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Many products with on-pack wellness claims are
outpacing overall retail growth.

Across Nielsen-measured retail channels and categories, Nielsen Wellness Track reports products labeled organic achieved a four-year compounded dollar growth rate (CAGR) of 14% — considerably higher than the 3% sales growth across the store the past 52 weeks. But several more specific wellness claims enjoyed strong growth as well. In fact, claims driving the biggest growth on a long-term (four-year CAGR) and short-term (latest 52 weeks) basis were up between 47% and 152% and 39% and 92%, respectively.  Can you think of a better way to demonstrate the opportunity around health and wellness in our industry?

Halechart032016No. 1 on the list of top-selling wellness claims was kosher, which delivered $174 billion in annual sales during the 52 weeks ended Oct. 24. However, four other wellness claims — natural presence, soy, fat presence, and vitamins/minerals — delivered annual sales in excess of $54 billion.
Among the fastest-growing top-tier claims in the short-term (year-to-year sales growth), 22 of the 64 drove double-digit growth. Over the long-term (four-year CAGR), 19 of 64 drove double-digit growth.
Gluten-free wellness claims yielded $49.6 billion in annual sales and delivered strong short- (+15.4%) and long-term (+16.2%) growth. Other claims delivering double-digit short- and long-term growth included natural, no artificial color/flavor, GMO-free, organic, and hormone/antibiotic-free.
Six third-tier wellness claims (corn-free, quinoa, grain-free, chia, amaranth, and kamut) were among the top five short- and/or long-term growth claims. Low glycemic and spelt also drove strong double-digit short- and long-term growth. However, exce

pt for low-glycemic and corn-free, all had annual sales below $500 million.
In terms of absolute dollar sales growth over the long term, kosher leads the way: + $29.9 billion between 2011 and 2015. The next five biggest long-term gainers (gluten-free, natural presence, soy, natural, and no artificial colors/flavors) grew between $22.4 billion and $11.2 billion. All 10 wellness claims on the list of top long-term growth drivers all grew in the short-term, too.
Kosher (+$6.7 billion) and gluten-free (+$6.6 billion) were also No. 1 and 2 in terms of the greatest short-term absolute dollar sales growth. The remaining top 10 enjoyed gains between $1.7 billion (hormone/antibiotic-free) and $4.3 billion (natural presence).
Most wellness claims with high reach/household penetration also exhibit high buying rates, and most of the top-selling wellness claims fell into this group. To drive growth, leverage recipes and promotions to stimulate multiple unit or larger package purchases of these claims.
Purchase size or per trip dollar spend was greatest for claims with lower reach and/or less frequent buying — or among products for more specialized needs (eye health, diabetes, non-food allergy and hypertension). Leverage advertising, usage/recipe ideas, and coupons to broaden reach and/or stimulate more frequent buying of these claims.
Except for low- versus high-income households, Nielsen measures fairly equal or universal appeal across a number of popular wellness claims. The exceptions: high fructose corn syrup-free, hormone/antibiotic-free, and organic claims have above-average appeal among households headed by Millennials and omega 3-type and organic claims have above-average appeal in Hispanic households.
In terms of income, sales of all popular wellness claims are low among households with incomes under $20,000. The question is: Are low-income households unable to afford healthy, is healthy simply less important to low- income households or are retailers serving lower-income areas less likely to carry a healthy assortment? At the other end of the spectrum, high income is a strong differentiator for sales of all popular claims except HFCS-free and kosher. How are you helping your retail partners align assortment and merchandising focus at store-level to win the affluent shopper?
Age of the female head of household provides more insight into demand for fast-growing wellness claims. Sales around amaranth, chia, quinoa, kamut, spelt and nut-free are all higher than expected among households headed by females age 35 to 54 and, particularly, 35 to 44.  Fast-growth claims are also better developed in more affluent households (incomes above $70k) and Asian households.

If I were a manufacturer of frozen or refrigerated foods contemplating new or expanded efforts in the health and wellness space, here are some questions I would like to answer in order to drive product development, pricing/promotion, cross-merchandising efforts and print/online recipes:

  • What categories or brands are the lead drivers of sales within a given claim?
  • Can products with wellness claims perform well with higher prices and less promotional support?
  • Do households show stronger loyalty to products with specific claims?
  • How important are large and/or fast-growing wellness claims to heavy buyers of your brands?
  • Leverage this knowledge in product development, cross-merchandising efforts or in print and online recipes.
Todd Hale

Todd Hale

Retail insights thought leader Todd Hale is the former senior vp of consumer and shopper insights at Nielsen and now serves as principal at Cincinnati-based Todd Hale, LLC. A popular conference presenter, he also speaks at large and small company events — everything from board meetings to sales meetings to planning sessions. Todd’s discussions include the latest consumer and retail trends with insights on how manufacturers and retailers can enhance both near- and long-term market performance. He can be reached at todd@toddhalellc.com.

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