As distribution is moving towards online retailing and home delivery schemes, the organic and sustainable products market enters a new growth phase, according to Ecovia Intelligence (formerly Organic Monitor).
According to the market research firm, Amazon’s purchase of Whole Foods Market marks the beginning of the new era. “Sustainable foods and natural cosmetics were initially introduced in health and natural food retailers, with distribution expanding to the mass market in the last two decades. The next spurt of growth is envisaged to come from mobile apps linked to delivery services,” finds Ecovia Intelligence.
With the ubiquitous use of mobile devices and growing influence of Millennials, the next growth phase for sustainable products is likely to be with online retailing. According to Ecovia most demand for organic and sustainable products is coming from Millennials. They are the fastest growing buyers of organic foods in the US, generating over half of total sales. They are also digital consumers, buying 40% of their groceries online. Research also shows that 58% of Millennials say they will shop at a store because of their private label ranges.
The question is how will brands compete in the digital marketplace? Whole Foods Market is already showing signs of moving away from small producers, as it focuses on private labels and high volume items. The future maybe digital, however will it be sustainable for small producers?
However, while Amazon is capitalizing on these trends in North America, Ecovia Intelligence believes the company will find it more difficult to build the same footprint in Europe. The organic food and natural cosmetic markets are highly fragmented, with large retailers having the most successful private labels. Whole Foods Market has just seven stores in the UK. Whilst there are over 20 chains of organic food shops in Europe, none have a regional presence. Amazon would have to acquire and integrate several retail chains if it is to have a similar impact in Europe.