“[R]etailers such as Whole Foods, Sprouts and Natural Grocers have generally outperformed the broader grocery market in both sales and traffic growth,” says Michelle Evans, global lead of retail at Euromonitor International, Chicago. “The channel is benefiting from long-term shifts toward wellness, ingredient transparency, and premium food and beverage choices.” 

However, Evans notes that success in the channel is becoming increasingly tied to balancing strong health credentials with value and affordability. 

“While consumers still want natural and organic products, they are becoming more selective about where and how they spend, creating opportunities for retailers that can deliver both,” she says. “Inflation has changed purchasing behavior more than it has changed demand. 

“Consumers continue to prioritize health and wellness, but they are shopping more cautiously by comparing prices or looking for stronger value,” Evans continues. “For specialty natural and organic retailers, the challenge is less about maintaining interest in the category and more about proving why consumers should pay a premium for their products.”

Evans adds that consumers are taking a more proactive approach to health, looking for products that support specific outcomes such as gut health, protein consumption, hydration and healthy aging. 

“At the same time, shoppers are paying closer attention to ingredient transparency and product quality,” Evans says. “Natural and organic retailers are well positioned because many of these trends align with the strengths that have long differentiated the channel: trust, education and curated assortments.”

Howard Telford, senior global insight manager for soft drinks at Euromonitor International, notes that functional beverages tend to thrive in natural and organic retailers, particularly those built around hydration, protein, gut health, sustained energy and mood support. 

“This is also a channel where premium spring and mineral water brands thrive,” he says. “These categories benefit from a more demanding consumer who is actively looking for new health propositions, who actively reads ingredient lists and is often particularly sensitive to artificial colors, sweeteners and other additives.”

Further, Telford notes that natural and organic retailers have traditionally provided the pipeline through which these ideas — from kombucha to prebiotic soda — enter the wider market with the speed clearly accelerating in recent years. 

“They offer newer brands an environment where shoppers are receptive to unfamiliar ingredients, more complex benefits and premium price points,” he says. “That helps explain why emerging propositions often establish themselves there before moving into conventional grocery.”

However, the gap between channels is narrowing, Telford says.

“Modern soda, prebiotic drinks and cleaner energy products are now readily available in Walmart and other mass retailers. Natural and organic specialists therefore no longer have a monopoly on healthier innovation,” he explains. “Their advantage lies further up the pipeline, in identifying and cultivating the next generation of functional beverages and brand concepts before they become mainstream.”

Euromonitor’s Evans says that one of the biggest opportunities is at the intersection of wellness and beverages. 

“Consumers increasingly view beverages as a convenient way to support health goals, whether that is hydration, protein consumption, gut health, energy or functional nutrition,” she says. 

“Natural and organic retailers are well positioned to benefit because shoppers already associate these retailers with product discovery, ingredient transparency and wellness expertise. The retailers that can combine innovative functional offerings with trusted guidance will be best positioned to drive growth.”