Purposeful Ingredients Are Driving U.S. Retail Growth
Just like streaming has migrated from buzz term to common vernacular in the media industry, health and wellness in the retail space is no longer a trend that just a few know about. That’s not to say, however, that it’s no longer a strong lever that manufacturers and retailers can pull on the quest for growth. It’s just that as health and wellness is now a mainstream trend, the growth levers need to be that much more focused.
There are numerous ways consumers are varying their health and shopping routines as they seek to meet their individual goals. When we look across the landscape of food, however, sugar is a common ingredient that many consumers are particularly focused on. Consumers haven’t lost their sweet tooth, but the continued shift toward healthier eating—complemented by new product labeling requirements—has affected the U.S. sugar and sweetener market.
That’s where alternatives come in, and a number of natural sweeteners like stevia and monk fruit, are stepping in to satisfy consumer cravings. But these two ingredients weren’t always so prominent. In fact, their rise and growth trajectories is somewhat recent—much like the greater health and wellness trend. And today, we see notable growth among “no sugar added” products across the store.
So this begs the question: How can fast-moving consumer goods (FMCG) companies know if an ingredient has the potential to become a sales growth driver? What will be the next stevia, for example?
In an effort to help manufacturers and retailers zero in on the ingredients with the most retail promise, Nielsen and the New Hope Network’s NEXT data and insights team analyzed a set of 30 ingredients to assess their growth trajectories. To determine the growth potential of each ingredient, the team measured aspects of innovation, distribution, sales and consumer engagement. With that insight, standardized growth and breadth index metrics were created for each ingredient.
When complete, the ingredients were plotted on a grid according to their maturity and growth potential. For example, leaves from Guayusa, a species of holly tree, are currently in the innovation stage as a food ingredient. We also see Rhodiola Rosea, Yerba Matte, Moringa and algae in this “incubation” stage (e.g., the opposite of maturity). That said, however, each ingredient has a position on the path to maturity, or worse, its demise. Yerba Matte and algae, for example, are notably closer to maturity than Rhodiola Rosea and Guayusa. That’s because they are included in more products and categories and those products and categories have grown over a greater time period.
Much like we’ve seen stevia and monk fruit step in to help meet consumers’ desires for healthy sweeteners, several ingredients have come to market that are playing a role in Ayurvedic medicine, one of the world’s oldest holistic healing systems. For example, Turmeric, Ashwagandha and Moringa are superfoods that offer medicinal benefits because of their Ayurvedic principles.
While Ayurveda hasn’t gained mainstream awareness, several ingredients in this space have captured the attention of innovators and consumers alike. And as a result, Ayurveda is indirectly finding its way into innovators’ tool boxes and consumers’ shopping carts. For example, superfoods are increasingly touted and called out on product packaging, and those products are being incorporated into everyday meal occasions—because consumers are looking for them.
Among the ingredients with Ayurvedic benefits, turmeric is the most mature. Notably, it’s found in more than 100 products across the store, and the categories with those products are delivering strong sales gains. Across the store, sales of products with turmeric increased 3% in the year ended April 7, 2018.
Turmeric’s anti-inflammatory and antioxidant attributes have turned this medicinal spice into the industry’s hottest ingredient ($11 billion in sales in the year ended July 7, 2018), making it a safe bet for any FMCG player wanting to fit in. Compared with turmeric, ashwagandha and Moringa, which are also known for their Ayurvedic benefits, have some catching up to do, as they are still in their innovation stages.
Ashwagandha’s stress coping, enhanced brand function, and stable mood attributes holds burgeoning momentum, but breadth and growth lag behind Moringa’s emerging status. And Moringa is showing signs of ingredient prodigy, dethroning kale’s reign as the most nutrient dense green. As a result, its quickly finding its way into far more products.
As it stands today, Moringa is experiencing explosive growth, but it hasn’t been fully accepted by consumers the way turmeric has. Moringa, while appearing in a quickly growing number of products, only has a 3% U.S. household penetration rate. Turmeric, by comparison, has a 97% penetration rate. Given Americans’ continued exploration into deeper health and wellness areas, however, brands have an opportunity to capitalize on the benefits of both Moringa and ashwagandha through increased consumer awareness initiatives and product labeling.
Wherever you play within the store and whatever your focus product is, innovation continues to be the cornerstone of finding growth, yet ultimately, remains more complex than ever before. Exploring all of your options is overwhelming, but having a framework to assess what ingredient is going to resonate with consumers next can be your guide to finding growth in this health and wellness retail space.