Innovation in Natural and Organic Food and Drinks: Winning NPD strategies and future trends in healthy and ethical products

The terms natural and organic are not mutually exclusive: many products are marketed as ‘natural’ without organic certification; likewise, a number of organic products do not incorporate the term ‘natural’ in marketing, or in the brand or product name. However, this report pairs the analysis of the natural and organic market due to their close relationship.
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Innovation in Natural and Organic Food and Drinks
Executive Summary 10
Drivers of the natural and organic food and drinks market 10
Growth opportunities in natural and organic food and drinks 11
Innovation trends 12
Key trends in natural and organic food and drinks 13
Conclusions 14
Chapter 1 Introduction 16
Research methodology 16
What is this report about? 16
Report structure 17
Chapter 2 Drivers of the natural and organic
food and drinks market 20
Summary 20
Introduction 20
The future potential of the natural and organic market 21
Value of natural, fresh and organic food and drink markets by category 22
Value of organic food and drink markets by category 23
Organic market value and growth, by country 23
Nutrition education 25
Industry response to health campaigns 25
Rise in diet-related illnesses 27
Estimated prevalence of diabetes in seven major markets 27
Taking an ethical interest 28
Get certified: avoid a brand boycott 29
Food miles 30
Providing the best of both worlds 31
Retailer interest 32
Whole Foods Market in the US – soon to enter Europe 32
Celebrity endorsements 33
Farmers’ markets keep major multiples on their toes 33
Chapter 3 Growth opportunities in natural
and organic food and drinks 36
Summary 36
Introduction 37
Growth of natural and organic food and drinks categories 37
Category analysis 39
Bakery and cereals 40
Confectionery 42
Dairy 44
Ready meals 45
Snacks 48
Case study: Whitworths 50
Soft drinks 52
Growth opportunities in natural and organic food and drinks 54
Soft drinks 56
Bakery and cereals 57
Hot drinks 59
Ready meals 61
Regional analysis 63
Europe 63
North America 66
Latin America 69
Asia-Pacific 71
Chapter 4 Innovation trends 76
Summary 76
Introduction 77
Innovative natural and organic food and drinks 77
Innovations in formulation 78
Soy products attracting consumers despite confusion 78
Innovations in positioning 80
Targeting consumers by gender and age 81
Innovation in packaging 82
Vitamin and mineral fortification 82
Innovation by category 83
Alcoholic drinks 84
Sweet and savory spreads to benefit from health-consciousness 85
Product tags on natural and organic products 86
Premiumization 86
Trans fats regulation in the US 87
Pure and simple holds strong appeal to consumers 88
Flavor trends 89
Orange is losing ground to more exotic flavors 90
Chapter 5 Key trends in the natural and
organic food and drinks market 94
Summary 94
Introduction 95
The three mega-trends 95
Health 95
Convenience 95
Premiumization 97
Case study: premiumization in chocolate 97
Mums-to-be 99
Raw food 101
Functional products 104
Glycemic Index 105
Whole foods 107
Case study: Tree-gate’s happy and healthy teas 108
Chapter 6 Conclusions 112
Summary 112
Introduction 113
Key trends 114
Market opportunity and the future of the natural and organic food and
drinks market 115
Category potential 115
Global opportunities 117
Sweden stands out as highest potential target market for natural and
organic food and drinks 118
Index 121
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Figure 2.1: Tree-gate’s Love, Freedom and Beauty Teas 29
Figure 2.2: Teaming fairtrade with organic: the UK labeling scheme 32
Figure 3.3: Percentage growth of natural & organic food & drinks in terms of new product launches, 2003-2006 38
Figure 3.4: Percentage of food and drinks products in each category launched that are natural and organic 39
Figure 3.5: Perky’s Perky O’s and Sweet Home Farm Low Fat Granola 42
Figure 3.6: Green & Black’s and CocoaVia 43
Figure 3.7: Well Being iQ2 and Lactantia Nature Addition Omega 3 Milk 45
Figure 3.8: Hain Celestial all natural soups 47
Figure 3.9: T-Bar Green Tea Nutrition Bar and Island Nuts 49
Figure 3.10: Whitworths healthy on-the-go fruit snacks range 51
Figure 3.11: Tesco Aqua Mineral Water 53
Figure 3.12: Market opportunity of natural &/or organic food and drink categories, current market value vs. potential market value 55
Figure 3.13: NPD in natural soft drinks is focusing on pomegranate in juices 57
Figure 3.14: Innovative teas 60
Figure 3.15: Percentage of product launches targeted at natural & organic in each category in Europe, 2001-2006 64
Figure 3.16: Xavante Guarana Energy Drink Plus 65
Figure 3.17: Prince Charles’ Duchy Originals 66
Figure 3.18: Percentage of product launches targeted at natural & organic in each category in North America, 2001-2006 67
Figure 3.19: Food For Life Wheat & Gluten Free Brown Rice Tortillas and Quaker Crispy WholeGrain Minis Chips 68
Figure 3.20: Percentage of product launches targeted at natural & organic in each category in Latin America, 2001-2006 69
Figure 3.21: Power Punch Uva 70
Figure 3.22: Percentage of product launches targeted at natural & organic in each category in Asia-Pacific, 2001-2006 72
Figure 3.23: Enhanced Organic Coffee 73
Figure 4.24: Innovation in formulation 80
Figure 4.25: Innovation in positioning – Healthy Mom Nutrition Shakes 81
Figure 4.26: Defense Effervescent Vitamin & Mineral Supplement Drinks 83
Figure 4.27: Innovation in natural & organic food and drinks categories, 2001-2006 84
Figure 4.28: Three Sixty Vodka 85
Figure 4.29: Justin’s Nut Butter 86
Figure 4.30: QueenBee Pure Honey Candy 89
Figure 5.31: Twinings Iced Tea 96
Figure 5.32: Dagoba premium and organic chocolate 99
Figure 5.33: Naturel Complement en Fer Eau 101
Figure 5.34: Organic Snack Bars and Virta Organic Bars 103
Figure 5.35: Alvarado St. Bakery Diabetic Lifestyles Bread 105
Figure 5.36: Solo GI Low Glycemic Weight Management Sustained Energy Bar 106
Figure 5.37: New Earth’s Best Organic Crunchin’ Grahams 107
Figure 6.38: Forecast value CAGR of natural and fresh (including organic) food and drink markets by key product categories, Europe and US, 2004-2009, 116
Figure 6.39: Burnbrae Farms Egg Creations 117
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