Health And Wellness Category Defies Economy

energy drinks powerade and gatoradeSkyrocketing food and fuel prices may be shaking up the way many mainstream consumers shop, but for those devoted to health and wellness products, money isn't much of a factor, according to a new study.

The Natural Marketing Institute says that retail sales within the U.S. consumer packaged goods health and wellness industry hit $102.8 billion in 2007, representing growth of 15% from 2006--and it doesn't seen signs of a pullback next year. NMI predicts that double-digit growth of the health and wellness marketplace will continue, with projected sales of $170 billion by 2012. In natural and organic food products alone, NMI is predicting a 17% increase in sales in 2008.

Other studies have found that mainstream consumers, many of whom had begun dabbling more extensively in organics before the current spike in food and gas prices, are retreating. IRI recently reported, for example, that in the early part of 2008, 52% of shoppers said they were buying fewer organic products.

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But these dabblers were never particularly committed, says NMI president Maryellen Molyneaux. Core customer groups, however, are deeply attached to their beliefs. "Look at how fond consumers have become of sports hydration products. Go to any soccer field in America and all you see are people drinking these beverages. We're even seeing kids buying them with their own money. That's not going away," she says. "People see these foods as providing a convenient way to get what they need, and they're willing to pay for it."

Functional foods and beverages continue to be the largest segment of the market. In 2007, NMI says consumers spent $38.6 billion on functional and fortified foods and beverages, an increase of 12%. "We're still predicting strong growth in functional foods, because you have a melding of high consumer need with an aging population, high consumer awareness, and even strong uptake on information about emerging nutrients," she adds.

NMI says that spending on vitamins and other supplements reached $21.7 million, a 7% gain; natural foods and beverages, $19 billion, up 4%; natural and organic personal care products, $7.8 billion, up 29%, and natural and organic general merchandise, hit $1.5 billion, up 21%.

But that's not to say there won't be changes in how various segments of the wellness market spend their money, she says. Consumers committed to sustainability, a group NMI calls LOHAS shoppers, aren't going to back away from the commitments they've made, especially around buying organic products. "But they may very well switch from a national brand to a store brand," she says, "and we think there is a lot of opportunity for private labels right now."

The same applies to wellness "devoteds," who make purchases based on avoiding what they perceive as toxins. "We know that people who buy organic milk do so because they are avoiding certain chemicals, so organic milk hitting $7 a gallon won't change their mind. They may decide to drink less of it, or cut back somewhere else. But they won't start drinking a product they believe is unhealthy."

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