CPG Chatter

Last week, I had the privilege of hosting a webcast along with Clio Stewart of Clio and Company.   Clio is a long-time natural and organic industry insider, and she was kind enough to share her experiences, expertise, and opinions about the future of this channel.  She clearly has some pull in the industry, as the event  turned out to be one of our best attended webinars of the year.  The slides can be downloaded here and the full recorded transcript of the event can be found in the on-demand learning library.

As part of the session, we offered several poll questions on the key themes of the discussion, which I thought deserved some discussion.  The first topic centered on the continued growth of the natural and organic channel, despite the continued down economy.  When asked if this reflected a long-term behavioral shift by shoppers, nearly 71% indicated it is a long-term lifestyle decision.  Only 27% suspect the steep growth is over, and only 2% believe natural and organic is just a flash in the pan.  Given that our audience consisted of an even blend of folks coming from conventional grocery and natural and organic, I think it’s safe to say all agree natural and organic is here to stay.

We then shifted gears a bit to discuss the rising commodity costs which will likely have an impact in the grocery supply chain.  We are at an unusual point in time where consumers are not experiencing much inflation, while supplier costs are rising dramatically.  At some point, those costs are going to have to get absorbed somewhere in the food chain.  Our audience poll showed that almost 60% believe the consumer will eventually be stuck picking up the tab.  Another 27% thought the suppliers would have to eat the costs.  Notably, few thought retailers or wholesalers would pitch in – apparently the middle men are believed to be somewhat immune to the price increases.

Ironically, to this point the retailers such as Whole Foods have shouldered a lot of the burden of rising costs by improving operational efficiencies, but this likely won’t last too much longer. In fact, our last poll question asked when we will likely see prices increase at retail, and just over 80% believe it will happen at some point in 2011, and less than 20% expected prices to remain low until 2012 and beyond.

What was clear, however, from the session is that natural and organic is continuing to single-handedly support the fast moving consumer goods industry through the down economy.  As Clio pointed out, as more mainstream shoppers focus on health, the environment, and social consciousness this trend will likely continue.  The question remains, what impact will price increases have, and how long can this strong growth be sustained?  I expect we’ll have a good idea midway 2011.

Podcast with Rob and Clio