WholeFoods’ Natural Products Forecast 2017

We asked industry experts to shed some light on possible trends for the upcoming year.

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Just as our country is experiencing — and will continue to experience — a lot of changes in the next year, so is the natural products industry. One topic that is on everyone’s mind is
Donald Trump’s presidential victory. Up until this election, the U.S. has never had a business man, without a political background as our country’s leader. Americans are left guessing how this will impact us as a nation, while the industry is left wondering how this will affect us, with issues like trade deals, entitlement reform and our environment, being up for debate. One change that our nation seems to be making collectively is that we want to be healthier.

Consumers are making better choices, eating well, taking their supplements and are educating themselves on the latest natural product trends. In turn, industry is seeing a rise in organic and planted-based protein and probiotics, while the topic of cannabinol (CBD), and other cannabis-based products, is being explored more and more.

The Natural Products Industry in Donald Trump’s America
It is difficult to predict what changes President-elect Donald Trump and his administration will set forth over the next four years, but one thing we can count on is that he will be a very different commander in chief from President Obama. Donald Trump has publicly denounced global warming as a myth, and strongly opposes the Trans-Pacific Partnership (TPP), to name a few differences. In one way or another, these differences and changes will affect everyone in our nation, including the natural products industry. While we cannot predict the future, we can anticipate trends based on what we know. So what kind of impact will Donald Trump’s presidency have on the industry?

“This Presidential election was all about one thing: a mandate for change,” says Patricia Knight, senior political advisor, United Natural Products Alliance (UNPA), Salt Lake City, UT. “It is hard to tell if the vote was for President-elect Donald Trump, or a repudiation of President Barack Obama.” As fellow senior political advisor for UNPA, Peter Reinecke points out, “It is interesting to note that while voters pushed for change in the White House, they mostly re-elected the same Members of Congress. “This will undoubtedly create an atmospheric shift within Congress as well as the Executive Branch agencies. And while we now know who our next president will be, this decision has brought forth many more questions than answers.”

Reinecke notes that one big question will be how the White House and Congress will work together, particularly in the Senate where Democrats will be needed to pass most legislation. With a Republican president back in the white house, Knight anticipates leadership in Congress to believe they have “mandate to make systemic changes in how government operates that will last for a generation.” She points to issues like entitlement reform — such as Medicare and Medicaid — and a tax code re-write as examples. “Inevitably this will trickle down to policies that impact the natural foods industry,” she states.

To some, the outcome of the presidential election is seen as an opportunity to rectify policies within our system that have been broken for some time. “Over the past six years, the U.S. Food and Drug Administration (FDA) has twice tried to provide guidance on how and under what circumstances new dietary ingredients must be noticed to FDA prior to marketing. Many stakeholders, including leaders in Congress, have been concerned about the scope of the FDA drafts, believing them to exceed the intent of Congress and with parts that could restrict access to new products without any commensurate public health benefit,” says Reineke.

UNPA’s senior political advisors went on to say they encourage Americans to seek opportunities to promote public policy that promote wellness and help Americans adopt healthy habits. “It is perfectly in keep with a philosophy of promoting greater freedom of choice and personal responsibility. It also can play a major role in reducing costs,” adds Reineke. Knight points to the Dietary Supplement Health and Education Act (DSHEA) as validation that Americans do indeed value their freedom to use natural products like dietary supplements to maintain a healthy lifestyle.

This notion then sparks another question that is on the minds of every American: what will the Affordable Care Act be replaced with? While there is no way of knowing just yet, UNPA’s senior political advisors are hoping for one change that could be very beneficial to both consumers and suppliers. “For your customers, one thing that will be discussed is the possibility of making a change so that you could use your flexible spending account (FSA) or healthcare savings account for dietary supplement purchases,” says Knight. “It makes tremendous sense to allow people to use FSAs to help them purchase health-promoting products like supplements. We need to be encouraging, not discouraging, the adoption of healthy lifestyles.”

Some in the industry are also optimistic about having a “Chief Executive who is an executive” leading our nation, particularly, a “private sector executive who can be expected to advocate for pro-business, less-regulatory options which encourage economic growth, job building policies, and responsible spending,” says Knight. “This could accrue to the benefit of the natural foods industry and specifically your stores and customers. But there are many uncertainties,” adds Reinecke.

Throughout his campaign, the president-elect was very vocal about changing the way our country makes trade deals and his intent to create and produce more jobs within the U.S. and therefore limit international trading. “It appears our trade policies could shift dramatically to a more protectionist view,” says Knight, pointing to Trump’s “America First” campaign theme. “This could affect natural products in terms of costs and sourcing of imported products and ingredients and on a larger level in terms of international markets,” says Reinecke.

You Are What You Eat
While the organic movement still has a focus on clean, pesticide-free foods, a new extension seems to have developed recently: a growing trend toward the humane treatment of animals and the importance of the environment — for consumers who are not vegetarians or vegans. According to Maryellen Molyneaux, president and managing partner, Natural Marketing Institute, Harleysville, PA, non-vegan, non-vegetarian consumers are choosing plant-based products more frequently. Per Molyneaux’s findings, “25% of American consumers consider themselves occasional vegetarians and 30% indicate they eat a lot of vegetarian meals.”

Why are omnivores moving away from meat? According to Dan Lohman, CPSA,Organic & CPG strategic advisor for Category Management Solutions, Littleton, CO, “Consumers are looking for transparency when it comes to their foods…they want to know that their foods are not impacted by pesticides, herbacides and GMO’s.” Lohman goes on to say that consumers are placing a lot of importance on eating “as natural as nature intended it to be.” “Cows are not designed to eat hay. They are not designed to eat grains. They are designed to eat grass,” he points out. “Therefore, grass-fed beef is much better for us, because it is better for the gut.” This, he says is a big contributor to the organic movement. While the cost of organic foods may seem higher at first glance, it is actually more cost effective in the long run as it sustains a person far better.

Molyneaux, meanwhile, credits a few different influencers for the reasoning behind this movement. “In an effort to ‘clean up their diet’ consumers have been moving away from meat source options to lower their cholesterol, to lower calories and to control weight,” she explains. “These plant-based products are perceived as better-for-you simply because they are non-meat protein sources.” Secondly, if consumers enjoy the taste and do not experience digestive issues with plant-based proteins, they naturally become a more desirable choice. “Occasional vegetarians” could of course revert back to meat if new information — for example, better absorption from specific animal sources of protein —would prove meat protein to be a better choice.

Plant-based protein and bone broth protein are two other sub-trends that further assert the importance consumers place on protein consumption. “Consumers consider [protein] important for maintaining energy, steady blood sugar, weight management, muscle maintenance and muscle recovery,” says Molyneaux, adding, “We will see both trends continue to grow as they become more well-known and accepted by mainstream consumers.” Molyneaux points to data which indicates that over 40% of consumers say they used plant-based proteins recently, while the consumption of bone broth is only in the low double digits. While this may seem low, we should consider that these two trends are very new. Still, she predicts bone broth could penetrate the market faster, as “foodies consider it to be better tasting, an attribute that drives all purchases of food and beverage among all consumers.” Currently, whey and casein proteins are the preferred and recommended source of protein by sports enthusiasts as they support muscle strength, maintenance and recovery.

Lohman points out that while there is no definitive information that proves plant-based protein to be better than animal-based protein, there could be a correlation between older generations who were not as affected by food allergies and the chemical-free foods they were consuming. “It is my belief, and I think the belief of a lot of people engrained in the industry, that some of those adulterated products — adulterated could even mean the grain isn’t GMO or the water the crops are washed with isn’t clean — is contributing to today’s food allergies.” he says. Lohman refers to an analogy he frequently uses: pesticides are used to knock out the nervous system of an insect. If you spray pesticides on a product, why would we not assume that some of that would get into the product and in turn impact us?
These are the types of things consumers are now becoming privy to, and therefore influencing their decisions.

Eating and Drinking Your Supplements
Probiotics have seen tremendous growth in recent years. In 2015, the market was estimated at $33 million, and is expected to reach $50 million by 2021 (1). As a result, suppliers have responded by going beyond the traditional pill form by making functional beverages and foods containing probiotics as well. Consumers have been receptive and thus we’ve seen a surge in this new form of probiotic supplementation. “Innovation is first driven by consumer demand and consumers are demanding mainstream foods and beverages that are fortified with well-studied probiotic strains,” says Mike Bush, president of Ganeden, Mayfield Heights, OH, and executive board president of the International Probiotics Association (IPA). “The format that is fueling innovation isn’t the ingredient itself per se but rather the ability of the ingredient to be utilized in food and beverage products that appeal to consumers.”

Bush uses Ganeden’s probiotic—GanedenBC30—as an example. “The strain’s natural ability to withstand a variety of food and beverage manufacturing applications, has created opportunities to formulate probiotics into many new products and categories,” he says. “As innovative companies continue to formulate with our probiotic, we continue to see new formats developed in categories as diverse as HPP products, hot beverages, shelf stable foods, sports nutrition, straws, caps, etc. As manufacturers find new applications for our probiotic we anticipate continued growth of the probiotic food and beverage space.”

“In regards to different dosage forms and probiotic delivery systems, we have seen a surge in the dietary supplements, but also the food and beverage space with new ways to deliver live and efficacious probiotics,” says George Paraskevakos, executive director, IPA. Paraskevakos points to three sectors that are included in this growth: foods containing probiotics, like yogurt and kimchi, considered “market leaders,” sports bars and beverages that continue to be in demand and lastly, supplements, which are “undergoing rapids change in delivery system” (1).

According to Bush, consumer demand has gone beyond just wanting a product with health benefits — they are in fact now paying closer attention to labels. Paraskevakos says this can be attributed to the development of new research which says that probiotics are not just for those with digestive issues, but also for consumers looking for overall immune support. He credits digital media platforms for driving this point. “This means foods and beverage manufacturers must focus on the individual ingredients being used, with more emphasis on natural, organic, allergen-free and non-GMO certifications,” Bush says.

With consumer demand and supplier innovation on the same page, it seems that probiotics are only going to continue to grow from here on out.

Destigmatizing Cannabis
“Cannabidiol (CBD) has tremendous potential of becoming the next big thing in the health products industry. It has only begun to scratch the surface of what’s possible in terms of its healing properties,” says Lohman while pointing to potential benefits to people suffering from migraines, seizures, and inflammation. “Imagine having an ingredient that will give you energy and enhance your performance, improve memory, reduce inflammation, provide better sleep and regulate respiratory functions.” Sounds incredibly important for the industry, right? So what is the problem? According to Lohman, the big confusion lies within one small misconception: that CBD is the same thing as marijuana. “CBD is a portion of the hemp plant, but not the same as pot. It has a THC component that can be stripped away so that it will not make you high,” Lohman clarifies.  “The CBD oil is a lot more patented and beneficial because it is clean.” The misinformation about the way CBD is produced and concerns around its legalization are just two very important factors as to why this product isn’t reaching a broader audience.

Jay Jacobowitz, president and founder of Retail Insights, Brattleboro, VT and WholeFoods Magazine merchandising editor agrees, “The inconsistent legal status; legal in several states, illegal federally, means uncertainty. Broad adoption will depend on ironing this legal limbo out.”

Still, manufacturers like, Stuart Tomc, VP of Human Nutrition at CV Sciences, producers of PlusCBD Oil are optimistic that legalization will lead to public acceptance. “As people learn that you never needed to move to Colorado to get CBD and that hemp derived CBD products, unlike marijuana-derived CBD products, actually began as agricultural products. Then we will see even faster mainstream acceptance, adoption and placement. The demand will ultimately shape the narrative,” says Tomc.

“Drug companies will continue to study and isolate active molecules in the hemp plant that take the focus off one molecule such as CBD and shed more light on the importance of  the full-spectrum of phytocannabinoids and terpenes in the form of whole food complexes, an important differentiating factor between cannabinoid supplements, and RX drugs,” says Ian deQuieros, CEO, MetaCan, Edison, NJ. “Greater access to a variety of genetic material and research will allow for a new generation of products, while increased regulation will limit irresponsible companies the ability to operate in corners of the internet and in the vacuum of a consistent regulatory policy.”

But before there is legalization, there needs to be education and overall acceptance. “Access to trustworthy information as well as reliable and safe products are paramount. Many consumer testimonials are further driving progress alongside growing research,” says deQuieros. Tomc points to hundreds of studies and clinical trials as well as the rapid increase in sales and product availability in just a few years as proof that despite the topic being taboo to some, we are still seeing progress being made. “Demand is increasing in conjunction with growing awareness of the potential benefits of cannabinoids.” Indeed, the stigma on CBD is progressing, but Tomc says we should consider that CBD research is still in its early phases and large randomized studies are the answer for mainstream acceptance. Early adopters, he says, are beginning to report human health benefits that will demand further research. “Hemp-based CBD is a novel supplement that with further study could indeed have a profound effect on improving human health.“

When it comes to retailers and consumers, deQuieros says, “The wave of awareness of the therapeutic benefits of hemp-derived Phytocannabinoids has been a result of widespread media coverage and a recent burst of scientific research extolling the potential benefits of the plant. ”All of this exposure, he asserts, has resulted in consumers all of over the world demanding cannabinoid products from many that had never considered trying a cannabinoid product before. But because of the aforementioned uncertainties, deQuieros says retailers want to be sure that they are working with trusted and reputable companies, which create  legal, consistent and safe formulations, in addition to having access to the proper training and sales support so that their staff is then fully prepared to answer the many consumer questions around cannabinoids.

So what does the future hold for CBD? According to deQuieros, “Brands will emerge that are trusted and dependable as consumers become increasingly aware of the array of tangible benefits supporting the Endocannabinoid System, which we call the ‘Master Adaptogenic System,’ of the body for its homeostatic, balancing affects.” deQuieros also promises safe and consistent products. “Products that are backed by clinical research, feature replicable spectrums of synergistic compounds found in hemp and other botanicals while incorporating innovative and advanced delivery methods are the future of this space.”

Tomc, meanwhile predicts CBD will experience mainstream acceptance sooner than we think. “We will have an entirely new category of hemp-derived remedies that will forever change the face of our industry. Hemp derived products, including CBD, are among the safest and most effective natural answers we have. As the word gets out, supply may not be able to keep pace with demand, it’s going to be bigger than any OZ effect and it’s going to stick.” WF

References
1.Prebiotics Probiotics 2016, http://www.teknoscienze.com/Contents/
Riviste/Sfogliatore/PREBIOTICS-PROBIOTICS_2016/index.html#1/z, accessed on Dec. 8, 2016

Published in WholeFoods Magazine January 2017

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