Business Time

Growth to fuel ­innovation in ­natural products sector

Wednesday 03 May 2017, 10:17AM
Growth to fuel ­innovation in ­natural products sectorAmarjit Sahota, the president of Ecovia Intelligence

The natural products business is big business, and it's only going to get bigger, according to a UK market researcher.

Amarjit Sahota, the president of Ecovia Intelligence, spoke at the recent Natural Products NZ Summit about future trends and the general state of the natural products sector around the world. 

Mr Sahota, whose company has been tracking ethical and sustainable product industries since 2001,  was a keynote speaker at the summit in Nelson.

Across the world, the natural products sector has moved firmly into the mainstream, he told the assembled crowd.

The organic food market alone has grown to be worth US$82 billion globally since the 1990s, when it was a niche market mostly dominated by small family-owned health food businesses.

The New Zealand market, and even our major trading partner China, are only a very small part of this whole, he says.

In fact, 92% of all sales globally are concentrated in the European Union and North America, with everywhere else only buying 8% of the organic food sold.

This doesn't mean New Zealand businesses should give up on their dreams of making it big in Asia and attempt to make inroads into the competitive markets of Europe or the USA instead, Mr Sahota says.

China and India are expected to grow to make up 15% of all global organic food sales as their middle classes expand.

"New Zealand is in a good place to capitalise on the boom in Asia in the long term," Mr Sahota says.

The market drivers behind the sector's impressive growth are very different in various parts of the world. 

 "Consumers are becoming more informed about products," Mr Sahota says.

Increasingly, certification labels indicating products really are environmentally friendly are becoming important. Currently, certifying a product is organic is the dominant label used by businesses, followed by a fair trade certification.

This is only going to increase and more products these days are starting to sport multiple organic labels, he says.

"How will we prevent label fatigue?" Mr Sahota asks. "Will fear-based marketing continue? Is it the way forward?"

Unfortunately, many companies are buying into this trend by simply creating their own meaningless, or even fraudulent, certification labels.

Currently, it is very difficult to tell these apart from genuine certifications.

Asian governments do not appear to have an appetite to do anything to address this practice, so this can be a big problem for New Zealand companies wanting to sell in that market, Mr Sahota says.

"It's a big challenge for New Zealand; you will be competing with brands that have false logos," he says.

Mr Sahota predicts the sector will continue expanding into the mainstream over the next five to 20 years, although there are likely to be some changes on the horizon.

For instance, we should expect products to use increasingly novel proteins instead of traditional meats in response to the unsustainability of current proteins.

Mr Sahota expects we might be eating proteins from insects and algae regularly in years to come.

Mobile technology may also become increasingly prevalent, and soon customers will be able to scan a barcode on products and be able to find out as much, or as little, information about it and where it came from using their mobile device.

In keeping with this trend, online retailers are also expected to become even more commonplace.

Changes to packaging are also predicted. Mr Sahota talks about future smart packaging that might one day change colour to represent the freshness of the product it ­contains. Other companies are already moving to green packaging that is easily recyclable or even getting rid of packaging entirely.

He points to a company that is using a laser to imprint its labels directly onto its organic vegetables, and another company that has produced a package that contains seeds and can be planted directly in the garden.

"It's not just about having safer products and reducing business waste. We also need to change consumer behaviours that impact on the environment," Mr Sahota says.

Some companies overseas are already running advertising campaigns aimed at modifying customer behaviour. Mr Sahota points to Bacardi's Champions Drink Responsibly campaign featuring tennis star Raphael Nadal, or the clothing brand Patagonia's hugely successful marketing campaign, which told customers not to buy its newly released jacket due to its environmental impact.              JCT



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