Organic: the Ultimate Clean Label Category Growth Driver for Natural Brands

Organic products by definition are clean label, and consumers are buying more organic more than they are natural and non-GMO (genetically modified organism) products. Brands can capitalize on these important trends to grow sales and compete more effectively.

Daniel Lohman, Organic Industry Strategic Advisor

March 28, 2017

4 Min Read
Organic: the Ultimate Clean Label Category Growth Driver for Natural Brands

Organic products are fueling sustained sales growth across most every category, leading both natural and non-GMO (genetically modified organism) sales in many cases. They represent perhaps the single best opportunity for brands to drive profitable growth for themselves and their retail partners.

Total U.S. food sales (all outlets) were up only 1.9 percent in 2015 while organic sales were up 16.9 percent, according to Nielsen Answers (ending Oct. 24, 2015, total us food, drug, mass, Wal-Mart, Sam’s, BJ’s, dollar stores and convenience). Organic products represent only 3.1 percent of total food sales. Natural product sales were up 11 percent and represent 7.7 percent of total food sales. Non-GMO sales were up 15.8 percent and represent 4 percent of total food sales. This is great news for organic brands and their loyal shoppers.

Consumers want healthy, clean label products that they can trust and confidently feed to their families. A growing number of shoppers place quality over price. This is especially true for organic products. Shoppers look to organic products to improve their health and wellness.

Organic products by definition are clean label. Organic products contain USDA-certified organic ingredients. Organic ingredients are automatically free of GMOs, pesticides, herbicides, man-made and synthetic chemicals, etc. They are as nature intended them to be. These trends are top of mind for consumers and are fueling health and wellness trends. They are leading category growth across every channel.

Brands can capitalize on these important trends to grow sales and compete more effectively.

Retailers have three primary objectives:

  1. To grow their loyal shopper base (the number of consumers who shop their stores). This can be accomplished by promotions and product assortments that meets the needs of their shopper base.

  2. To encourage shoppers to make most or all their purchases in their stores (their monthly shopping list). Shoppers have myriad choices. This step is critical to helping the retailer compete and grow in their market.

  3. To increase the size and value of their shopper’s market basket (the items in their shopping basket at checkout). This is accomplished by inviting shoppers to trade up to more expensive items, for example, organic milk as opposed to non-organic milk.

Retailers, generically speaking, don’t make and sell their own products—they sell products made by other companies. Retailers sell shelf space, "product real-estate" in the form of product assortments by category. They make money based on how well they manage that "real-estate" to best meet the needs and wants of the consumers in their community/market. This includes getting a fair price for the goods and services they sell. This means that retailers rely heavily on quality products that they can sell for a fair price.

Retailers can't possibly be experts in every category and in every item they sell. This creates a unique opportunity for organic brands to help educate both retailers and their shoppers. Organic brands have a tremendous opportunity here to help the retailer develop health-focused category schematics and promotions that leverage their product’s strengths, helping their retailer partners grow sustainable category sales while boosting consumer loyalty in their stores. This is a win-win for both the brand and the retailer.

The organic shopper is more valuable to retailers because they have the highest market basket. Organic shoppers who purchase organic bread are more likely to also purchase organic spreads, meats and cheeses for making sandwiches. The organic shopper carefully reads labels to search out the most transparent and authentic ingredients.

Organic brands have leverage with retailers. Savvy retailers should not treat organic brands as an ATM machine. Everything is negotiable. Retailers need those brands and much as the brands need them. Brand owners are the category experts; they know what health-focused consumers want and how to best satisfy their needs.

Organic brands need to leverage their category and shopper expertise to help the retailer drive sales across their entire store, one category at a time. This is where true category management comes in. True category management includes the best practice strategies to help organic brands effectively merchandise, price and promote the products consumers want.

Organic brands need to provide actionable insights to their retailer partners that include effective strategies that avoid out-of-stocks while maximizing every selling opportunity. Organic brands should also leverage their marketing efforts to help drive enthusiasm and shopper traffic to store shelves.

About the Author(s)

Daniel Lohman

Organic Industry Strategic Advisor, CMS4CPG (Category Management Solutions)

Daniel Lohman is an expert in the organic and natural CPG industry. With more than 20 years experience, he is certified at the highest level of category management proficiency: Certified Professional Strategic Advisor.   

Focused on leveling the playing field between natural and conventional CPG manufacturers and retailers, Lohman is passionate about helping them get more out of their available resources. He believes that natural and organic CPG companies deserve to benefit from the same practices and technologies as their conventional counterparts—without sacrificing what makes the natural channel distinctive. Lohman is a trusted and respected member of the natural community, a Natural Products Expo speaker, and a writer for Supermarket NewsNatural Food Merchandiser and newhope360. He is a staunch advocate, passionate about bringing true category management to the organic and natural channel and offers a unique and fresh perspective on the industry. 

Responsible for growing sales and teaching Category Management theory and principals while at Kimberly-Clark, Unilever and SPINS, Daniel has worked with and supported hundreds of natural and conventional manufacturers, retailers and brokers. His extensive knowledge and expertise extends beyond that of a traditional Category Manager and has earned him recognition and a reputation throughout the industry as a thought leader. He has mentored Category Managers, is a trainer, speaker and expert panelist for the Category Management Knowledge Group. 

Lohman is internationally published and the author of Strategic Solutions And Guide To Grow Your Natural Business and the What You Need To Know blog.

Category Management Solutions (CMS4CPG) provides innovative strategic solutions for natural and organic CPG companies interested in gaining a significant competitive advantage. CMS4CPG provides companies with actionable insights to assist them better connect with consumers, helping them "win-at-shelf." 

Follow Lohman on TwitterLinkedIn and Facebook. Lohman lives in Colorado, is a member of Naturally Boulder and can be reached at [email protected] or 303-748-3273. 

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