Growth is Good: New Natural Products Industry Data Released

There is great new industry data on the natural products industry available in the June 2009 Natural Foods Merchandiser. You can download the industry data overview, by clicking here.

Some interesting highlights:

• Natural products were a $68 billion category in 2008 -- up $6 Billion (around 10%) from 2007.

• People are finally beginning to understand (in a big way) the need for Vitamin D -- sales in 2008 were up 94%. There has been a lot published in the science about the many beneficial effects of Vitamin D over the past few years and it is taking hold. I take 2000 IU / day religiously. I live in Maine, maybe I should be taking 20,000?

• Sales via the internet were up 22% to $1.4B. Still a small overall part, but great growth. And for companies that can sell direct -- nice margin impacts.

• The anti-aging and personal care category was flat.

• Beer was up 11%, with 22% of the category now organic. A shout out to my friend Jon Cadoux from Peak Organic (also based in Portland, Maine) -- Peak makes some great organic beer. US craft brewing is a $6.3 billion industry, up 10.5% over last year. I'm also a big fan of Geary's, which is also based in the craft brewing capital of the world, Portland, Maine. Maybe that's also why we need so much Vitamin D....we're inside drinking beer too much....

• NFM states that private label sales were - up only 5% and forecasts 7% growth in 2009. This is much smaller than I thought, given the economy and what I've seen elsewhere. Milk makes up 31% of natural private label sales with other dairy accounting for 29%. I guess a cow is a cow -- that's 60% of all natural private label sales. Private label salty snacks were a mere 2% of overall private label sales. Despite what some people say, brands still matter immensely.

• Energy bar sales continue to grow: up to $61 million from $57 in 2007. Although Clif Bara and Lara Bars are #1 and #2 respectively in the category, I'm a big fan of Kind bars (recently invested in by VMG Partners, a private equity/venture capital firm in the Bay Area) and a newer entrant, Kardea. Kardea's bars are very interesting. They taste great, and through plant sterols, have beneficial health effects. Functional foods are very much the path of the future.

• Gluten Free was up an amazing 28% to $1.6 billion. I can believe this easily. We have turned into a gluten free house. We don't have a celiac in the house, but someone in our family has a thyroid problem directly related to the intake of gluten. I meet a new person every week that is gluten free, it seems. One of our portfolio companies, The Rustic Crust, has an amazing Gluten Free Pizza Crust. Check out Rustic's new profile on Facebook and sign up to get a coupon. You can also order Rustic's crusts direct via their website.

This is a great, growth industry. Nice to avoid the doom and gloom out there everywhere else.