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As the threat of recession looms for the U.S. economy, both conventional supermarket and mass merchandise retailers are likely to depend more on the natural and organic market as a source of traffic and sales. Many have already embraced this segment within their food and beverage aisles, and are seeing growth as a result. In fact, such products posted double-digit growth rates for the past four years, and upward trends continue.
While assortment opportunities are still to be found within the food set, however, the pressure is increasingly on margins and price points. As consumers reduce their discretionary spending, higher-priced food and beverage products are falling outside the reach of some budgets.
The natural and organic personal care segment is a different story, one of a market that remains underdeveloped at most conventional retailers. According to SPINS, a market research and consulting firm concentrating on the natural products industry, the natural and organic personal care segment is currently a $344 million opportunity within the food-drug-mass channels (FDM). The segment has grown at a compound annual rate of 17 percent since 2004.
This is especially intriguing given current growth of less than 5 percent for conventional personal care in the same stores. There remains significant upside to retailers, based on the share development of natural and organic personal care at 2 percent of sales of natural and organic within FDM, vs. 6 percent share of sales for all natural and organic products within FDM. Currently more than 20 brands are posting growth of over 20 percent and sales of over $1 million within FDM, offering plenty of opportunity for item assortment and differentiation. (See chart below for the 10 leading brands in the category.)
Here are the top 10 brands for natural and organic personal care, in terms of dollar sales, in the mainstream food-drug-mass channel (excludes Wal-Mart):
Tom's of Maine
Jason Natural Cosmetics
Kiss My Face