Varied Interests Drive Growing Popularity of Local Foods - Amber Waves, December 2010, Feature

Varied Interests Drive Growing Popularity of Local Foods

As demand for local foods grows, so do questions about what constitutes “local” foods, what characterizes local food markets, and how local food markets affect farmers, consumers, and communities.

Steve W. Martinez

High Quality Prepared Food Departments Add Dine-in Cafes to Drive Traffic at Grocery Stores

Prepared food bar at Wegmans.  Photo Courtesy of
toujourspretamanger.com

Been to a Wegmans lately?  The Market Cafés have pizza, freshly-made sushi, burritos, Thai food, and vegetarian choices for dining in or taking home. And Kroger took out the underused salad bars to make way for prepackaged salads, sandwiches, and carnitas. My own local Harris Teeter offers chef-staffed prepared food stations.  Imagine that, a live person ready to make my perfect California roll.

As a self-proclaimed 'foodie' you would think I'd stick to the trendy new restaurants in downtown D.C. But on today’s shoestring budget that’s not possible.  Instead, I find myself eating what I want at attractive, upscale bistro area of my local grocery store.

The traditional grocery channel made 57% of retail food & beverage dollar sales in 2010, according to market research publisher Packaged Facts. Through their in-store foodservice options, traditional grocery stores stand to further grow in share of U.S. food & beverage sales.

Grocery stores are aiming to make shopping more appealing by providing upscale restaurant-like experiences to customers. In order to attract as many shoppers as possible, stores are providing a wide range of restaurant-style foods and amenities: wood-fired pizzas, made-to-order soups, sandwich and sushi bars, and dining areas. And the eager (read: hungry) shoppers who want to grab a quick meal while grabbing the groceries, take a break for lunch, or get a snack before the drive or walk back home are eating it up.

Packaged Facts analysis expects to see food retailing and foodservice channels continue to converge around fresh prepared foods, working fervently to make consumption more convenient. As a result, the competitive lines between grocery stores, restaurants, convenience stores, and other channels will continue to blur in a U.S. food & beverage retail market projected by Packaged Facts to reach nearly $700 billion by 2015.

At the end of the day, when the sushi stand has been cleaned and the fresh olive bar has closed, what else will retailers be looking to add? Besides adding to their variety of on-the-go foods, deli and prepared food departments will expand with easily accessible take-out entrances and check-out lanes; curbside pick-up and call-ahead ordering; website and smart phone apps for ordering.

Well, that’s where its heading, but for me its lunch-time and I’m heading over to the Parisian café at my local Whole Foods Market. Or maybe a grilled vegetable sub at Teeters? I could really go for some sushi-…

MORE> 

Women dominating postsecondary ranks

Market Insights: A Selection From The Report

---

Bolstered by revenue safeguards such as federal food programs and student loans, K–12 and college foodservice has emerged as an industry bright spot expected to grow steadily over the next several years, according to The Education Foodservice Market in the U.S.: Elementary, Secondary and Higher Education by market research publisher Packaged Facts.

Women dominating postsecondary ranks
For fall 2008, 19.57 million students were enrolled at all Title IV postsecondary institutions. 18.97 million of these students were enrolled in a 4-year undergraduate program (48.0% of total enrollment), a graduate program (12.7% of total enrollment) or a 2-year program (36.3% of total enrollment).

• Among the 9.39 million students enrolled in a 4-year undergraduate program, 7.42 million (or 79.0% of all 4-year undergraduates) were enrolled full time and 5.26 million (or 56%) were female.
• While graduate students were more evenly split between full-time and part-time status, some 61% of graduate students were female.
• 2-year institutions also enrolled a higher percentage of females, but about 59% of 2-year students were enrolled part time.
  

View Table of Contents »

Energy Drinks and the New Food-Supplement Continuum

Written by David Sprinkle for Natural Product Insider

Energy drinks and energy shots have been one of most remarkable success stories in the mass-market for foods and beverages. According to SymphonyIRI data presented by Packaged Facts at the 2010 SupplySide West conference in Las Vegas, Red Bull posted $45 million in dollar sales gains through supermarkets, drugstores and mass-merchandisers for the 52-week period ending October 2010, even with the exclusion of Wal-Mart, as well as convenience stores. Although sales growth has leveled off from an average 31-percent annual rate throughout the middle of the decade, Red Bull dollar sales were up 12 percent for the most recent period. Even that relative tapering off in growth is partly attributable to thunder-stealing by Living Essential’s 5-Hour energy shots, which are posting 58-percent annual growth through these outlets.

Table 1: Selected Leading Dollar Sales Gainers by SymphonyIRI Tracking in Food, Drug and Mass Outlets (52 Weeks Ending Oct. 3, 2010)
Brand Line	$ Sales	% Chg	$ Gains
Chobani Yogurt(Greek-style)	$196M	246%	$140M
Red Bull Energy Drink	410	12	45
Fage Total Yogurt (Greek-style)	123	57	45
5-Hour Energy Shot	118	57	43
Dannon Activia Yogurt	251	20	41
Nature’s Bounty Mineral Supplements	233	20	38

Energy drinks and energy shots serve as a wake-up call to the rest of the beverage market. Major marketers and megabrand managers certainly took notice of the sales success, as evidenced by new product introductions, such as AriZona Energy drink, Crystal Light Energy drink mix (“caffeine and energy releasing B vitamins to help you feel energized”), Minute Maid Natural Energy Strawberry Kiwi with Yerba Maté (“a delicious juice drink providing a natural energy lift”), and Snapple’s Elements Energy Drinks or AriZona's new Fast Shots (A.M. Awake, Rx Energy). Food manufacturers also learned the energy lesson, as evidenced by new products, such as General Mills’ Fuel Wheaties, which aims to boost an athlete’s energy, endurance and performance.

Part of the marketer enthusiasm for energy drinks and energy shots stems from the fact that these new products, like formerly newfangled sports/activity drinks, invert the usual age pattern for dietary and nutritional supplementation. Use of nutritional supplements overall, as indicated by the Experian Simmons Spring 2010 national consumer survey, rises from 36 percent of Gen Y-ers to 76 percent of senior citizens. Consumption of Red Bull energy drinks, in contrast, falls from 19 percent among Gen Y adults to 3 percent among Boomers and virtually nil among seniors. Use of 5-Hour energy shots, similarly, takes a plunge after a usage peak of 7 percent (twice the average) among Gen Y adults.

Table 2: Use of Red Bull Energy Drink by Adult Generational Cohort
Age Cohort	Percent
Adults Overall	7.3%
Gen Y (18-29)	18.9
Gen X (30-44)	9.5
Boomers (45-64)	3.2
Seniors (65+)	n/a
Source: Compiled by Packaged Facts based on Experian Simmons Spring 2010 National Consumer Survey.

Energy drinks and energy shots are also important for underscoring that consumer priorities in dietary and nutritional supplementation are not necessarily, and for younger consumers, not even primarily, about health concerns. A Packaged Facts online consumer survey in 2009 asked U.S. adults whether they had purchased food or beverage products within the prior 12 months specifically because of nutritional benefits in relation to health conditions or concerns. This survey showed 71 percent of adults purchased food or beverage products for this reason, with energy levels (24 percent) and appearance/beauty (23 percent) edging out such medical concerns, such as digestive health (22 percent), cholesterol, obesity/weight management and immunity as the top triggers for such purchases (Packaged Facts, Functional Foods and Beverages in the U.S., 2009). A follow-up survey in 2010 showed 10 percent of U.S. adults strongly agree they “frequently” choose foods and beverages because they are naturally rich in specific nutrients, and 32 percent somewhat agree.

That almost three-fourths of adults make at least trial purchase of food or beverage products for functional reasons testifies to the blurring of the food and supplement markets. Historically, food was natural. Whether from farm or sea, food was associated with nature’s bounty—or, too often, the lack thereof. Even turning agricultural crops into bread, cheese or wine relied on basic natural and physical processes, such that these traditional foodstuffs did not seem, conceptually speaking, to fall very far from the tree.

In the modern era of American supermarkets, that paradigm faded. Nationally branded packaged food “products” claimed the spotlight, and the reliability, abundance, variety and heavily marketed innovation of branded products tended to relegate farm foods to second-class status. Moreover, both the focus on branded food products and the distinctively modern luxury of choosing from among too many foods along supermarket aisles helped pave the way for consumer adoption of nutritional supplements. If food manufacturers tossed extra vitamins and minerals into their processed foods, why not toss multivitamins into your shopping cart? If food product choices hinged in part on the presence of desirable nutrients, why not cut to the chase and buy those nutrients in isolated form?

Most recently, nature’s bounty has made a comeback in the form of whole foods and consumer demand for natural/organic, seasonal, fresh, local and sustainable food options. At the same time, nutritional supplements have kept their place at the table, such that Packaged Facts projects retail sales of supplements to average 7-percent annual growth from $9.4 billion in 2009 to $13.2 billion in 2014.

What is notable here is the mildness of our awareness of contradiction (reservations within the medical community notwithstanding). Without stirring up much sense of incongruity, ultra-traditional Greek yogurts and high-tech Activia fly off the shelves together. Without much tripping of consumer wires, Whole Foods Market is a leading retailer of nutritional supplements, Nature’s Bounty is a leading supplement brand, and supplement manufacturers are busily adopting food marketing product claims, such as gluten-free, vegetarian and even single-serve.

Table 3: High Growth Nutritional Supplement Package Tags/Claims, 2005 vs. 2009
Package Tag/Claims	Increase
No Gluten	56%
Vegan	41
Vegetarian	34
Natural	32
No Dairy	26
No Sugar	24
Single Serving	23

A continuum has emerged in the food and beverage market from whole foods and superfoods to fortified/functional foods and supplements. In response to myriad dietary and nutritional concerns, American consumers have characteristically chosen an “all of the above” approach. This new continuum has brought superfoods, along with fortified/functional foods and beverages, to the sweet spot of new product development, such that these center-of-continuum products will continue to account for disproportionate share of the best-selling, most profitable entries in the market.

Because of amped-up competition and the proliferation of hybrid products along this food-to-supplement continuum, marketers of nutritionally positioned foods and beverages face multiple challenges. One is to create products that combine key nutrients and benefits/functions in ways that make instant, intuitive sense to busy consumers. Another is to create products that are tasty and wholesome enough to compete with nature’s bounty. Superfood products have an advantage here, as evidenced by the success of Greek-style yogurt. Another challenge is creating products that are convenient and portable enough to compete with pills. Functional/fortified foods and beverages have an advantage here, as evidenced by the success of 5-Hour energy shots. Navigating this continuum effectively will help turn consumer trial of your product into wake-up-and-smell-the-energy retail success.

David Sprinkle is research director for Packaged Facts (PackagedFacts.com), Rockville, MD, and co-publisher of Culinary Trend Mapping Reports, a joint publication with the Center for Culinary Development (CCDSF.com), San Francisco.

A sweet finish to the year

Christmas is a lucrative time for local chocolatiers as they continue to weather the economy's downturn.

By JACKIE CROSBY, Star Tribune

Last update: December 23, 2010 - 10:08 PM

The machines were humming this week inside the sprawling factory at Abdallah Candies in Burnsville. A worker gently sprinkled sea salt onto dark chocolate pieces as they moved along a conveyor belt, while two women on a nearby line stamped "B's" into the warm chocolate that enveloped a vanilla-butter-cream filling.
"They're going out the door as fast as we can make them," said CEO and owner Steven Hegedus, the fourth generation to run the company, as he surveyed the 65,000-square- foot plant. "Business is brisk."
Christmas makes up 35 to 40 percent of annual sales at Abdallah, which manufactures chocolate candies and confections for more than 6,000 gift and specialty food stores across the country, as well as Lunds and Byerly's locally. The company specializes in "everyday chocolate," generally priced lower than most handmade artisan brands, but higher than, say, Hershey's.
If America's sweet tooth provides insight into how consumers feel about the economy, chocolatiers such as Hegedus have some hope for the year ahead.
"We put resources into infrastructure so that when the economy picked up, we'd be poised to be at the next level of production," he said. "That's exactly what's happening now. The recession's not over, but it's picking up."
The $17.3 billion U.S. chocolate industry has expanded, but hasn't regained its prerecession pace of growth, according to consumer market research firm, Packaged Facts. Sales have been resilient mainly because the percentage of Americans who buy chocolate -- 3 out of 4 -- has remained steady.
Industry experts attribute that relative vigor to what economists call the "lipstick factor," where sales of small luxury items stay strong during times of economic hardship because of their ability to lift spirits.
Nonetheless, the recession has forced a handful of chocolate makers in the Twin Cities to become more nimble, and to think of their business in new ways.
Brian McElrath and Christine Walthour, a husband-and-wife team who own wholesaler B.T. McElrath, have completed shifted their business model. A couple of years ago, they manufactured mostly filled chocolates. But in 2009 they boosted production of high-quality chocolate bars.

Frozen food trend on the up, says Packaged Facts

www.foodnavigator-usa.com
By Caroline Scott-Thomas, 23-Dec-2010
 
"The frozen foods industry in the United States has boomed over the past few years – and growth in the sector looks set to continue in 2011, according to a new report from Packaged Facts."

The market research organization said that the frozen food sector has enjoyed a period of unprecedented growth, as consumers are eating at home more often and manufacturers have innovated with healthier options that also tap into demand for convenience. Packaged Facts’ “Frozen Foods in the U.S., 3rd Edition” report found that from 2006-2010 sales of frozen foods rose 22 percent, or about $10bn, to reach a total value of $56bn in 2010.

Publisher of Packaged Facts Don Montuori said: "A lingering effect of the recession is that consumers are eating at home more. This trend has had a positive impact on the frozen foods market, as consumers turn to the freezer aisles to supplement more expensive fresh produce and meats. Additionally, microwaveable frozen products provide a quick and easy lunch-at-work for those looking to avoid pricey lunches out."

In addition, the report says that the economy is no longer holding back frozen food innovation. After two years of declines, the number of new frozen food and beverage product introductions reached a new high in 2010, increasing 21 percent on the previous year, to 728, more than in pre-recession 2007. The market researcher said this is “a sign that economic conditions are no longer discouraging frozen food marketers from bringing new products to the market.”

While frozen dinners and entrees continued to sell well in 2010, sales of frozen appetizers and snacks are flat, and the frozen juice category is in free-fall, the report said.

“Canned, bottled and frozen juices have all experienced losses in the millions as consumers turn to beverage options with less sugar, or to functional beverages such as energy drinks and enhanced waters,” according to the market researcher.

Packaged Facts predicts that the frozen food and beverage sector will reach $70bn in retail sales by 2015, up 25 percent on 2010.

For further information, please visit: http://www.packagedfacts.com/Frozen-Foods-Edition-2511637/.

Mmm, Chocolate

Seemingly recession-proof, chocolate’s appeal continues to evolve with the times.

By Joanna Cosgrove, Nutraceuticals World, Published December 9, 2010

“Over the last decade chocolate makers have been responding to consumers’ drive to live healthier lifestyles,” commented Packaged Facts’ Curtis Vreeland, a seasoned chocolate industry analyst and author of the report. “Their efforts have brought us portion-controlled packaging, sugar-free sweets, heart-healthy dark chocolate and fortified confections of unbelievable variety and veracity. This trend should continue, as healthier confectionery offers consumers an irresistible package: health and wellness, plus indulgence and a convenient serving modality.”
__

Read Full Article

---

The Future of Pet Insurance in North America

The North American market for pet health insurance has never been more competitive. During the past five years the number of established players has doubled, and all of the companies now in the market appear to be on solid ground. Where is this market headed? How will companies incorporating distinct trends now impact the industry in the next five years? Furthermore, what business strategies will maximize their bottom line?

Presentation authored and read by David Lummis, Senior Pet Market Analyst, Packaged Facts

Frozen food manuf. find themselves in spot during the recession

Marketers of frozen convenience food have found themselves caught between a rock and a hard place during the economic downturn. Though fresh convenience food has gained through positioning that casts it as a less expensive alternative to restaurant food during a time of recession, frozen convenience food is frequently viewed as a more expensive, less fresh alternative to cooking from scratch at home. The frozen food categories that have been able to grow substantially in this environment are therefore the ones that have been able to elude this paradigm.

Specifically, the mammoth frozen pizza category and the spunky hand-held breakfast category have both found a way to go head-to-head with restaurants; and the prepared vegetable category has been able to triumph on the freshness front via the development of steaming techniques. According to Packaged Facts, these three categories have led the way sales-wise, enabling an otherwise ambivalent market for frozen convenience foods to grow by a modest 2.0% in 2010 to reach sales of $16.8 billion. Packaged Facts expects that marketers in other categories will soon adopt similar strategies, driving sales of fresh convenience foods up another 10% by 2015, to $18.6 billion.

Frozen Convenience Foods in the U.S. : Packaged Facts

Indulge your hunger for knowledge at Weight Management 2010 - the virtual conference and expo

Indulge your hunger for knowledge at Weight Management 2010 - the virtual conference and expo

FoodNavigator-USA.com will host the first virtual conference and expo dedicated to weight management, showcasing the latest trends and strategies in weight management for the food, beverage and dietary supplements industries.

The live one-day event called Weight Management 2010 Virtual Conference and Expo will be taking place on Thursday November 4. The conference will cover key topics from high-profile industry personalities from Nestlé, Unilever, The Federal Trade Commission, Packaged Facts, New York University, Université Catholique de Louvain and University of Sussex.

Organized in association with NutraIngredients-USA.com, the virtual event allows visitors to network, attend conferences, and visit suppliers online – without having to book flights or hotels.

Virtual versions of trade shows and conferences are becoming increasingly popular as marketing budgets come under pressure in the recession and IT companies develop new and improved platforms for online events.

Networking

Cost saving is not the only attraction of the virtual format. Visitors to Weight Management 2010 can easily navigate their way around the virtual floor and can network simply with both visitors and suppliers through forums at stands, and using a chat facility.

In addition to networking, attendees of the show can come to stands in the virtual exhibition hall to pick up product brochures, technical papers and case studies, and tune in to videos. The select group of suppliers showcasing their very latest ingredient and formulation innovations include: DSM, Roquette, Sensus, National Starch, Pharmachem, Bio-Serae, Cognis, Frutarom, Nutrition21, OmniActive, P.L. Thomas and Tate & Lyle.

Conference line-up

The program will start with an overview of the weight management sector, from Don Montouri, publisher of Packaged Facts, with special focus on dietary programs to achieve weight management, from Atkins to GI and Weight Watchers.

The U.S. Moms Market 2010, 3rd Edition

A new market research study takes a look at the changing demographics in the mom's market and details who is and will become a Mom in the near and distant future.

The report is divided into two parts: The Market Fundamentals and The Market Opportunities.

The Fundamentals

Within the fundamentals you will understand the facts about Moms and children. You will also get to know Mom better by looking at the different ‘stages’ she goes through as a mother of children at varying ages. Additionally, you will step inside her mind to understand not how she is using her cell phone or how much time she spends on the internet, but what she worries about and/or what motivates her.

The Opportunities

The second part of the report takes macro trends and applies them to the Mom Market and explores the resulting micro trends. Highlighting the most influential shifts in the U.S.: Finances, Ethnicity, Eco-Awareness and Technology, the report is filled with specific insights, implications and examples of opportunities for brands.

---

Each chapter includes insights and implications so that once you put the report down you will have ideas, plans and actions in mind. Highlights include a look at brand attribute importance by Moms vs. females overall and by Moms across different ethnic groups.
Additionally, commentary on new products in the market coming directly from Moms is included for understanding and distillation.

More Information>>

Pet Insurance in North America, 4th Edition

Now in its fourth edition, Packaged Facts’ Pet Insurance in North America is the most comprehensive examination of the U.S. and Canadian pet insurance markets available and a must-have for any company interested in this dynamic industry. Although sales growth slowed due to the recession, revenues (measured as gross written premiums) remained in the double digits in 2009 while delivering a 2005-2009 compound annual growth rate of 21%. Packaged Facts expects the North American market for pet insurance to continue to chart strong annual increases over the next five years, with the high level of competitive activity helping to offset the slow economic recovery and ongoing challenge of communicating the value of pet health insurance to budget-watching consumers.

As of 2010, industry pioneer Veterinary Pet Insurance (VPI) continues to lead the market. However, both the U.S. and the Canadian pet insurance markets have experienced significant market share shifts during the past five years as more than a half dozen new companies have come onto the field. Each of these companies brings with it unique strengths, in some cases including potent co-marketing affiliations with powerful brands (e.g., PetPartners and the AKC, PurinaCare with its own famous name), and in other cases including important retail channel thrusts (e.g., PetFirst with Kroger and Petfinder.com, and Trupanion with Petco). The industry is also seeing more investment backing and large insurance companies coming into the market as underwriters, including Aon with Healthy Paws, Aetna with Pets Best, and Berkshire Hathaway with PurinaCare.

Private-Label Food & Beverage Retail Sales

See more presentations by MayaT | Upload your own PowerPoint presentations

Natural, Organic and Eco-Friendly Pet Products in the U.S., 3rd Edition

Although the 2008-2009 recession took a notable toll, natural and organic pet products continue as a top-growth market segment on their way to becoming the standard for premium pet products in the pet specialty channel and other upscale venues. Doing their part, all of the major mass-market and cross-channel marketers are tapping into the trend as well, keeping pressure on smaller marketers to scale up their product offerings even further. Most recently, in mid 2010 Procter & Gamble rocked the pet food industry by acquiring Natura Pet Products, whose natural and organic pet food brands include Innova, Evo, California Natural and Karma—a move that suggests that the natural pet food party is just getting started on the mass-market side.

Also underpinning steady market advancement is consumer demand for products perceived to be safer, an appeal that got a big boost from the Spring 2007 recalls and one that continues to define the way marketers formulate and position products. According to pet owner surveys conducted by Packaged Facts, 40% of dog owners and 38% of cat owners purchase natural/organic pet products; nearly half of pet owners would buy more natural/organic pet products if they were more affordable; and almost two-fifths would do so if they were more available. Featuring exclusive consumer data such as these, the report homes in on food and nonfood purchasing trends across multiple categories, as well as attitudes and demographic characteristics of natural and organic pet product purchasers.

More Information>>



Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Foodservice

Wegmans Cafe

Hoping to parlay recession-based foodservice-to-retail migration into long-term gains, food retailers continue to ratchet up their prepared foods and ready-to-eat programs. Packaged Facts estimates that grocery stores and supermarkets will grow prepared- and ready-to-eat foods sales by more than 7% in 2010. Their usage imprint is already imposing:

According to Packaged Facts’ proprietary consumer research, 64% of adult consumers have gotten ready-to-eat/heat-and-eat food from a grocery store or supermarket in the last month. Moreover, in terms of total usage occasions, grocery-related prepared foods use leads both family and casual restaurant segments and trails only fast food/QSR.
 
While convenience stores have also relied heavily on prepared foods and foodservice sales for sales and higher margins, increasing competition extends to supercenters, warehouse clubs, convenience stores and drug stores. At a time when food value is so closely associated with low cost and convenience—and when consumers increasingly perceive private label food retail brands as competitive with name brands on cost and quality—prepared and ready-to-eat foods programs that deliver on quality, taste and convenience can not only compete with foodservice fare, but can also help food retailers adapt to modern consumer lifestyles.

More Information>>