Consumer preference for natural, organic boosts sales growth

Move over nature-inspired products. Consumer demand for products with truly natural ingredients is heating up — fast.

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While products formulated with a high proportion of synthetic ingredients dominate the global natural personal care market — accounting for nearly 75% of the total market share in 2014 — truly natural positioning is gaining importance with consumers, manufacturers and retailers, according to global consulting and research firm Kline & Co.



Sales of the global natural personal care market increased by nearly 10% in 2014, Kline & Co. noted.



Responding to the trend, suppliers have increasingly been reformulating with a higher proportion of truly natural ingredients in their products. They also are becoming more transparent in their communication about the quality level of ingredients, certification and the company’s values.



“These reformulations are the next natural step for companies aiming to establish strong natural concepts with high importance given to the trust between the brand and the consumers. Moving upward in the natural ratings is a great way for natural brands to gain acceptance from a larger consumer base in the mid-to long-term,” said Agnieszka Saintemarie, project manager, consumer products at Kline & Co., when announcing the findings.



Meanwhile, James Russo, Nielsen’s SVP global consumer insights, stated during the recent “The Beauty of Creativity” webinar that natural and organic beauty products have experienced a four-year compound average growth rate of 24%. That’s pretty impressive when you compare it with total U.S. beauty, which posted a four-year compound average growth rate of just 2.7%.



And that this isn’t just a beauty dynamic — it’s a consumer dynamic that is playing out across all categories.



Further underscoring the point, Target executives stated during the company’s fourth-quarter conference call in February that nearly every household that shops at Target buys natural and organic products, and more than half of them indicate that they’d prefer to purchase natural and organic products when available. While overall sales in the natural and organic space are rapidly growing, Target executives said that in-store sales of such products are growing even faster — outpacing the industry by 50% in 2014.



Executives said that its “Made to Matter — Handpicked by Target” collection of natural, organic and sustainable brands remains one of the greatest examples of Target’s focus on wellness. In 2014, sales of the brands within the Made to Matter collection grew twice as fast at Target compared with elsewhere in the market, according to executives. Looking to 2015, Target will unveil a refreshed “Made to Matter — Handpicked by Target” collection, which will double in size compared with last year to offer more than 200 new and exclusive products from 31 brands.



While natural and organic products are often pricier, consumers are proving they are willing to invest, according to Kline & Co. — if the products deliver effective results.