The U.S. natural and organic products industry grew 4.8% in 2023, with overall sales totaling $303.3 billion. That steady growth is expected to continue into the next year, according to New Hope Network’s annual Market Overview. Published in August, the report projects that in 2024, the industry will continue to see an uptick in sales, with next year’s growth estimated at 5% and overall sales increasing to $318.6 billion.
One big difference between today’s market and the industry back in the early 1980s, when New Hope Network first started tracking growth by mailing paper surveys to natural foods retailers across the country, is that most natural products sales came from independent retailers then. Today, natural, organic, eco-friendly, and now regenerative products can be found just about everywhere from Costco to Kroger, and from the online e-commerce behemoth Amazon to social media such as TikTok, where influencers are driving a number of healthy food trends and product sales.
According to New Hope’s “big picture,” natural, organic and functional food and beverage products commanded a 69.3% share of the overall natural products market, growing 4.8% in 2023 to account for $210.3 billion in sales. This sector, led by growth in classic categories including dairy, snack foods, meat, fish and poultry, and condiments, is expected to continue to grow at 5% to an estimated $220.8 billion in sales in 2024.
Dietary supplements, with a 21.2% market share, grew 4.4% to $64.3 billion in sales in 2023, with gummies, herbs and botanicals, sports nutrition and meal replacements leading the way. Sales of dietary supplements are projected to increase 4.9% to $67.4 billion in 2024.
The natural living category, including natural and organic personal care and household products, comprised 9.5% of the natural products market in 2023, with sales growing 5.5% to total $28.7 billion. Sales of natural living products are expected to reach $30.4 billion in 2024, reflecting a projected growth rate of 5.9%. Feminine hygiene, oral hygiene, shaving and bath products, among others, lead the growth in this sector.
Supplements on the Comeback
For dietary supplements in particular, Nutrition Business Journal Editor in Chief Rick Polito credits the COVID-19 pandemic for boosting the supplement market for the long term. After a slowdown in sales in 2022, attributed to everyone stocking up during the pandemic, dietary supplement sales began to recover in 2023. “In 2019, before the lockdowns and face masks, NBJ made its standard five-year projections and foresaw a $64.4 billion market for 2024, the last look through that pre-COVID lens. Now, in 2024, NBJ projects a $67.53 billion market for 2024, meaning Covid appears to have added $3 billion to the [dietary supplements] market after all the spikes and dips are worked out,” said Polito in NBJ’s Supplement Business Report, published in May 2024.
“Even immunity sales appear to have bottomed out, as sales growth reappears in the most recent estimates. But all those “new normal” consumers who moved into the market during the pandemic might still be figuring out where supplements fit into their post-pandemic lives. NBJ expects solid growth in mood and mental health supplements and sports nutrition as indicators of what that fit might look like,” Polito projected.
While reporting slightly different numbers in his Retail Insights Universe report, highlights of which were published by Whole Foods Magazine in February 2024, natural products retail specialist Jay Jacobowitz said, “The natural organic sector of the food business is alive and well. Six of the eight channels we track in the Retail Insights Universe delivered overall natural growth of 4.38%, exceeding the typical 3% growth rates reported by conventional foods retailers during the past 12 months. Even though consumers reported stress from dealing with inflation, particularly acute for groceries, households continued to embrace natural organics as part of a healthier, more resilient lifestyle.”
Earl Carr, CEO of CJPA Global Advisors and a contributor to Forbes Magazine, in March 2024 summed up why we are seeing continued robust growth in the natural and organic products sector: “There is an alarming need in the world to holistically change our food consumption patterns towards healthier and sustainable food. Not only are concepts like regenerative farming in line with the UN Sustainable Development Goals but over time they have the potential to fundamentally decrease chemicals from our global food supply chain and reduce our carbon footprint and create a more equitable supply chain for future generations. Businesses worldwide are taking notice and adapting their strategies to meet the needs of customer preferences in organic food. Companies who don’t innovative will be left behind. Moreover, the growing trend for organic food production is not just a transitory fad, it’s here for the long term.”
Brick and Mortar: “That’s Where the Volume Is”
As e-commerce has grown steadily, boosted by the pandemic, traditional brick and mortar natural products retailers were trying to grapple with competition not just from mass market but also from online sales. However, according to Benji Fitts, Director of Customer Education for SPINS, brick and mortar retail is positively thriving. “That’s where the volume is,” Fitts said.
According to Fitts, SPINS’s expanded natural channel alone, which generates $41 billion annually, is made up of 2,500 brick-and-mortar stores nationwide. The conventional MULO (multi-outlet) channel consists of 110,000 stores while the convenience store channel comprises 150,000 stores. “Physical retail is where America spends most of its money,” Fitts told New Hope Network writer Melaina Junti. “Do you know anyone who doesn’t shop at a grocery store? No. Do you know people who don’t buy things online? Absolutely.”
According to Pure Branding’s latest PureSegmentation research, the percentage of supplement users who purchase at least some of their supplements from large mass retailers increased to 48% in 2024 from 38% in 2020. “Savvy DTC brands are aware of this opportunity and want to expand their piece of the pie,” Samantha Brewster, VP of Growth Marketing and Account Management, told New Hope Network. “Retail is an enticing path toward mass awareness and growth.”
Online CPG brands are taking notice, with digitally native brand leaders such as MaryRuth’s Organics, which launched online in 2014, crossing over into the brick and mortar retail market. The brand was awarded Whole Foods Market’s Rookie of the Year Award in 2022, and since has expanded into Natural Grocers, Sprouts Farmers Market, Walmart, Target, Kroger and more, according to New Hope Network.
Retailer Insights
While the data tells a broad tale, “every retailer’s experience navigating the marketplace dynamics and serving its customers has its own distinct narrative,” wrote New Hope Network’s Market Overview author Douglas Brown. Here are a few quick observations some independent retailers shared with New Hope Network for its annual report:
“Our conjecture is that eating out continues to be an expensive endeavor and inflation continues to be a concern for our [customers]. Cooking at home, while not at levels we saw in 2020 and 2021, during the pandemic, still has legs for growth. [We’re] tuning our promotions program, trying to use that opportunity to make our pricing more accessible and provide some relief. — Sam Mogannam, Owner, Bi-Rite, San Francisco, California
“We’re all in for functional beverages. We’ve got more than a toe in the water—we’ve got an entire foot in there. People are looking for low-sugar drinks, for drinks with fiber and functional mushroom ingredients. They’re looking to sit their digestion. We are seeing a lot more of these products come into our store—and more leave the store.” — Neil Sullivan, Owner, St. Vrain Market, Lyons, Colorado
“One challenge is how do you sell regenerative? For many of our customers, healing the Earth might not click. How does it benefit health? We don’t have the taking points for it yet. We’re still trying to figure it out. We, as an industry, have to understand how to promote it, and it will take work on our end to get across the talking points for customers.” — Darren Viscount, Natural Living Senior Category Manager, Bristol Farms, Rolling Hills, California
“The new wave of craft vegan is doing well [for] those that embrace it. People are looking for new nutrition and nutrition density in their foods. And this new wave is all about whole ingredients, health and taste—not filler.” — Mitch Orland, SVP of Merchandising and Procurement, Earth Fare, Asheville, North Carolina
“With the continuing interest in the keto lifestyle and the rising interest in the carnivore lifestyle, consumers are searching for products such as tallow—high in saturated fat and zero carbs. That includes body and beauty items. Not everyone can tolerate a plant-based diet, and many can be sensitive to plant-derived ingredients in body care products.” — Julia Greenblatt, Health and Beauty and Gifts Category Manager, Kimberton Whole Foods, Kimberton, Pennsylvania
Download the Report
Download New Hope Network’s Annual Market Overview data here.
Read Natural Foods Merchandiser’s Summer 2024 Edition with the complete Market Overview report here.
Steven Hoffman is Managing Director of Compass Natural, providing public relations, brand marketing, social media and strategic business development services to natural, organic, sustainable and hemp/CBD products businesses. Contact steve@compassnaturalmarketing.com.
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