Natural Products Expo East - Record Numbers of Suppliers Exhibit at Expo
Growing Demand for Natural/Organic
The record attendance at Natural Products Expo East in Baltimore Sept. 17-20 reflected the growing demand for natural and organic products. More than 1,330 exhibitors -- up about 10% from 2013 -- displayed their products, including more than 400 first-time participants, according to Expo East officials. One vendor said, “For a while after the financial crisis, this show was slow. This year, the energy is back. There’s a vibrancy and imaginative new products I haven’t seen for a while -- a lot of new vendors. And that’s even though the barriers to entry -- the upfront capital requirements -- are much higher than they were a few years ago.”
Hot trends in natural/organic products included raw, sprouted and fermented foods, cold-pressed juices, high-protein foods, cold-brewed coffee, and grass-fed meats. Sources said frozen organic fruits and vegetables gained ground with improved quality, and organic nut butters in a variety of flavors offer the high protein that consumers are seeking. Functional foods, such as cactus water that contains antioxidants and flavonoids to reduce inflammation, were also popular.
Consumers Seek Increased Transparency
Most products at Expo East were copiously labeled -- whether as certified organic, gluten-free or, increasingly, non-GMO -- not to mention dairy-free, nut-free or BPA-free. “Greater transparency is what shoppers want. It’s amazing how important that has become, especially on the West Coast,” one national vendor said.
One vendor's sign shows GMO certification is in process (OTR Global photo)
Many more vendors at Expo featured their badge of non-GMO certification than in previous years, while other posted signs that their certification approval was “in process.” One supplier said, “It’s becoming as important -- or even more so -- than organic certification." Another vendor said, “It took us 18 months to get certification, but fortunately, we got it before the show. It was frustrating that it took so long because right now, it’s what everyone here wants.” As Whole Foods Markets Inc. plans to implement GMO or non-GMO labeling on all products it sells in the next few years, suppliers have even more incentive to get certification. One said the certification is difficult, commenting, “We all have to do this now because of Whole Foods. But it starts to feel like it is a process for the sake of a process.”
Gluten-Free Here to Stay
Another prevalent trend was gluten-free products, which sources said are being consumed by not only those with celiac disease but also consumers who believe over-hybridized wheat is an issue. “I don’t think gluten-free is going to keep growing at this rate, but it has become the new paradigm,” one supplier of gluten-free frozen products said. Another said, “It’s here to stay.”
The staying power of gluten-free is evidence by the entry of major players into the space, such as Nestle SA’s Osem USA division, which had its Gratify line of gluten-free snacks prominently on display. "We have the ability to put out a better product at a better price. Everything gluten-free is so expensive," a representative said, adding that Gratify will roll out its covered pretzels and other snacks at retail in 4Q14 with retail prices about $3.99-$4.99 per bag. Boulder Brands Inc. also had new gluten-free items on display, including cookies and pretzels, under its Udi’s brand.
Increased Competition May Affect Pricing
Suppliers and others agreed affordability of natural/organic products can be an issue for consumers, and some said increased competition -- both between retailers and between suppliers -- may pull pricing down. “That [high pricing] is changing as there is more supply and demand,” one buyer said. Some noted Whole Foods’ campaign to change its “Whole Paycheck” image has in recent weeks resulted in more aggressive promotions than previously, such as 10% off all 365 private-label items in one region and 50% off all packaged deli meat in another. “They seem to be taking a page from the Sprouts [Farmers Markets Inc.’s] playbook. It looks like they’re going to give sharper discounts to get [shoppers’] attention,” one supplier said. Another supplier said, “Whole Foods is more likely to meet you halfway on doing promotions these days.”
Suppliers said much of their growth recently has come from more conventional grocers, including The Kroger Co., Safeway Inc., Costco Wholesale Corp. and others, as well as online marketers, such as Amazon.com Inc. Indeed, one source said his organic product line is sold entirely through conventional retailers, such as Costco. Another said, “I think the conventional grocers are changing. They are growing the [natural, organic and gluten-free] sections dramatically.”
ADDITIONAL QUOTES
"Do you want to pay less for your food now, and more for health care later, or vice versa?"
“That’s why [Whole Foods is] not getting as many transitional shoppers as they used to; people have more alternatives.”
“[Our product] is $6.49 at Whole Foods, which I think is insane. It is $5.25 at independent markets. Whole Foods is too high in price."
“[AmazonFresh] seems to be happy with their growth in Los Angeles and San Francisco.”
“I saw one of their [AmazonFresh] trucks in Park Slope [Brooklyn]. Clearly, they’re about to start it up.”
“Protein and grass-fed -- the demand for products with those labels is just huge this year and will keep growing. Grass-fed has just really taken off. And any vendor who’s featuring protein, like all these new snacks with protein, is what's getting snapped up.”
“[Non-GMO Project certification] not only has legs, it’s now set in concrete.”
CONFERENCE DETAILS
WHAT: Natural Products Expo East
WHEN: Sept. 17-20
WHERE: Baltimore, MD
WHO: About 24,000 industry professionals, including suppliers, distributors, and retail and wholesale buyers
