Move Over, Multivitamins: A Focus on Function

When you think of nutritional supplements, “multivitamin” may first come to mind. Although multi-vitamin/mineral/supplement pills that cover various nutritional sins remain the most commonly used type of product, the nutritional supplement market has broadened its horizons and raised its sights. Today, information-driven consumers often know specifically what they want, and that means a focus on function.

Just as in the functional foods market, consumers are seeking supplements that help address specific health conditions and concerns. In fact, many have turned to ingredients that at times sound like pantry items: turmeric and cinnamon, for example, are two of the hot ingredients in the supplement market. Others are not as appetizing (probiotic bacteria, anyone?) but remain desirable nonetheless for specific digestive maintenance properties.

Consumers are also looking for supplements that keep their promises. Efficacy and credibility have never been more important than in the age of Google searches, media broadsides against dodgy products and deceptive active ingredient claims, and the product pans of consumers who are both disappointed and angry. Supplement developers are increasingly relying on scientific evidence supporting the benefits of specific nutritional ingredients to bolster the industry’s image in the eyes of consumers and the healthcare practitioners who advise them.

The most successful supplement marketers will be those who feature products with supportable claims, including those targeting specific concerns such as joint, brain, and heart health. While the outdatedly named "multivitamins" will remain industry workhorses, function-focused new products featuring marquee ingredients will be the thoroughbreds that drive industry growth.

Supplement marketers must keep their sights squarely focused on target marketing, including those age 65+ and the do-it-yourself-healthcare prone Baby Boomers who have begun swelling the senior ranks. Targeting younger adults whose supplements usage rates have been falling is also critical to the market’s longer-term future, as is reaching the emergent Hispanic population, whose supplement usage rates are below average.

During 2012, supplement sales rose 7% to $11.5 billion, according to Packaged Facts estimates presented in our recent report on Nutritional Supplements in the U.S. Given the decay of all flesh in an aging society and the reassurance of solid scientific support, we forecast the market to reach $15.5 billion by 2017.


For more information on our full report:
http://www.packagedfacts.com/Nutritional-Supplements-Edition-7131106/

Pizza Industry Doesn't Have to Throw Health Under the Bus

When it comes to eating more healthfully, it's long been obvious that while consumers may talk the talk, they may not walk the walk. But the needle has nevertheless shifted: the health trend is real. Is it leaving pizza behind? The survey say “yes.”

Proprietary survey results analyzed in our Pizza Market in the U.S.: Foodservice and Retail report indicate a clear food consumption trend toward healthier options and home-based cost savings, at the expense of pizza.  With respect to the 17 foods and food types we asked about, consumers are most likely to be “eating more” of those with stronger general health attributes and with home-based cost savings. Unfortunately for pizza purveyors, consumers are less likely to be eating more pizza, whether its restaurant pizza, frozen pizza, or fresh/refrigerated pizza.

Sales trends are correspondingly lukewarm. We forecast U.S. pizza restaurant 2011-2014 compound annual growth of 3.3%, lagging projected restaurant industry growth. Pizza is also loosening its hold on the restaurant menu, with menu penetration falling by 4% from 2008 to 2012. We also forecast U.S. frozen and refrigerated retail pizza 2011-2014 compound annual growth of -0.1%, lagging projected retail food sales growth (estimates are unadjusted for inflation).

Of course, nobody is counting pizza out--you can't swing a pepperoni stick without hitting a pizza lover.  With usage penetration at restaurants and retail alike well above 90%, pizza remains an American staple. But after riding the recession-driven value wave, pizza is losing steam.

 

Even so, menu trends reveal a wealth of cuisine-driven growth opportunity, from pushing more mileage out of fusion cuisine to sauce experimentation to leveraging a wider variety of niche cheeses. Each of these approaches increases taste variety, opening up sales opportunity.

 

But health must play a more central role. While health claims are often woven into menus, pizza is simply not in step with the health-driven terminology: only 2.3% of restaurants serving pizza as an entrée associate pizza with “gluten free” on the menu; “low fat” and “organic” are associated with only 1.9% and 1.1%.   Restaurant operators surely can experiment more with healthful claims that resonate with pizza eaters.

 

And the industry already has vegetables in its corner. A slew of vegetable toppings are available at restaurants serving pizza entrées, ranging from the more ubiquitous olives (at 69%) to broccoli (30%) and arugula (10%), demonstrating strong mainstream and niche appeal. As an inherently healthy food, vegetables provide an ideal vehicle for purveyors to ratchet up pizza’s health profile without having to aggressively sell on nutritional merits to consumers, who already order pizzas with vegetables in abundance.

 

 

The bottom line is that the pizza industry doesn't have to throw health under the bus, especially if it wants to grow sales: Some 4 in 10 consumers say healthier pizza options would entice them to eat pizza more often.

Green Cleaners: Not Mopping Up, But Outperforming in Growth

 "Green"  (eco-friendly) cleaners, once used primarily by hard-core green consumers, have expanded their appeal to mainstream consumers who typically use non-green cleaners.   Initiatives over the last five years by both marketers and retailers served to broaden the base of green cleaners.   Mass retailers including supermarkets and general merchandisers such as Walmart and Target significantly expanded their selection of green cleaning products in response to consumer demand.   Sales grew rapidly in these channels, such that they displaced health and natural product stores as the leading venue for green cleaning product sales.   To a degree, a sort of caste system developed:  mass marketers such as Clorox, Dial, and Church & Dwight entered the green market with a flurry of new products that competed at lower price points against venerable green leaders such as Seventh Generation with natural products channel cred.   Increased competition grew the overall market, and reinvigorated new product and marketing activities of green marketers. 

Consumers do say they want green cleaning products.   In an online Packaged Facts consumer survey conducted in August 2012, 41% of respondents indicated that they had purchased or used natural, organic, or eco-friendly household cleaning/laundry products within the previous 12 months, up from 38% in February 2009.    Nonetheless, many consumers find green cleaners too expensive and question whether they work as well as traditional products.   Price has become ever more important during difficult economic times.  It’s a challenge marketers must face in the coming years.  What’s the value of green cleaners to mainstream consumers?   Hard-core green consumers are already sold, and have their trusted brands.   Yet they are a relatively small niche.   Mainstream consumers must be convinced, or continue being convinced, that a green cleaning product, whether from a mass marketer or an "alternative" green marketer, is a good value and the right solution.

In the long-term, green cleaning products are poised to continue outperforming conventional cleaners in sales growth, given the slowly but steadily coming-to-a-boil consumer interest in sustainability,  loyal usage by core and converted consumers, and higher price points.  Growth will accelerate if and when economic conditions improve.

Latinos and Prepaid Cards: It's About Overbanking, Not Underbanking

Prepaid debit cards are growing in popularity among Latino Consumers.  Packaged Facts' new report Consumer Payments in the U.S.:  The Latino Market reveals that between 2011 and 2012 the number of Latinos using prepaid cards increased by 7.2%.  At the same time, the total number of consumers using prepaid cards grew by only 1%, and use of prepaid cards by non-Latinos declined by 0.5%.  Thus, Latinos drove the growth in prepaid card use during this period.

It might be expected that the popularity of prepaid cards among Latinos would be due to the higher propensity of Latinos to use cash, and relatedly to their lower propensity have checking accounts.  The results of a survey of Latino prepaid card users published in 2011 by Washington, D.C.-based National Council of La Raza (NCLA) provide some support for this view.  The NCLA study found that 26% of Latinos obtaining a prepaid card did so because “it was cheaper than going to a check casher.” Nearly half (48%) said that what they liked most about prepaid cards is that “I didn’t have to carry cash.”

However, NCLA found that the top benefit of prepaid cards as reported by Latino users relates to a desire to manage spending rather than a desire to find a replacement for cash.  More than 60% of those participating in the study liked using prepaid cards because “I could only spend the amount of money that I had.”  The fact that using a prepaid card “was convenient/saved time” was a benefit noted by 42% of respondents.

As our Consumer Payments in the U.S.:  The Latino Market report notes, 20% of Latinos with checking accounts used a prepaid card in the last 12 months, compared to only 14% of Latinos without checking accounts.  Therefore, Latino use of prepaid cards seems to be less about being underbanked and not having checking accounts and more about avoiding being overbanked and falling prey to credit card debt.

Meals at Home Gain Renewed Importance for American Families Post-Recession

The recession ruined everything…or so it seemed.  Businesses crumbled. Unemployment soared. The housing market crashed.  And now on the precipice of another presidential election, the recession’s impact to many lingers as a blemish on the résumé of the incumbent and a formidable—and perhaps persistent—challenge for the eventual winner.

Even the food and beverage industry wasn’t immune to this economic scourge, as consumers sought less costly alternatives to the products and brands they loyally purchased in better times.  Restaurant foot traffic declined.  Fast food dollar menus got more creative.  While various incarnations of 2 for $20 meal deals appeared in seemingly every casual dining restaurant chain nationwide. 

Nevertheless there has been some (literal) feasting amid the famine.  Less money to spend dining outside the home, has meant more dining inside the home.  The result is the triumphant return of the home cooked meal punctuated by honest-to-goodness nutritious foods and family bonding time.  While the lack of money to dine out has impacted Millennials harder than any other group of U.S. consumers, it is Gen Xer parents who apparently have found the most cause to parlay what some would consider a pseudo mealtime travesty into an opportunity to nurture and feel closer to their children.

According to Packaged Facts’ recently released report, How We Eat: Retail and Foodservice Opportunities in When and Where America Eats, there exists a correlation between a healthy, happy family and home cooked meals.  Eating meals at home together is said to improve a family’s health and well-being, reduce the risk of youth substance abuse, and prevent chronic disease.  Parents have found security in the knowledge that eating regular family meals at home means their children are likely to eat more healthy foods (fruits, vegetables, and whole grains) and consume higher amounts of important nutrients (calcium, fiber, and iron)—while conversely consuming less fat and avoiding unhealthy snacks.   Additionally, mealtime togetherness contributes more strongly to the well-being of children than other common family activities or recreational activities performed outside the home such as sports, dance, arts, clubs, etc.

As the 2012 electoral dust inevitably settles and America drifts further away from the worst of the recession and acquiesces to the new economic normal, it will be interesting to see how both consumers and food industry players respond.  People will continue to find ways to indulge their whims to dine outside the home, but one can’t help but believe that the forced/necessary resurgence of the home cooked meal has reawakened something enduring.  Now that we have seen firsthand how much happier and healthier our children are nestled in the sanctity of our domestic kitchens and dining tables, how can we ever fully go back to the way it was pre-recession?

Still the reality is people aren’t getting any less busy.  Parents don’t have and won’t always have time to cook from scratch as much as they might like to.  By providing healthier, fresher ready meals and better quality frozen foods, industry players will continue to help Americans find opportunities to juggle their responsibilities professionally, socially, and domestically.

For food retail manufacturers, Hispanic households will be a key entry point for sustained sales and growth. Hispanics have tremendous buying power and traditionally place importance on home and family.  According to the report, Hispanics are responsible for 13% of aggregate food expenditures.  During the peak period of the recession between 2007-2010, Hispanic share of food-at-home expenditures increased by 22%, out pacing figures for non-Hispanics.  There’s no reason to believe this upward trend won’t continue.

Cheek to Jowl with Pets

U.S. retail sales of pet supplies totaled $11.1 billion in 2011, up 2.0% over 2010.  From a high of 5% in 2007, annual sales gains slowed year to year during the economic recession of 2008-2009 and its aftermath.

Nonetheless, a number of market factors point to a return to healthier growth.  These include the industry’s success in playing up the human-animal bond to drive higher-ticket, sales of premium products, the strong market presence of upper-income households willing and able to spend heavily on pet supplies, and the growing population of pets with specialized health needs, especially senior and overweight dogs and cats.  Another good sign is the ongoing expansion of the pet specialty channel, which indicates increasing interest in all things pet, including at the ever-important superpremium end of the spending spectru

Many of the trendsetting items entering the pet supplies product stream are markedly parallel with human goods, appealing to pet owner as much as pet.  With more Americans treating their pets like members of the family, there’s no question that consumers are receptive to pet products that are “human-style,” whether by virtue of their brand names, benefits claims, or packaging presentations. 

In this vein, pet owners show a high degree of interest in human cross-over brands, which can bring instant confidence and familiarity into pet categories in which there is relatively little pet brand equity, including pet beds (Simmons Beautyrest, Orvis), cleaning products (Arm & Hammer, Bionaire, Febreze), grooming products (Conair, Wahl), supplements (GNC, Standard Process, Bach), travel/containment products (Jeep, Coleman), and apparel (Burberry, L.L. Bean).  A concomitant trend is the increased market involvement of makers of human products, a trend Packaged Facts expects to continue to gain momentum in the years ahead—with brands including Bissell, Conair, Febreze (Procter & Gamble), and Wahl making strong showings at the 2012 Global Pet Expo.

The humanization trend is always apparent in the new products featured at the Global Pet Expo. But particularly evident this year were human-style items that looked exactly like products for toddlers, from car seats and strollers, to safety gates and “cribs,” to rubber and plastic toys, with examples including Pet Gear strollers, Carlson pet containment devices, and Simply Fido pet toys.  Such products give pet owners plenty of human-style design options in the products they choose to integrate into their lifestyles and home décor—or rather, these human-style options make sense because pets are so thoroughly integrated into our lives and our homes.

And what are lifestyles without some celebrity cachet?  The pet market continues to register increased celebrity involvement, with names such as Martha Stewart and Ellen DeGeneres now cheek-to-jowl with brands such as Purina or Petmate.   Will it be long before Olympic champions vie to get their face on a box of Milk-Bone Trail Mix?

"Salonistas" Drive Up Sales in DIY Nail Care Market

Conventional wisdom might suppose an inverse correlation between the sales of do-it-yourself (DIY) nail care products and the use of nail salon services.  In fact, as the mass-market nail care category grew 25% between 2009 and 2010, the market for nail salon services did decline.  According to Nails Magazine Big Book 2011-2012, the nail salon services market fell nearly 5% in 2009, and was still below its 2008 level in 2010.

However, all signs now point to a return to popularity of nail salon services.  According to Experian Simmons National Consumer Study data cited in our recent report on The Nail Care Market in the U.S., an improving economic picture in 2011 resulted in a sharp uptick in the number of women who are frequently professional nail care services.  In 2011 the number of women having two or more manicures in a six-month period (defined as “salonistas” in our report) increased from 16.3 million to 18.1 million, or 11.3%. 

The question facing nail care product marketers in 2012 is whether DIY nail care sales will decline as women return to salons to get professional manicures and pedicures.

Paradoxically, the data strongly suggest that the reverse will be true: the more women go to salons for manicures, the more they buy and use DIY nail care products.

·         One in four (25%) salonistas used do-it-yourself (DIY) nail care products five times or more in the past 30 days, compared to only 15% of other women.  Salonistas are nearly twice as likely as other women to have used DIY nail care products two to four times during this period (39% vs. 22%).

·       Packaged Facts estimates that  the monthly number of DIY uses of nail care increased by 13.4 million in 2011.  Nearly half of this growth (46%) was due to the increase of 6.2 million DIY nail care product uses by salonistas.

Salonistas are at the core of the nailcentric fashion culture that is driving nail care market growth.  Rather than siphoning off dollar sales of DIY nail care products, the post-recession boom in professional manicure and pedicure services will serve to fan the flames of the mass-market nail care market.

Prepaid Cards as a Mutually Agreeable Separation

Big banks are not necessarily beloved institutions, and recessions have a way of  driving them near to the bottom of many consumers' lists. Throw on some questionably timed decisions to add a usage fee onto debit cards—a banking service consumers expect to receive at no cost—and you can kindle a bonfire of indignation. More than ever, consumers are apt “shop and drop” their consumer banking services.  And for consumers who don’t like banks—and who can do without some of the services banks traditionally provide—a prepaid card could fit the bill perfectly.

This may be just fine for many of our largest financial institutions, which are poised to conserve banking margins while continuing to generate revenue with industry-leading prepaid card products. As noted in Packaged Facts' July 2012 Prepaid and Gift Card report, JPMorgan Chase is moving to shed what it determines are lower-profit checking accountholders, many of whom newly fit that description thanks to regulation limiting debit interchange and overdraft fee revenue. In the wings, ready to take flight this summer, is the Chase Liquid prepaid card.   Chase Liquid is positioned to redirect at least a portion of these lower-profit consumer banking customers onto a game-changing consumer prepaid product: very well designed, simple to understand and  use, and yet one that promises solid profits.

With prepaid products like this promising debit interchange rates untouched by the Durbin Amendment, strong cost containment, solid margins on consumers major banks may deem unprofitable, and the means to earn income from the unbanked in the bargain, what’s not to like for a major bank? While we view increased prepaid regulation as a near certainty, we believe Chase Liquid will demonstrate that substantial headroom exists for consumer general-purpose reloadable (GPR) prepaid products providing transparency, a strong product feature mix, simplicity, and reasonable fee structures. We see Chase’s foray as an opening salvo among major banks: with American Express also pushing aggressively into the consumer GPR prepaid field, it’s only a matter of time before other major banks (such as Citi, Bank of America, Wells Fargo and US Bank—none of which have a consumer GPR prepaid presence) follow suit.

HBC Marketers Ramp Up for the New Majority

African-American? Hispanic? Asian? Other minority or multi race/ethnicity?  Today in the U.S., a “yes” to one of these is becoming more and more likely.  According to U.S. Census Bureau projections, the number of non-white U.S. residents reached 113 million in 2010, and these collective minorities are expected to eclipse  white non-Hispanics as early as 2042.  When this occurs, the minority population will collectively become a new majority.  The market  for "ethnic" health and beauty care has therefore never been more appealing, both in terms of product options for consumers and of marketers looking for sales spikes in tandem with the demographic tides.  (Albeit an outdated and offputting term,  "ethnic" remains the HBC industry descriptor for specialty products targeting white non-Hispanics).

Although the U.S. market for ethnic health and beauty care (EHBC) is already valued at close to $3 billion, significant growth potential remains.  As reported in Packaged Facts’ Ethnic Hair, Beauty and Cosmetics Products in the U.S. (July 2012), racial/ethnic minorities still use general-market products far more often than ethnic-specific ones—at a rate greater than ten-to-one.  At the same time, EHBC is expanding much faster than general HBC as minority consumers increasingly demand products specifically formulated to meet their needs.

Prompting the growth in demand for these products is the  burgeoning number of minority consumers in the U.S., a sharp and steady increase in their buying power, and a rapidly expanding array of product options.  In the past, minority consumers seeking specialized personal care products had little to choose from, and the distribution of products that were available was partially limited to alternative channels including barbers and beauty supply stores. Now, mass retailers such as Target and CVS are coming on strong in EHBC, stocking brands that just ten years ago they would not have considered carrying, and devoting entire shelving sections to EHBC.

Of particular interest are makeup products that identify and address the specific skin concerns of the different minority communities.  Another up and coming segment is grooming products for minority men beyond shaving lotions and dandruff shampoos, as it becomes socially acceptable and even a social imperative for men to adopt grooming habits and products previously viewed as somehow too attentive and less than masculine.  Regardless of gender, many minority consumers want products that work for them rather than having to make do with what is available.

A handful of highly successful EHBC marketers have already figured this out.  And while many mainstream HBC products are activly positioned on a cross-multicultural basis, marketers committing to targeted products that meet the skin, hair and cosmetic needs of African-Americans, Hispanics, Asians, and other racial/ethnic groups appear set to attract growing communities of Americans looking for brands and products that speak directly to them.

Tweaking the Score, if not Changing the Game: The Consumer Take on Food and Beverage Packaging

From purchase off the shelf through consumption, packaging for food and beverages evolves to intersect with consumer needs and desires.  Food and beverage categories and brands benefit significantly when manufacturers and retailers manage to fuse packaging innovation with emerging consumer trends.

To take advantage of the dynamic environment, as argued in our recent report on Food and Beverage Packaging Trends in the U.S., manufacturers and retailers must understand what matters most to consumers, and which packaging innovations deliver benefits that actually impact behavior. 

This understanding is critical because new product success is exceedingly tricky to achieve, even among the most veteran, category-dominant, and deep-pocketed manufacturers and marketers.  According to SymphonyIRI, just 3% of new products achieve blockbuster status, sales of more than $50 million in the first year.  The vast majority of new products don’t even reach $7.5 million first year out.  Yet innovation is essential.   Experian Simmons data show that even during difficult economic times—and corresponding during a boom time for comfort food—half of U.S. consumers like to try out new food products, with 32% agreeing “a little” that they like to do so, and 18% agreeing “a lot.”

What do consumers generally think about food and beverage packaging?  Overall, they are satisfied with packaging available to them.  Respondents to our Packaged Facts March-April 2012 Survey showed hardly any dissatisfaction with packaging across major food and beverage categories, findings that suggest that packaging is not likely to be a primary driver of purchase for most products.  Nonetheless, innovative packaging is a value-add that can determine product format or brand choice—especially given that consumer aren’t totally happy with packaging choices, either.  In fact, they don’t necessarily think very highly of manufacturers’ overall packaging efforts.  Packaged Facts survey data show that about 60% of consumers strongly or somewhat agree that manufacturers often make insignificant packaging changes.   And 45% think lighter weight or less bulky packaging is important.

More specifically, survey respondents have some common complaints across major food and beverage categories.  Most cluster around consumer frustrations with easy opening and closing, resealing, maintaining freshness, and food safety issues.