Natural Gains : Record Health Food Sales Projected

The health food industry, once a countercultural institution, is courting mainstream respectability in hopes of expanding its appeal to a larger segment of the public.

The change was particularly evident at the National Nutritional Foods Assn.’s annual convention here, where discussions of mass-marketing techniques were more in evidence than holistic evangelism.

More than 7,000 people attended the five-day gathering, which featured seminars and exhibits, at the Las Vegas Hilton.

The convention was cheered by the release of a trade journal survey indicating that industrywide sales in 1988 were up 9.9% to $3.55 billion annually. (Total grocery sales in this country are estimated at $239 billion a year.) The report, prepared by Natural Foods Merchandiser, also projects that 1989 will bring record sales for health foods and related items.

“Our products are more popular than ever before,” said Burton Kallman, science and technology director for the National Nutritional Foods Assn. “People are taking a strong interest in natural foods.”

The success is fueled by external factors that complement some of the industry’s central themes: organic produce, exotic whole grains and vitamin supplements.

“While the national media’s attention on cholesterol, food safety and organic foods has brought new customers into natural food stores . . . these stores and their suppliers were able to respond skillfully, assuring that many of these customers would keep coming back,” the journal stated.

The debate over farm chemicals in foods, resulting from an environmental group’s claim that pesticide residues pose an elevated cancer risk to children, played to the natural food industry’s strength.

“The Alar-in-apples controversy has been fantastic for us,” said Patricia Heydlauff, National Nutritional Foods Assn.’s executive director. “Our members have always sold organic apples and other organic produce. We’ve also been selling food without artificial additives or preservatives for years.”

According to veteran observers of the health food industry, the manufacturers and retailers also now embrace, rather than scorn, the sales and marketing tactics of more conventional food firms. The change has made the natural food stores more “professional and comfortable” to the general public, according to the magazine.

“The solid growth and maturation of the industry during the past two years set the table for this year’s ‘gang-buster’ sales boom,” Natural Foods Merchandizer reported.

Another reason for natural foods’ popularity is that some of its best selling items--organic foods, dietary supplements and bran cereals--are also being sold by supermarkets.

For instance, about 20%, or $679 million, of all natural products sales are being generated in supermarkets rather than in the smaller stores that form the bulk of the industry.

“If you are very careful then you could fill a shopping basket with nutritious products at a supermarket,” Kallman said. “But it’s much easier to do so at a health food store.”

Yet another report released at the convention, this one by Whole Foods magazine, indicated that the average health food consumer is both affluent and well-educated.

The magazine surveyed more than 500 patrons of health food stores in late May and early June and found that the shoppers’ average household income was $39,966. Of those queried, 64.9% were also college graduates.

When given an opportunity to list why they shopped at these particular stores, 67% of the respondents cited food quality. The survey also polled shoppers on their food purchases. The most popular items included whole grains, cereal, herb tea, bottled water, juice, bulk food and produce.

“The nice thing about our business is that most of the food tastes pretty good. It didn’t several years ago,” Ian J. Goldmunz, Whole Foods advertising sales manager, said in a speech to the convention.

Goldmunz also talked about a sensitive subject: the practice of making exaggerated claims about the benefits of various foods, vitamins and other health aids.

While privately applauding the U.S. Food and Drug Administration’s crackdown on some segments of the industry, Goldmunz said that the natural food store operator should not be intimidated by the federal agency.

“The FDA is doing a good job of getting harmful products off the shelf,” he said. “I think its terrible that people were selling all these hair-growth formulas that didn’t work . . . But fear should not be the motivating factor in this industry.”

The National Nutritional Foods Assn. also announced at the convention that it will urge its 3,500 members to regularly donate food and health products to hunger relief agencies. Among those who said they will make contributions to Second Harvest, a national food banking system, were General Nutrition Centers, Alta-Dena Certified Dairy and Health Valley Foods Co.