALTYSNACKSALES SOURCE:NIELSENSCANDATA,52weeks1/23/16 KALE QUINOA 11 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. THEFRESHFOODSPERIMETEROFTHESTOREISGROWING Overtwoyears,shareofperimetersalestototalfoodsalesincreased1.2sharepoints Dollar%Share CENTER 63.2% PERIMETER 36.8% (+0.3) 63.3% 36.5% (+0.9) 64.4% 35.6% 2015 2014 2013 Shr.pt.chg.vsYA $12.4B Growth Source:NielsenAdvancedFreshPerspec:ve;TotalU.S. 12 FRESHCANBEFOUNDANDPURCHASEDEVERYWHERE Copyright©2012TheNielsenCompany.Confiden:alandproprietary. SHAREOFCHANNELSHOPPERSPURCHASINGFRESHWITHINEACHCHANNEL DRUG CONVENIENCE/ GAS MASS/ SUPERCENTER WAREHOUSE/ CLUB 19% 35% 84% 88% Source:NielsenHomescanTotalShopperViewSpecialtyPanel,52weeksending12/26/15 GROCERY 99% 13 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. DIABETICDIAGNOSISCHANGESPURCHASEHABITSTOFRESHFOODS Categorieswithhighlevelsofgrowthajerdiagnosis,usingfoodasmedicine RefrigeratedJuice&Drinks Candy FreshStrawberries IceCream PrecutFreshSaladMix Puddings/DessertsDairy Sugar/SugarSubs:tutes FrozenNovel:es FreshCarrots Milk FreshOnions $/HHversusYAGrowthorDeclineRela:vetoTotalUSTrends Source:NielsenDiabetesSurvey;NielsenHomescanAllOutlets52W/E12/26/15vsYA 14 LOOKINGAHEADATH&W Copyright©2012TheNielsenCompany.Confiden:alandproprietary. H&WISBEINGDRIVENBYSEVERALMACROFACTORS INCREASEIN CHRONIC DISEASES RISING HEALTHCARE COSTS AGING POPULATION DEMANDFOR FOOD TRANSPARENCY HEALTH& WELLNESS DRIVERS TECHNOLOGY ACCESS 16 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. ANDH&WMATTERSACROSSTHEENTIRESTORE CENTERSTORE FRESH OTC/PHARMACY PERSONALCARE CLINICS 17 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. RETAILERSACROSSALLCHANNELSAREUSINGH&WASA GROWTHSTRATEGY Examplesofstrategicini:a:vesinretail: Priori:zinghealthyfoodsandbeWer-for-youbrandsincenterstore Emphasizingfreshandperishablefoodsaroundtheperimeterofthestore Trainingassociatesandusingdie:cianstobemoreknowledgeableonhealthyproducts Focusonspecifichealthcategories(i.e.Allergy,Vitamins,Beauty) Focusonaspecificailmentsufferer(i.e.Diabe:cs)oroldershoppers Increasedhealthcarerelatedserviceslikeviaretailclinics 18 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. ORGANICISADIFFERENTIATORINRETAIL AverageOrganic$ShareofFresh 5.0% 4.5% 4.0% 3.5% 3.0% Topfreshretailers sellalargershareofOrganic 2.5% 2.0% acrossthefreshdepartments 1.5% 1.0% 0.5% 0.0% HIGHFRESHVELOCITYRETAILERS Sep:le1 Sep:le2 Sep:le3 Sep:le4 Sep:le5 LOWFRESHVELOCITYRETAILERS Sep:le6 Sep:le7 12%ofproducedollarsalesareorganic attop:erfreshretailers, comparedtoonly5%intheboeom:er Source:NielsenFreshFacts52WeeksEnding12.26.15 19 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. THELARGESTMANUFACTURERSARENOTGROWING,WHILE SMALLERMORENIMBLEPLAYERSGROWSHARE Nimble,quickercompe:torsaretakingsharefromthelargestfoodmanufacturers FOOD MANUFACTURERS 4YRCAGR Top25 +0.1% Next75 +3.2% Over100 +6.3% StoreBrands +2.6% Source:NielsenU.S.ScantrackxAOC52weeksending2011vs2015 20 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. THEBIGGESTFOODMANUFACTURERSARESTRATEGICALLY FOCUSEDONH&W Theyarefocusingonproducttransparencyandmakingchangestotheirproductporuolio Reducingsugarandremovedar:ficialcolors/flavorsfrombrands Removingundesirableingredientslikear:ficialpreserva:vesanddyes Usingsimple,easytoreadingredientsandsustainableingredientsourcing Crea:ngorganicandnaturalop:onstoexis:ngbrands Star:ngVentureCapitalFundstoiden:fyupandcomingbrands Acquiringdisrup:vehealth&wellnessbrands 21 BUTHEALTH&WELLNESSISNOTAONE-SIZE-FITSALLAPPROACH UnderstandingthedriversofengagementwithH&Wiscri:cal Copyright©2012TheNielsenCompany.Confiden:alandproprietary. LOWERINCOMEHH’s UNDER-INDEXAMONGTOP WELLNESSCLAIMS Source:NielsenAnswersOn-DemandSyndicatedPanel,52weeksending12/26/2015 THEREISADIFFERENCEIN CONSUMERENGAGEMENT ACROSSHEALTHIERCATEGORIES Source:Homescan,NMIH&Wsegmenta:ons, 52weeksending12/26/2015 22 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. ITISIMPORTANTTOUNDERTANDTHEH&WCONSUMER NIELSEN’SHEALTH&WELLNESSCONSUMERFRAMEWORK WHO/WHATINFLUENCES THEH&WCONSUMER IMPACTS WHATTHEYEAT Foodconsump:on Beverageconsump:on Centerstore&Fresh HOWTHEYTREAT Socio-economicfactors Lifestage Geography Healthcarecosts Generalwellness Ailmentmanagement Media/technology Healthcareprofessionals Socialcauses Sustainability Pharmaceu:cals OTC/PersonalCare Supplements WHERE/HOWTHEYSEEKCARE Doctors Retailclinics Hospitals Self-care 23 Copyright©2012TheNielsenCompany.Confiden:alandproprietary. FINALTAKEAWAYS Implica:onsforOrganicProduce • Consumerswillcon:nuetoproac:velyengagewiththeirhealth&wellness.Assess howorganicproducefitsintoconsumer’sH&Wmanagement. • Engagewithretailersacrossallchannels.Theyarefocusingonhealthyandfresh foods,includingandespeciallyproduce.Thisisahugegrowthopportunity. • Focusonconsumersatalocallevel.Thereisnoone-size-fitsallstrategy. • Bepreparedforincreasedcompe::onfromlargerfoodcompanies.Useyour marke:ngdollarseffec:velytocon:nuetowinloyaltyandshare. 24 Thankyou! [email protected] OrganicProduceTrends-CurrentDrivers&WhatToWatch Culinary Tides, Inc. SuzyBadaracco,President Toxicologist,Chef,Die::an WhoWeAre…WhatWeDo • Whoweare: – – – – PrivateTrendsForecas:ngThinkTank–Staff=7 2Satelliteoffices–WashingtonDC,Tokyo Forecastworkiscreatedthroughmilitaryintelligencetechniques,ChaosTheory Background:BSCriminalis:cs,Assoc.CulinaryArts,MSNutri:on • Toxicologist,Chef,RegisteredDie::an • Whatwedo: – Partnerlongtermw/foodindustryclients–sidealongThinkTank – LookforpaWernsinChaostoaidfuturestrategy – Producecustommonthly&quarterlyreportsforclients • Government,Technology,Adversaries/Allies,Compe:tors,Research,Flavor&Cuisine-trackedand forecastedspecifictoclient • Quarterlyreportsincludeupdated12-18monthforecastforeacharea Consumers ConsumerBehavior:RecoveryForecast *Ac<on/Reac<onMaps-Usedto<eeventstooutcomes,shiDsinpaEerns Inspira:on Factor Cause Priori:es • Efficiency • Ease Time i Transla:on • Returntorestaurants • Conveniencetrumpsbudget • Brandsrebound • Travelabroadh Spending • Value • Worth Income h • Couponusei • Valuetrumpsbudget • Greenspendingh • Organicrebounds • Tradeofftrumpstradedown Food&Flavor • Educate • Explore Fear i • Dessertsinspotlight • Exo:c,experimentaltrumps comfort • Luxury,Indulgencerebound • Playfulness,riskreturns • Winevarietals,regionsh ConsumerForecast2016/17 Foraged Repurposing Protein Invisiblyhealthy Snacking Balance Guiltfree Fermented Protein Transparency Foodsource Authen:c FoodWaste Foods Meatless "FreeFrom" Kids Seasonal Sustainability Consciousconsump:on Health Mindful Consumers Control,Safety,security Hyperefficiency Allergens Authen:city Por:onop:ons Customiza:on History,Legacy,&Roots Organic History,inspiredstories Customized/Personalized Escape Mo:va:on Kids Foodorigins Exo:cOfferings Indulgence Value,NotPrice Cleanslatebrands Sustainability SustainabilityLandscape WithinState? WhichCer:fica:on? WithinCountry? 150Miles? Whose? Local Seasonal Organic Sustainable Re-Commerce Packaging HiringPrac:ces Ethical AnimalWelfare Green FairTrade ManufacturingSites EmbeddedBenefit GrowingPrac:ces ConsumerInfluencers • Nielsen • • Nielsen • • • WashingtonStateU • • • UofIllinois • • OTA • • PackagedFacts • • IFIC • Hartman Genera:onZ'swillingnesstopaymoreforsustainableproducts-72%willingtodosoin2015vs. 55%in2014,Boomers-51%willingtopaymorein2015vs.44%in2014 Manyfoodsadver:sesustainabilityinbothmarke:ngandpackaging,with60%ofsnackssold globallyusingbothmethods,TVadsinfluen:alpurchasesfor34%ofrespondents Salesoforganicfoodanddrinkaresettodoubleby2018butthisisnotenoughtofeedtheworld Thepurchaseoforganicvirtuefoodslikestrawberriesmaybebasedmoreontasteconsidera:ons, butorganicindulgencefoodslikecookiesmaybepurchasedbasedonnutri:onconsidera:ons 35%ofUSfamilies“makeagreatdealofeffort”tochooseorganicfoodsandproducts,jumpsto 74%whenfamilieswhomakeatleastaminoreffortareadded 37%ofconsumersaged25–39arelikelytoseekoutplantproteins,(highestofanyagegroup) followedby22%ofadultsunderage25 Americanswhosefoodandbeveragepurchasingdecisionsareimpactedbysustainabilityincreased 41%in2016vs.35%in2015,38%ofallAmericansarewillingtopaymoreforfoodthatis producedsustainably Topdescriptorssought:fresh81%,clean70%,real65%,61%natural,59%noar:ficialflavors, colors,preserva:ves,58%lessprocessed,58%noGMOs HealthHorizons HealthTrends:Drivers Diges:on Vision Fiber/Grains hFlexitarian Obesity CVD FreeFrom FoodSafety Energy Calories Mood Organic/Natural Sustainability Muscle Seniors Joint/Bone Salt,Sugar,Fat Acrylamide Control MenuLabeling Apps Sa:ety Unprocessed Simplify Benefit? Health Trust HealthClaims NaturallyHealthy Cogni:veFunc:on Obesity Stress Focus Development/Decline Cholesterol Kids Preven:on Relaxa:on Diabetes Seasonal/Local Diges:on Sleep Memory Depression Convenience Snacking Sa:ety Kids Por:onControl DiningOut OrganicProduceAlly:Breakfast hDopaminemetabolites iAggression(teens) 75%usuallyeatbreakfastathome,15%eatonthegointhecar/train, 10%eatatdesks h Shorttermmemory h Focus 65%prefermaking/assemblingmealfrom scratch Health iBMI Behavioral iDiabetes iHeartdisease 48%eatbreakfastatnon-tradi:onal :mes 63%believeit’sunhealthytoskipbreakfast,only26%eat breakfasteveryday Whenea:ngonthego,63%grabsomethingfromhome,45%gotoa drive-thrurestaurant,31%stopataconveniencestoreorgassta:on Spending • NPD-Breakfastfoodloversfuelrestauranttrafficgrowth,restaurantssawbreakfast-:metrafficrise4%intheyearendedMay31, largelyduetogainsatfast-foodchains,whilelunchanddinnervisitswereflat OrganicProduceAlly:Protein Chickpeaflour hFa:gue hSa:ety hCholesterol Health hBloodpressure iCogni:vefunc:on hColon,prostatecancer • Oat Technology Lentein hKidneyFailure • Peaprotein Hemp Algae hMortality • Len:l Redmeatconsump:oni AlgaVia MeatlessMondaysh Behavioral Flexitariansh Proteindesireh EasyFlav Profi-OneStop Plantproteinsdesireh Vegetarian/veganchoicesh NPD-Consump:onofmeatsnacksincreased18percentsince2010,24percentlookforproteinonnutri:onlabels,50percent thinkthebestproteinsourceisanimalprotein Mintel,Frost&Sullivan-productlaunchesusingpeaproteinincreased49%between2013/2014,legumes,includingpeas, madeup34%ofnon-soyplantproteinproductsgloballyin2014,withinlegumes,peaproteinmadeup55% UniversityofChicago–Paleodiethasitwrong,Cavemendideatcarbs,carbohydrateconsump:onwasvitalforthe accelera:onofbraingrowthoverthelast3millionyears FlavorHorizons FlavorEvolu:on:Morph *Morph-cousinstealsthespotlight ComfortFoods Recession Hybrids,Stuffed MidRecovery Fusion MolecularGastronomy FullRecovery Hybrids/Mashups&StuffedFoods Bakery:donuts,Twinkies,puffs,éclairs,etc. Cronut,brookie,wookie,cakepops OtherGrains:pasta,pizzacrust,bread Icecreamcake,piemilkshakes Nutellasagna Pretzelbuns,cragels Meats:roasts,chicken,etc. Hybrids& Mashups Stuffed Ramenburger Grapeleaves Chicken&waffles Waffletaco,spagheƒtaco,sushi burrito Beefalo,Ironagepigs Pluot,plumcot,peacotum Vegetables:potato,squash,peppers, mushrooms,etc. Pierogies Broccoflower Arancini Onigiri Kolache Pupusas Turducken FoodForecast2016/17 NonGMO Coconut Lulo Yuzu Citrus Mango Fruit Black,choke,pichu,tay-berry Maple Organic Avocado Sustainability Foodwaste Protein KidsMeals FreeFrom Pumpkin Seaweed Beans,Pulses Celery Cauliflower Localinglobaldishes Seasonal Local Fig Chicory Invasivors Health Food/Flavor Vegetables Weeds Tea Citrus Jerk Seasonings/Sauces Charred,smoke Sweetbrowns Flexitarian Chilies Alcohol Seaweed Nutrientdense Fiber Sour Sumac Ginger Chilies Deconstructed RoottoStem Speedscratch Wildcrajing Stuffed Prepara:on Livefire Bold,spicy,exo:c Pickled,sour,fermented Soup Hybrids BeverageForecast2016/17 Nitrogen Snackified-textures InfusedIce Smoke Energy Sparkling Coldpressedjuice Plantwaters AddIns/Mixers Spice/Heat BiWers Frozen Coconutmilk Non-Alcohol Bubbles Styles/Varietals MapleH2O Coffeefruit Switchels Ginger UnblendedSmoothies Shrubs Mezcal Cocktails Aquavit Carbonated Applebased Teabased Japanese,USA,Irishwhiskey Crajsodas Pickleback Infusedspirits Updatedclassics Culinary Regional “Session” Cuisines&Fac:ons DeepSouth/Appalachian/LowCountry Filipino Ar:san,HouseMade Nordic Brazilian Cuban GlobalVegetarian Cuisines StreetFood Fac:ons MiddleEastern Snacks GlobalBreakfast RegionalMexican EasternBlocEU-Russian ComfortFusion Foraged Seasonal Pickled,Sour,Fermented SingleEstate/FarmFoods HowtoPlayonaChangingPlayground SustainabilityForecast • • • • • • • • • Technologysourcericochetsgainground–novelsources:salt,fiber,etc. Packagingtechnologyisdictatedbysafety,sustainabilityissues Consumerdisconnects,confusionremainsfocusforbehavioralresearch GenZspending,valuepaWernscomeintofocusanddifferen:atedfromothergens Genera:onal,ethnicgroupspendingdifferencesafocusduringrecovery Adversarialgroupstoremainfocusedoncorporatesustainabilityclaims VegetableproteinscompetewithanimalproteinforconsumeraWen:on FreshfoodfocusedC-storesandgrocerantsstealconsumerfocusfromrestaurants,retail Nega:vehealthconsequencesofdietswhichvillainizefood/foodgrouprevealed Comba:ngFa:gue Out IN • Generic“green”labelstatements • Marke:nghowasustainabilityprac:ce helpsyourcompany • Explainwhyproducthasgreenclaimonlabel–educate theconsumer • Promo:nghowyourcompany’s sustainabilityeffortshelpsthe environment/community • Marke:nghowasustainabilityprac:cehelpsthe consumer • Empowerconsumers–givethemthecontrolover beWeringtheirenvironment/communitybyusingyour products Thank You! Culinary Tides, Inc. SuzyBadaracco President www.culinary:des.com sbadaracco@culinary:des.com hWps://twiWer.com/sbadaracco hWps://www.linkedin.com/in/suzy-badaracco-7443144 (503)880-4682
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