IRI and SPINS: Natural Resonates Now and Beyond the Pandemic

Although some consumers have turned to larger conventional food brands during the COVID-19 pandemic, many still shop with wellness in mind, creating even more opportunity ahead for natural brands. According to a report co-authored by data firms IRI and SPINS, natural product sales are not only higher than last year, but in some cases are even outperforming their conventional counterparts.

The report found that health concerns due to the pandemic pushed more consumers toward natural food products in March, April and May. The Natural Products Industry (NPI), as defined by SPINS, comprised 8.5% of total store sales for the week ending May 17. Additionally for that week, natural products dollar sales grew 21%, while conventional grew 15%.

“Natural buyers did not abandon the products they felt best met their needs,” Steve Ramsey, IRI’s EVP and practice leader, said in a webinar last week.

During the initial stock-up period in mid-March, natural product sales soared as more consumers prioritized self-care, Ramsey noted. Throughout the pandemic, dedicated natural consumers also tried new natural products, more carefully studying labels and certifications to avoid certain ingredients as they paid more attention to their own health and wellness.

But where consumers shop for natural products has shifted rapidly. The force of e-commerce was substantial even after the stock-up period, Ramsey said. For the week ending May 17, online trips per buyer grew over 30% year-over-year for natural products. During March stock-up trips, spending on natural products increased across all consumer segments; though slower, spending still remained high during May as well. Moving forward, brands should focus on keeping these new shoppers engaged, Ramsey said.

However, Ramsey said, the struggling economy is impacting pricing, which could influence consumer behavior. The average price for natural edible products increased about 10% over last year, owing to higher base prices and reduced promotional activity, which was consistent with conventional prices, Ramsey noted.

Simultaneously, private label products saw growth similar to previous recessions, and with consumers’ budgets constrained, the trend will likely continue. For example, private label frozen breakfast food grew 152% in the eight weeks ending May 17.

“With the reality of 13% unemployment and millions more financially stressed, inflation at this level cannot be sustained near-term or long-term without significant recovery very rapidly,” Ramsey said.

Along with the increase in private label purchases, IRI and SPINS forecast that budget-minded consumers will seek sale items and larger package sizes to make the most of their dollars. However, the report notes that overall interest in natural products remains high as many consumers are focusing on staying healthy. In the supplement category, immunity-boosting and anxiety-reducing supplements saw an uptick, especially those with zinc, elderberry, mushrooms, melatonin and Chinese herbs. Moving forward, food and beverage products that offer these functions will be in even higher demand, Kathryn Peters, SPINS’ EVP of business development, said.

“In the time of a pandemic without [an] appropriate vaccine, [the] body is the first line of defense,” she said. “It’s really critical to dig deeper and understand the varying dynamics that make up personal choice; it’s not one-size-fits-all.”

With boosting health in mind, consumers following specific diets or lifestyles remained steady during the pandemic, Peters noted. In particular, plant-based products saw 40% year-over-year dollar growth for the four weeks ending May 17, while paleo and vegan items saw 199% and 120% category growth, respectively.

Even as consumers seeked comfort foods, many chose healthier alternatives, with paleo and plant-based baking mixes up 75% and 80%, respectively, for the four weeks ending May 17. Mixes with alternative sugars also saw traction that will continue, Peters said.

Following those trends, “indispensable categories” during the pandemic include baking mixes and ingredients and refrigerated plant-based meat alternatives, according to the report. Overall, 2 million new consumers spent $41 million on plant-based meat products during the pandemic. For the four weeks ending April 19, a third of plant-based meat purchases were from new households.

Other “necessity categories” (high year-over-year replenishment gains, but low stockpiling gains) during the pandemic included seasonings, salsas and dips and both dairy-based and plant-based cheese. Ready-to-drink tea and coffee, refrigerated pasta and baby food all fell under “passive categories” as consumers sheltered in place.

To maintain the uptick in natural product sales, Peters encouraged brands to strive to understand consumer priorities around taste, transparency, interest in health and plant-based eating, along with price and pack sizes. Specifically, brands should focus on targeted, high-quality messaging, aligning in-store marketing and promotions, and analyzing retail markets and geographies. Personalization and ingredient-based innovation is important, though smaller brands may find more barriers to entry in the current climate.