National Nutrition Month: Consumer Demand Heating up the Organic Foods Market
Consumers are eating more organic food and using more organic products than ever before, according to the 2020 Organic Industry Survey released by the Organic Trade Association. The U.S. organic sector posted a banner year in 2019, with organic sales in the food and non-food markets totaling a record $55.1 billion, up 5% from the previous year. With an increased focus on health during the pandemic, more consumers gravitate toward healthier options, signaling potential future growth.
In recognition of National Nutrition Month, let’s look at the brands filling the growing demand for healthy foods – organically.
With a presence in nearly every natural foods categories, The Hain Celestial Group, Inc. (Tii:HAIN) brands include Celestial Seasonings, Avalon Organics, Hain Pure Foods, Live Clean and nearly three dozen others. The company, looking to siphon a portion of the massive coffee market, recently launched Energy Tea, which contains as much caffeine as a cup of coffee, as well as other teas designed to promote health and well-being. These teas include Mood Tonic, Sleep (the first tea with melatonin sold in the U.S.), Laxative and Gut Health (featuring a blend of prebiotics, probiotics and fiber). Shares of the company are responding well, up 79% over the last 12 months.
You may not be aware of what kefir is, but for Lifeway Foods, Inc. (Tii:LWAY), a producer of kefir-related products that include low-fat, non-fat, Greek, organic, and low-carb options, it’s a multi-million dollar opportunity. Kefir is a fermented milk product similar to a thin yogurt that is high in protein, calcium and vitamin D and offers probiotic benefits. Lifeway’s decision to focus on digital engagement to fuel online grocery purchases and grocery list initiatives has paid dividends in a year reshaped by COVID-19 online buying habits. Net sales for the company’s third-quarter ended September 30, 2020, reached $26 million, an increase of 14.6% from the third quarter of 2019.
Another beneficiary of Americans looking to adopt healthier eating habits is Natural Grocers by Vitamin Cottage, Inc. (Tii:NGVC), which reported a 15.2% increase in net sales for its first quarter. An expanding specialty retailer of natural and organic groceries, body care products, and dietary supplements, the company sells only USDA-certified organic produce and exclusively pasture-raised, non-confinement dairy products and free-range eggs. Natural Grocers also offers nutrition classes, recipe demonstrations and other events to educate and raise awareness and help consumers adopt healthy eating habits. Founded in 1955, the company has 160 stores in 20 states.
Also looking to expand is Sprouts Farmers Market (Tii:SFM), a supermarket chain that offers a wide selection of natural and organic foods, including fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, natural body care and household items. The company recently announced that it would open a new 24,000 square-foot store in Reno, Nevada, this May, which will bring approximately 110 full- and part-time career opportunities to the area. Sprouts currently employs about 35,000 team members and operates more than 360 stores in 23 states nationwide.
With a focus on organic, non-genetically modified and specialty foods, SunOpta Inc. (Tii:STKL) products include frozen fruit, snacks, plant-based beverages (such as oat milk, soymilk, almond milk), broths, teas and ingredients. With high consumer demand for plant-based foods and beverages, the company is expanding its offerings, investing $26 million in an oat base processing facility in Minnesota. This facility is currently producing SunOpta’s new SOWN brand of organic oat coffee creamers. Like many others in this space, SunOpta revenues have increased as a result of consumer habits. Revenues from continuing operations for its fourth quarter increased 10.4% to $205.6 million.
The world’s largest publicly traded organic food wholesaler, United Natural Foods, Inc. (Tii:UNFI), is steeped in the industry, supplying approximately 7,000 retailers in the United States and Canada with more than 6,000 individual products. Good news for the company’s shareholders came last week when United Natural Foods extended its primary wholesale grocery distribution relationship with Whole Foods Market, a subsidiary of Amazon.com, Inc. (Tii:AMZN), to September 27, 2027. In other good shareholder news, the company’s stock gained some 80% over the last 12 months.
Whether the organic foods boom continues throughout 2021 remains to be seen. Still, as long as consumers remain focused on healthy food options, there will be opportunities – during National Nutrition Month and beyond.