Tuesday, October 1, 2013
Tuesday, September 3, 2013
After getting its foothold in the office segment of the market, single-serve beverage brewing has experienced tremendous growth with widespread and continued adoption in the retail market. Research conducted by the National Coffee Association (NCA) in 2012 found that 36% of respondents who had a single-serve brewing system obtained it within the last six months, indicating just how fast this segment of the beverage market has been growing.
As a result, the packaged coffee category at retail is undergoing a a substantial transformation. U.S. retail market coffee sales grew at an impressive 10% in 2012 thanks to the single cup segment, which increased 82%. Single-cup coffee sales, at $415 million at the close of 2011, rose to $922 million in 2012. Single-cup coffee sales have thus grown to account for over a fourth of the total coffee dollar sales in grocery (Progressive Grocer, April 24, 2013).
Several factors are contributing to this sea change in what was a seemingly mature market:
· A nation of dedicated coffee drinkers
· Consumer desire to recreate coffee shop quality at home
· Continued adoption of single-serve brewers in offices and hotels
· Innovations in brewer technology supporting enhanced beverage quality
· A large selection of brewers to choose from, many of which are aggressively marketed and attractively priced
· Popularity of single-serve brewers as a hot kitchen gadget, well suited for holiday gift giving
· A wide selection of single-serve beverage options that continues to expand
· Recent increase in published reports of the health benefits associated with coffee consumption
The take-away: the possibility for innovation and transformation in the often static-seeming center aisles of grocery stores should never be underestimated.
For more information on Packaged Facts' report on Single-Cup Brew Beverage Products in the U.S.: Coffee Pods and Beyond, please see http://www.packagedfacts.com/Single-Cup-Brew-7372397/
Thursday, August 29, 2013
Why are many retail groceries stressing that the fresh fish on display in their seafood departments is from sustainable sources? After all, according to Packaged Facts’ June 2013 National Consumer Survey, less than 20% of consumers make a seafood purchasing decision factoring in the sustainability of the catch.
Partly it goes to show the power of the interplay between leading edge shoppers, seafood suppliers, and retailers. The issue is already reaching critical mass in consumer consciousness, and will continue to gain traction thanks to the efforts of merchants such as Whole Foods, Trader Joe’s, Safeway, Wegmans, Harris-Teeter, Target, Aldi, and Ahold, all of which have been acknowledged by Greenpeace for the their sustainable seafood policies.
Sustainability in the fish and seafood category refers to the efforts to harvest various species in ways that keep their populations from being permanently depleted. As noted in Eco Eating Culinary Trend Mapping Report (July 2013), a joint publication of Packaged Facts and the San Francisco-based food consultancy firm CCD Innovation, some 50% of world's fish stocks are considered fully exploited, and another 25% are overexploited, depleted or in recovery. Bluefin tuna, Chilean sea bass and orange roughy are among the species that have been overfished to the brink of extinction. And of the more than three quarters of America’s seafood that comes from abroad, much of of it is caught or farmed in ecologically dubious ways, according to James Beard-award winning author and Blue Ocean Institute fellow Paul Greenberg (Food & Wine, May 2013).
There are a host of government agencies, such as the Office of Sustainable Fisheries, and private organizations, such as Friends of the Sea and the Marine Stewardship Council, that are working with the seafood industry to limit catches so that further drastic depletion is avoided. Some of the associations offer certification to seafood companies and to retailers so that consumers can become more attuned to who is behaving in an environmentally responsible way.
At least to a degree, promoting sustainability is a great marketing strategy, according to OgilvyEarth, the sustainability communications subsidiary of the global advertising, marketing, and public relations agency Ogilvy and Mather. It notes that two-thirds of all consumers can be characterized as “Middle Greens,” who have good environmental intentions but are put off by efforts that seem more focused on the “Super Greens,” as well as by the higher costs associated with sustainable and otherwise environmentally correct products. OgilvyEarth refers to this as the Green Gap.
It’s obviously a good thing for so many retailers to be getting out in front on the sustainability issue, but what will it take to close the Green Gap? It could come down to the price of a can of tuna fish. Over 80% of U.S. households, according to Experian Marketing Services Fall 2012 Simmons NHCS Study, purchase tuna in cans or pouches. If tuna resources continue to dwindle, as they have been, the price of this very basic commodity could rise. The long-term costs associated with non-sustainability would come to the fore, and take consumer consciousness about seafood sustainability to the next level.
For more information on Packaged Facts' report on Fish and Seafood Trends in the U.S. (June 2013), see http://www.packagedfacts.com/Fish-Seafood-Trends-7649917/
For more information on our Eco Eating Culinary Trend Mapping Report, see http://www.packagedfacts.com/Eco-Eating-Culinary-7710822/
Tuesday, August 20, 2013
Facebook has become a promotional venue for many pet industry marketers, letting them keep connected with current customers as well as recruit new customers. In the pet food market, Facebook can really help put a “face” on animal welfare efforts, letting companies post images and videos of the animals helped by their causes. The ability to personalize content to suit specific needs, and almost instantly reach thousands, sometimes hundreds of thousands, of consumers, makes social media perfect for launching animal welfare campaigns. Marketers can also develop Facebook-specific applications for contests and promotions related to their causes.
PetSmart Charities took full advantage of the benefits of social media when it launched its “Share a Pic, Save a Pet” application via Facebook, in a bid to drive awareness and animal adoptions. The app lets Facebook members use their Facebook profiles to post alerts about adoptable pets in their communities. Users can enter their zip code and select up to 10 adoptable pets to highlight from Adopt-a-Pet.com’s nationwide shelter database. Highlighted pets appear in friends’ newsfeeds and on the user’s Facebook timeline. The selected pets also link to the local animal-welfare organizations where the pets are available for adoption. The app has save nearly 5,000 pets as of 2013.
The Nutro Company uses Facebook to promote its Room to Run Dog Park Appreciation Project. Nutro plans to award 30 grants to help fund dog park enhancements nationwide. Videos from previous years’ successes, a photo gallery and a link to the application make it easy for those seeking dog park grants to check out the project and apply, and also show Nutro customers how the company is working towards making these improvements.For more information on Packaged Facts's recent reports on the U.S. pet market and pet food industry, see http://www.packagedfacts.com/Pet-Outlook-7372395/ and http://www.packagedfacts.com/Pet-Food-Edition-7372391/
Wednesday, August 14, 2013
The market for sports nutritionals—which includes sports drinks and nutrition bars as well as product categories such as protein and weight gain powders, and pre- and post-workout supplements and energy gels—has experienced encouraging growth in recent years. Factors contributing to future growth in the sports drink and nutrition bar categories include a rapid increase in the number of dedicated fitness enthusiasts and the bullish growth plans of specialized retailers of sports nutritionals, while nutrition bars will benefit from a long-term trend toward healthier snacking.
The 77 million users of sports drinks and 28 million consumers of nutrition bars are key consumer segments driving the sports nutritional market as a whole. However, the demographic and attitudinal differences between the users of each of these products are so vast that they might as well live on two different planets.
As reported in Packaged Facts July 2013 edition of The Market for Sports Nutritionals in the U.S., compared to high-volume consumers of sports drinks, nutrition bar aficionados are less likely to be members of Gen-Y and more likely to be Boomers. They also have a higher likelihood of being married, living in one of the largest urban areas, having a college degree and enjoying a household income of $100,000 or more. The most remarkable difference between the two market segments, though, is the yawning gender gap that divides sports drink users from nutrition bar consumers.
Men, especially young men, dominate in the sports drink market. Males make up 64% of high-volume consumers of sports drinks. Men in the 18- to 34-old age group make up 15% of the population but account for 31% of high-volume sports drink consumers.
In the market for nutrition bars, however, is primarily a women’s world. Only 45% of those eating at least one nutrition bar in the last 30 days are men, while 55% are women. Female consumers of nutrition bars outnumber their male counterparts 15.2 million to 12.4 million.
Marketers of sports drinks need to face up to some dismal demographic news over the next decade that should lead them in the direction of paying more attention to women. The population of males under the age of 25, their most prized marketing target, will experience negative population growth between 2011 and 2020, declining from 24.5 million to slightly less than 24 million. Besides, although not the dominant consumer segment, women are important to sports drink marketers even now. More than 30 million women are active users and 13.3 million women are high-volume users of sports drinks.
Some sports nutritional marketers have already capitalized on the power of women. For example, Simmons National Consumer Study data show that women account for 77% of those consuming a Clif Luna bar in the last 30 days; nearly one in three (30%) are 35- to 44-year-old women. Other marketers are beginning to recognize that sports nutritional products geared toward women offer growing opportunities. Barre, which claims to be made with “real ingredients for real athletes,” is a nutrition bar designed by two professional dancers especially for women. On their website they write that “just reading the labels on most energy bars is enough to throw us off balance. So we traded our leotards for aprons and whipped up something of our own: a real food bar, made with wholesome, all-natural ingredients—stuff you can actually pronounce!”
Marketers also are responding with new products to meet a growing interest by women in whey protein, a natural supplement increasingly popular among bodybuilders. Examples include Designer Whey Protein for Her, which is marketed as “a high-quality nourishment designed for women who want the best of both worlds: a delicious supplement that helps support their fitness goals.”
Thursday, August 8, 2013
“Berries over Bugs” was the headline of a July 24th press release from The Center for Science in the Public Interest (CSPI, a.k.a., the food police). Being a Berry, of course, I fully endorse “choosing berries over bugs” any day! But seriously, CSPI issued this press release a week after the closing of the 2013 Institute of Food Technologists (IFT) Annual Meeting + Food Expo, where a whopping 97 ingredient suppliers were listed in the directory under the “Colors, Natural” category. But, as we all know, not all natural colors are equal.
(In case you missed my review of innovative ingredient technologies for dairy product formulators, which includes a section on the fact that “natural colors were the buzz” at IFT, you can view it HERE.
Understanding Natural Colors
(If you need a refresher course on food color additive regulations in the States, scroll to the bottom of this blog for “Food Colors 101.”)
In general, artificial colorings are manufactured from petroleum-based raw materials. Colors exempt from certification, commonly referred to as natural colors, are obtained from a variety of sources, including plants, minerals, insects and fermentation, resources considered by many to be natural.
It is this generalization that has some color suppliers creating a point of differentiation by touting the fact that their natural colors are derived solely from food, and most often, directly from fruits and vegetables. This is because carmine--a dye extracted from the dried, pulverized bodies of cochineal insects—is an exempt-from-certification color and continues to be controversial in terms of its naturalness.
CSPI’s Latest Beef with Carmine
CSPI’s recent press release is urging global yogurt giant Dannon to choose berries over bugs, that is, in terms of a colorant for a number of its yogurt products. Dannon uses carmine to give several varieties of fruit-flavored yogurt their pink color. The nonprofit food watchdog group says that Dannon’s practice cheats consumers who might expect that the named fruits—and not the unnamed creepy crawlies—are providing the color. Carmine also puts some consumers at risk of serious allergic reactions if they don’t read the ingredient statement carefully.
Strawberry, Cherry, Boysenberry and Raspberry varieties of Dannon’s “Fruit on the Bottom” line all contain carmine, as does the Strawberry flavor of Dannon’s Oikos brand of Greek yogurt. Two flavors of Dannon’s Light and Fit Greek use the extract, as do six of its Activia yogurts.
With all due respect to my fellow food scientists at Dannon, I am sure use of carmine is under careful consideration. After all, Dannon does use only natural colorings, such as purple carrot juice, in its Danimals line of yogurts marketed to children.
The food police are relentless. The chief of police, Michael Jacobson, CSPI executive director, said in the press release, “I have nothing against people who eat insects, but when I buy strawberry yogurt, I’m expecting yogurt and strawberries, and not red dye made from bugs.”
CSPI is sponsoring an online petition urging Franck Riboud, CEO of Dannon’s parent company Groupe Danone, to replace carmine with more of the fruit advertised on the label. The petition can be viewed HERE.
CSPI originally took interest in carmine a number of years ago because of the fact that some consumers experience serious allergic reactions when they consume this exempt-from-certification colorant. In response to a CSPI petition on this issue, the FDA now requires carmine to be listed on food labels when it is used.
Read FDA’s final rule HERE.
Previously, companies could obscure the presence of the insect extract by labeling it “artificial color.” CSPI had urged FDA to go further and describe carmine as “insect-derived,” making it easier for vegetarians, those who keep kosher, or anyone otherwise averse to eating such ingredients to avoid it.
The food police are reading the fine print, so are many consumers. With at least 97 ingredient suppliers marketing natural colors, consider choosing berries over bugs whenever possible.
Here are two new products that rely only on colors derived from fruits and vegetables.
Wallaby Organic Lowfat Kefir comes in four different flavors: Blueberry, Strawberry, Vanilla and a traditional Plain. It comes in family-friendly, multi-serve 32-ounce plastic bottles with a suggested retail price of $4.29. The ingredient statement of the strawberry variety reads: Organic Cultured Pasteurized Lowfat Milk, Organic Strawberries, Organic Cane Sugar, Natural Flavors, Organic Locust Bean Gum, Pectin, Fruit and Vegetable Juice for Color.
New Kemps Greek Yogurt comes in four varieties--Black Cherry, Raspberry, Strawberry and Vanilla—and is sold in 5.3-ounce cups. The ingredient statement of the Black Cherry and Strawberry varieties indicates that vegetable juice concentrate is used for color. The Raspberry variety gets enough color from the use of high-quality raspberries and raspberry puree.
Food Colors 101
The term color additive is legally defined in Title 21, Part 70 of the Code of Federal Regulations (21 CFR 70). Basically, any ingredient with the sole purpose of adding color to a food or beverage is a color additive, with all color additives requiring approval by FDA as a food additive.
In the U.S., synthetic food colors are classified by FDA as color additives subject to certification (21 CFR 74). They are certified with an FD&C number. This indicates that the additive has been tested for safety and is approved for used in foods, drugs and cosmetics, or FD&C. Seven colors were initially approved under the Pure Food and Drug Act of 1906. Over time, several have been delisted and replaced. Today there are still seven, which can be combined into an infinite number of colors; hence, the seven are considered primary colors.
The seven synthetics are further classified as standardized dyes or lakes. Dyes are a concentrated source of color and are water soluble and oil insoluble. Lakes, on the other hand, are made by combining dyes with salts to make them water-insoluble compounds. Thus, they are best described as providing color by dispersion. Lakes are considered to be more stable than dyes and are ideal for coloring products that either contain fat or lack sufficient moisture to dissolve dyes.
FDA also provides a list of color additives that are exempt from certification (21 CFR 73). By default, these colors are often characterized as natural but FDA does not consider any color added to as food unless the color is natural to the product itself. For example, consumers expect strawberry milk to have a red hue. If strawberry juice is added for color, and providing that none of the other ingredients in the milk were characterized as artificial, this product could be labeled “all-natural strawberry milk.” Such a description is not possible if beet juice, an FDA-recognized exempt-from-certification color additive, is used for a colorful boost. What is appropriate to say is “does not contain any artificial colors.”
To get a full dose of Dairy market research, go to www.berryondairy.com to learn about new featured dairy products every day. See additional samples of featured dairy products here.
Thanks for reading!
Tuesday, August 6, 2013
The FDA’s ruling on the use of “gluten-free” labeling is a triumph for consumers who suffer from Celiac disease, wheat allergies, or other grain-based food intolerances. When the regulation goes into effect a year from now, consumers who follow a gluten-free lifestyle out of necessity or choice will be able to shop for groceries with more confidence.
The FDA's final rule is setting a gluten limit of less than 20 ppm (parts per million) in foods that carry this label. The FDA explains that is the lowest level that can be consistently detected in foods using scientific analysis. This limit is consistent with those set by other countries and international bodies that set food safety standards. This rule holds foods labeled "without gluten," "free of gluten," and "no gluten" to the same standard.
The FDA rule may not have significant impact on the market size and growth for gluten-free packaged foods, however. Much of the growth projected by Packaged Facts in its current gluten-free report, which forecasts an increase from $4.2 billion in sales to $6.6 billion between 2012 and 2017, will be attributable to the mainstreaming of specialty marketers whose products and facilities already undergo the testing required to qualify for certification by one of the gluten-free credentialing bodies.
For information on Packaged Facts' report on Gluten Free Foods and Beverages in the U.S., 4th Edition, see http://www.packagedfacts.com/Gluten-Free-Foods-7144767/
Thursday, August 1, 2013
Once home to consumers with higher risk profiles and higher chargeoff rates, store credit card volume and active accounts took a nosedive during the recession, as issuer portfolios groaned under the strain of bad debt and reduced customer engagement.
For more information about Packaged Facts' report on Private Label Credit Cards in the U.S., please see http://www.packagedfacts.com/Private-Label-Credit-7278869/
But signs point to a private label turnaround. Deal-making activity suggests that private label card programs have become a more viable and stable income source for issuers; the payment card segment has been buoyed by a spate of deals that has invigorated market leader Citi Retail Services and has brought TD Bank and Capital One into the competitive mix.Packaged Facts' consumer survey analysis also suggests that private label cards have turned a corner, with consumer usage penetration and engagement on the rise from 2010 lows.
As store card issuers look to build their accounts, they will be threading promotions with discounts and rewards to catch consumers’ eyes.
According to our survey findings, roughly half of store card users would be motivated to apply for a card if they received points for every dollar spent on the card or received a 5% everyday discount on all card purchases. Some 4 in 10 would be motivated by receiving a discount with the first card purchase or by receiving 0% financing for 12 months on purchases made with the card.Importantly, these carrots may also entice non-cardholders: for example, fully one-third of non-cardholders would be motivated to apply for a store card in return for a 5% everyday discount on all card purchases.
For more information about Packaged Facts' report on Private Label Credit Cards in the U.S., please see http://www.packagedfacts.com/Private-Label-Credit-7278869/
Monday, July 29, 2013
Move over Parisian macarons and Pennsylvania Amish whoppie pies: Brazil’s beloved brigadeiro (pronounced bree-gah-day-ro) may be next in line as America’s latest sweet snack trend. A traditional treat at Brazilian social events, this humble confection is made with chocolate, condensed milk and butter that are slowly cooked down to a smooth, creamy consistency. Once cool, the chocolate is scooped into rounds and rolled in toppings such as chocolate or multi-colored sprinkles, nuts or coconut.
Brigadeiros boast the kind of simple recipe that makes it a family classic, sort of a cross between an easy fudge and chocolate truffles. This confection, also well known in Spain, Chile and Portugal, is often enjoyed with a cup of coffee or paired with a glass of dessert wine.
These Brazilian sweets began hitting the CCD Innovation radar several years ago, spotted on media lists of top sweets and chocolates around the country, including Oprah’s blog in 2012. This year, they have been featured on the Cooking Channel’s Taste in Translation and as a Valentine’s treat on Epicurious’ blog. With Brazil and its cuisine moving into the spotlight as the 2016 Olympics and World Cup host, this signature snack is ready for a global close-up.
Brigadeiros became wildly popular after Eduardo Gomes, a Brazilian Air Force brigadier general, ran for president in 1945. His female campaign volunteers whipped up batches for fundraisers. The candy ended up being a bigger hit than the politician, in that Gomes lost the election; however, the treat took its name from his impressive rank, leaving him a confectionery if not presidential legacy.
In the continued economic doldrums, it's worth noting that brigadeiros sprang up as sweet snacks for hard times: this trend took off during wartime shortages, when imports such as confections and nuts were scarce. During this same era, Nestlé introduced its cocoa powder and condensed milk into the country, setting the stage for the success of this simple bonbon that’s easy to make, easy on the budget, and easy to customize for adults or for kids will different roll-ons.
For more information on the recent Worldly Snacks: Culinary Trend Mapping Report from CCD Innovation and Packaged Facts, see http://www.packagedfacts.com/Worldly-Snacks-Culinary-7609483/
Thursday, July 25, 2013
When defined in terms of overall dollar sales and volume consumption, the market for fruit juices and juice drinks has remained remarkably stable for years. Packaged Facts estimates that between 2007 and 2012 dollar sales of fruit and vegetable juices and juice drinks barely budged, and that the volume of juices and juice drinks consumed by households hardly kept up with population growth.
Yet, underneath its apparently placid surface, the market for packaged juices and drinks has been roiled by undercurrents of constant change. Traditional consumption patterns are dying on the vine as consumers continue to turn away from products such as frozen orange juice.
As they reject the traditional, consumers are embracing new juices and juice drinks with wildly innovative forms and flavors. Many of the products achieving the highest growth rates are riding trends driven by juice bars and smoothie chains, which quickly impact on the habits of health-focused juice consumers.
As a result, the market for packaged fruit and vegetable juices has been upended. No longer do consumers need to frequent juice bars or natural and specialty gourmet retail channels to find novel blends and flavors. They only need to cruise the aisles and perimeter of their nearest supermarket to find cutting-edge products such as exotic blends of fruit juices, unexpected combinations of fruit and vegetable juices, smoothies, coconut water, aloe vera juice, and juices made from a new exotic antioxidant-rich “superfruit.”
Even so, consumers still make room in their refrigerators and pantries for tried-and-true juices and juice drinks. As Packaged Facts' Fruit and Vegetable Juices: U.S. Market Trends points out, despite the rush to create new and exciting flavors and textures for juices and juice drinks, many of the most old-fashioned flavors and products still have a hold on American consumers. Apple is a juice flavor used most by 65 million households, and orange juice still reigns as king of the mass market.
As might be expected, when it comes to traditional juice flavors, there are significant differences between the preferences of younger and older consumers. For example, consumers 55 years old and over have a higher likelihood of preferring cranberry juice and cranberry juice blends, while consumers under the age of 35 are more likely to favor tropical, pineapple, lemonade, lemon/lime, grape, fruit punch and cherry flavors.
There is just one fruit juice flavor with the power to fully bridge generational boundaries. Younger Millennials (those in the 18- to 24-year-old age group) are about as likely as those in the 65+ age group to say that prune is a juice flavor they use most.
For more information on Fruit and Vegetable Juices: U.S. Market Trends (April 2013), please see http://www.packagedfacts.com/Fruit-Vegetable-Juices-7497441/
Thursday, July 18, 2013
Horsegate is the name given to the scandal currently rocking the global meat industry, in which horsemeat has been mixed in with beef in everything from prepared frozen meat dishes to packaged ground meat to the Swedish meatballs served up in Ikea furniture stores.
Horsemeat is not unhealthy and is eaten in many countries including Italy, France, and Belgium. But horsemeat intended for human consumption is only supposed to come from animals that have not been given certain chemicals thatcan be harmful to human health, especially the types of drugs used to euthanize horses. But even if the horsemeat found so far in the foods in question came from horses that were drug free, there is still plenty of scandal simply on the basis of the mislabeling.
To date no horsemeat has turned up in the U.S. meat supply. But we did have our own meat scandal in 2012 when the news media reported on the widespread use of lean finely textured beef (LFTB) as a filler in ground beef. LFTB had been approved by the Department of Agriculture a decade ago despite the use of ammonia to process the ingredient. While there are health organizations that disagree with the USDA as to the safety of that process, the real problem was the nickname given by meat inspectors to this legal ingredient: pink slime. But as the news reports came out, that description alone was enough to turn off the public, leading many foodservice companies and retailers to drop the use of any ground beef that contained the filler and driving at least one LFTB manufacturer into bankruptcy.
So what do these scandals have to do with farmers markets and the locavore movement? Survey after survey indicates that consumers are increasingly concerned about the safety of the foods they eat, including meat and poultry. According to Packaged Facts survey data reported in our Meat and Poultry Trends in the U.S. report, food safety/contamination is a major concern for nearly 60% of consumers when they buy fresh meat, poultry, or seafood.
And while many producers of meat and poultry are launching lines that stress their products were raised naturally, without the use of antibiotics or other chemicals, as well as under humane conditions, nearly half of the Packaged Facts Survey respondents indicated they simply don't trust a lot of the "natural" labeling.
These concerns have been a contributor to the growth of the locavore movement that has consumers seeking out foods and other products that come from local producers. There is no firm definition of what local means in this context, although some sources place a 100-mile limit to it.
While the movement has been motivated by environmental issues, food safety has also become a major motivator in buying locally and especially at farmers markets, where the farmer or rancher is standing across a table from you, able to answer your questions about how the meat or poultry you are purchasing was raised and perhaps even inviting you to come see for yourself. For many consumers, knowing the producer as a neighbor, being able to meet him or her face-to-face and look them in the eye has a value that transcends an advertising claim on a package label.
Some locally produced foods can be found in independent grocery stores, and even some chain supermarkets are promoting their locally grown sections. But farmers markets are the mainstay of the locavore movement. According to the USDA’s Agricultural Marketing Service, the number of farmers markets in the U.S. has more than doubled over the past decade, from 3,137 in 2002 to 7,864 in 2012. The increase from 2011 to 2012 alone was nearly 10 percent.
The Centers for Disease Control has made it clear that foodborne illnesses have dropped dramatically in recent years thanks to the implementation of the Food Safety Modernization Act and the food industry’s positive response to the act. Nevertheless, large groups of American consumers--including many who were sideswiped by the financial system meltdown and resulting economic recession--are increasingly wary of large institutions, whether they be government bodies, banks, or corporations. It is not hard to imagine additional food safety scandals, however isolated from the bulk of our food supply, driving the further expansion of the locavore movement and the growth of farmers markets.
For information on our Meat and Poultry Trends in the U.S. (April 2003) report, please see http://www.packagedfacts.com/Meat-Poultry-Trends-7494416/
For information on our Meat and Poultry Trends in the U.S. (April 2003) report, please see http://www.packagedfacts.com/Meat-Poultry-Trends-7494416/
Friday, July 12, 2013
For years, the yogurt industry has made a splash with its advertising.
In the 1970s, Dannon ran its famous “In Soviet Georgia” commercials, sometimes credited with revolutionizing yogurt sales in the U.S. In the commercials, an announcer would explain some variation of the following: “In Soviet Georgia, there are two curious things about the people. A large part of their diet is yogurt, and a large number of them live past 100.” (One example from the campaign can be viewed here: http://www.youtube.com/watch?v=R9RJBgNB1ZI
Next came Yoplait’s introduction into the United States in the late 1970s, calling itself The Yogurt of France. The two brands have fought for yogurt supremacy in the U.S. – and worldwide – ever since.
And without much of a challenge from anyone else.
Until late 2007. That was when an upstart Greek yogurt brand Chobani first began appearing in stores. At that time, Greek yogurt barely had a presence in the market.
Fast forward to the evening of February 5, 2012. With a Greek yogurt craze in full swing in the U.S., Dannon decided that it had better signal its reaction on the biggest stage possible: The Super Bowl telecast. It launched “The Tease,” a commercial starring John Stamos that is said to be the first yogurt commercial to air during the Super Bowl telecast.
And for the last year, while the market for Greek yogurt has continued to grow, reaching 35% of the overall yogurt market by the end of 2012, a period of frantic competition for share of voice and share of wallet has ensued.
For information on Packaged Facts' report on The Yogurt Market and Yogurt Innovation: Greek Yogurt and Beyond (March 2013), see
Wednesday, July 3, 2013
What a better way to say goodbye to the chilly, wet spring that most of the country experienced than by jumping into June—Dairy Month—with some great research on profit margins.
As Americans become increasingly concerned about the negative health effects of certain foods or food ingredients, manufacturers are introducing a greater variety of healthier products. This includes lower-sugar flavored milks and reduced-fat cultured products.
This move has expanded profit margins throughout the food industry because health-conscious consumers are generally willing to pay more for food that they believe is healthy for them. (Think Greek yogurt.) In particular, large companies that have been providing Americans with foods for years have established brand loyalty, so when they introduce healthier, more-expensive products, they typically do not experience significant declines in demand for their products because people view them as high-quality brands, according to a recent industry report. As such, these companies can realize higher profit margins than companies that do not have well-established brands.
Food processors must purchase a variety of commodities, such as feed, corn, milk, wheat and sugar, to produce their goods. The prices of these commodities help determine how processors in a variety of food industries price their goods. So when the price of a commodity fluctuates rapidly from year to year, the cost of manufacturing products becomes volatile. (The dairy industry knows this very well.)
Volatility, in turn, leaves processors less able to anticipate cost increases. They will often pass these costs on to consumers in the form of higher product prices, or, as in the case of ice cream, by reducing package size. Although this move does not bode well for consumers, many will still pay the higher prices, or accept the smaller package, especially for foods that are staples in their diets. Processors end up benefiting because the higher input prices aren’t eating into their profit margins, while demand from consumers stays steady.
And here’s some good news on commodity prices. They are expected to be less volatile during the next five years, which presents even more opportunity for processors to expand their profit margins. Most notable is the price of corn, which is an input in all 10 of the most profitable food industries, one of which is ice cream.
Food processors aim to strike a balance between providing Americans with the food that they love at a reasonable price and maximizing company profitability. During the next five years, profit margins in these already-profitable food product industries are expected to expand as commodity prices become less volatile and operators cut costs associated with production. In addition, if prices do rise, they will be better able to pass off cost increases in the form of higher product prices to consumers because disposable incomes are improving in line with the economy.
In particular, larger and well-established companies produce brands that millions of Americans are familiar with and loyal to. Still, Americans will look to their favorite brands to introduce healthier food products as they strive to live healthier lives. Processors that introduce and advertise healthier products are likely to be rewarded with greater sales, thus benefiting margins further.
To get a full dose of Dairy, go to www.berryondairy.com to learn about new featured dairy products every day. Read about our new Blog contributor, Donna Berry and see samples of her featured dairy products here.
America is nothing if not a nation of resiliency. Our economy's dynamic convalescence during and after the recession has added to America's long, storied history of triumph amidst adversity. Consumer market studies echo that sentiment.
Nevertheless, we are not without mementos of leaner days that weren't even that long ago and that for some linger as daily obstacles. We at times cope with these persistent socio-economic challenges by therapeutically referring to them with feel-good phrases such as "the new normal". For retailers in the U.S., the realities of the new normal have them operating in a climate where unemployment is high (especially among minorities) and disposable income is lower for the average American family than in pre-recession years.
Though Facing An Unemployment Crisis, A Potent Consumer Demographic Remains
The high unemployment rate among African Americans has been at the epicenter of concern nationwide. In a market study from The Bureau of Labor Statistics' Economic Situation Summary for April 2013 reveals that the unemployment rate for African Americans is 13.2%. With the exception of teenagers, African Americans have a higher unemployment rate than any of the other "major work group" classified by the BLS, with a percentage almost equal to the combined unemployment rate of two other major minority groups: Hispanics (9.0%) and Asians (5.1%).
Though Obama's time as president hasn't yielded (for a variety of reasons) the fiscal and vocational utopia for African Americans that some envisioned, the demographic segment remains a potent part of the consumer landscape. Market research firm Nielsen estimates the buying power of African Americans will be $1.1 trillion by 2015, ahead of Nielsen's estimates for Asian consumers in 2015 and comparable to estimates made by market research firm Packaged Facts regarding the Hispanic community's present-day buying power. Considering that when African Americans spend, it is often on high quality, trendy, and brand name products, this demographic has the potential to be retail industry game-changers under the right circumstances.
Economic Optimism Still Strong
Consumer optimism is naturally an essential component to generating economy-boosting consumer spending. An upcoming market research report by Packaged Facts on African Americans reveals that compared to other consumers, African Americans are three times as likely to strongly agree that the economy will be significantly better off in the next 12 months--a positive sign for retail industry players.
Perhaps just as important, African Americans' optimism about the future is inexorably pinned on their continued support for the president. According an April 2013 article published by lifestyle website MademNoire, African Americans in general are confident about life and the economy under Obama. The article includes a poll indicating that 91% of African Americans view President Obama favorably, and 72% say that Obama's ascension to the White House has helped them compared to 4% who say the opposite. From a financial standpoint, the poll reveals that 30% of African Americans claim to be better off financially than they were four years ago, while 48% say their financial status is unchanged. Only 19% say they are worse off financially.
Regardless of our optimism or enthusiasm, we typically can't spend money that we don't have--especially with noticeable shifts we've witnessed in how consumers utilize forms of credit post-recession. The high unemployment rate among African Americans presents a disconcerting conundrum for retailers as the demographic's willingness to spend is tempered by the relative shortage of disposable income.
I may lack a soothsayer's clairvoyance, but I suspect that we will see a resurgence in employment figures that will help African Americans reach--and perhaps even surpass--their $1.1 trillion projected buying power. The windfall is nigh. Smart marketers will continue to advertise to African Americans even in this economically bleak hour. Those who have money spend, and those who presently are on fixed or no income budgets will be eager to spend once their financial status improves--assuming they aren't already finding small luxuries to splurge on to retain some level of normalcy.
-- Daniel Granderson
Market Research Analyst
Market Research Analyst