Search This Blog

Thursday, July 18, 2013

Horsegate, Pink Slime, and the Locavore/Farmers Market Movement


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/

Friday, July 12, 2013

The Competition Thickens in Greek Yogurt

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  http://www.packagedfacts.com/Yogurt-Innovation-Greek-7206794/

--George Puro

Wednesday, July 3, 2013

Why Profit Margins Are Trending In The Dairy Industry


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.

Overview

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.

Conclusion

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. 

Minority Market Study Shows Consumer Optimism Despite Tough Economy


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

Friday, June 28, 2013

10 New Chocolate Ice Creams For The Dairy Market This Summer

                                        


June 7th was
National Chocolate Ice Cream Day, the day we celebrate one of the most popular ice cream flavors of all time. And while chocolate ice cream does come in second to vanilla in terms of popularity, it does so knowing that it is very adaptable to layers of extra flavors and that it functions as a base for many other popular ice cream flavors.

For example, chocolate pairs surprisingly well with some unlikely partners, such as sea salt. It also likes to get heated up, with chocolate ice cream pairing well with chilies and various spices…and even booze! The almost wine-like taste of the upscale Mexican beer Bohemia, combined with the subtle heat of the pasilla chili pepper, makes for the ideal flavor combination for addition to a rich chocolate ice cream base.
And speaking of chocolate base, ice cream manufacturers are improving the quality of cocoa and chocolate that they use in order to deliver a more upscale eating experience. Often times the source of the chocolate is becoming part of the flavor story. 

 

Here are 10 innovative chocolate ice cream flavors for summer 2013:

  1. Stout Beer and Chocolate Gelato- Developed by Gelato Petrini, this product joins other alcohol-containing frozen desserts such as Guinness Chocolate.
  2. Ben & Jerry’s Chocolate Peanut Butter Cup- A chocolate version of its popular Peanut Butter Cup ice cream, limited-edition pints of Chocolate Peanut Butter Cup are available exclusively through Walmart. A half-cup serving contains 330 calories and 21 grams of fat.
  3. Blue Bunny Premium Chocolate Caramel Cashew Ice Cream- Here’s another limited-edition ice cream. It is described as silky chocolate ice cream loaded with chocolate flakes, honey-coated cashews and a caramel sauce. A half-cup serving contains 160 calories and 8 grams of fat. 
  4. The Farmer’s Cow Muddy Boots Knee-Deep in Chocolate- The Farmer's Cow is a group of six Connecticut dairy farms working together to sell their fresh dairy products. Based on a lot of chocolate, Muddy Boots Knee-Deep in Chocolate is pure decadence. It features The Farmer’s Cow “Cow Barn Chocolate” ice cream, which is made even muddier with brownie bits and chocolate chips swirled in a fudge ribbon.
  5. Baskin-Robbins' Maui Brownie Madness Frozen Yogurt- The popular ice cream parlor is this new yogurt, which is chocolate frozen yogurt loaded with chunks of brownie and macadamia nuts and swirled with ribbons of chocolate fudge.
  6. Straus Family Creamery's NuScoop- It is an innovative snack or meal supplement that provides complete nutrition in the form of a frozen dairy dessert. NuScoop is real, organic food without any artificial or genetically modified ingredients. This first ever “energy bar for ice-cream lovers” is available in 4-ounce cups in three flavors, Dutch Chocolate, Strawberry and Coffee. All of the NuScoop flavors are 50% higher in protein and 50% lower in fat compared to regular ice cream. The suggested retail price is $2.49.
  7. Three Twins Ice Cream- The dairy company has a number of new flavors this summer, including two chocolate pint concepts. There’s organic Fair Trade Chocolate Malt and organic Chocolate Peanut Butter Cup. Pints retail for $4.49 to $4.99.
  8. New Breyers Blasts! Mrs. Fields Chocolate Fudge Brownie Frozen Dairy Dessert-  This is a chocolate frozen dairy dessert loaded with Mrs. Fields fudge brownie pieces  with a fudge swirl.
  9. High Road Café Ice Cream Chocolate Noir- Recently debuted, it is a rich, dark chocolate craft ice cream. The company also offers Aztec Chocolate and Caramel as part of its Destination Series line.
  10. Nestlé Temptations Flavors of the World Belgian Chocolate Praline Flavored Ice Cream- An offering for consumers outside of the states, it is described as rich swirls of white chocolate and milk chocolate ice cream blended with Belgian chocolate chips and praline pieces made of chocolate-coated toffee bits.
It's shaping up to be a great summer for chocolate ice cream. Please enjoy a scoop or two!
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.

Friday, May 31, 2013

Summer Movies: Marketing to Ethnic Audiences


You know the summer movie season has arrived when half the commercials on television feature costumed adventurers, speeding muscle cars, computer-enhanced animal characters that are voiced by celebrities, or a combination of all three.

As ubiquitous as these summer blockbuster motifs may be, the presence of on-screen advertisement and in-movie product placement have become equally prevalent. The marketing through movies tactic has gained traction during the past two decades, and, while controversial to some consumer advocates, it has proven to be a viable means of reaching various movie-going consumer segments.

For example, African American moviegoers are particularly receptive to these forms of marketing. According to an upcoming market research report by Packaged Facts, African Americans are more than twice as likely as the average consumer to strongly agree that:

  • Seeing a character using a branded product they've never tried in a movie is likely to persuade them to try it.
  • They pay attention to the commercials that play along with the movie previews.
  • Seeing a brand name product they've used before in a movie reassures them that the product is good.
  • They often notice the ads in the lobbies of movie theaters.

Great Purchasing Power

Market research firm Nielsen estimates the buying power of African Americans will be $1.1 trillion by 2015. As a consumer demographic, African Americans are regarded to have the spending habits and intense brand loyalty that is very attractive to marketers. Yet, advertising directly through demographic-oriented media has been lackluster at best. On-screen movie advertisements and product placement could be one viable answer to reach African Americans through a means that reaches other consumer segments as well.

For years, consumers have been bombarded with advertisements from the moment they enter the theater. It's common to see not just the standard previews for upcoming films, but also lengthy sneak peeks at upcoming network television series and commercials for familiar products such as Coca-Cola.

These marketing tactics have been much maligned by casual movie goers and movie industry experts alike, including concerns raised by influential voices such as the late Roger Ebert. However, there's just too much money to be made by theaters for this trend to wane anytime soon.

There's Money In On-screen Advertising

In December 2009, Smartmoney.com cited Patrick Corcoran, spokesperson for the National Association of Theatre Owners, who estimated that movie theater revenue from on-screen advertisements shown before the previews increased  10%-15% annually. It's likely that revenue gains stagnated or dropped a little during the height of the recession and the years since. However, the continued prevalence of on-screen advertisements suggest that they remain an essential source of income.

Popular chains such as Regal Cinemas and AMC Theatres encourage companies to filter their marketing dollars into on-screen commercials by touting advantages movie theaters have over television commercials and other forms of media. Advertising advantages listed by AMC Theatres on the company website include:

  1. Big screen ads capture consumers' attention better than other media.
  2. The fact that consumers do not have remote controls to change channels or DVRs to fast forward through commercials means advertisers' messages aren't lost on consumers.

When it comes to product placement directly in films, there is a delicate balance marketers must consider when teaming up with movie studios to mastermind this sometimes volatile advertising synergy.

Don't Press Your Luck

An overkill of product placement can lead to consumer backlash. For instance, Iron Man 2  positioned itself to be the blockbuster film that would kick off the summer movie season when it debuted in May 2010. It garnered the usual assortment of positive and negative reviews from film critics, but also faced unexpected attention over what some perceived as its egregious (or perhaps envelope pushing) use of product placement.

The film had an estimated 64 product placements, which is roughly one product placement every two minutes. Aside from the appearance of luxury brands such as Audi, what made these product placements appealing to audiences is that most were associated with brands considered relatively affordable. These brands included Dr. Pepper and Burger King (that's right, even you the average American can purchase the brands preferred by the world's foremost fictional billionaire cum superhero).

The third and latest blockbuster movie in the Iron Man franchise, which hit theaters in the U.S. on May 4, 2013, followed in the same vein of its predecessor to a slightly less ambitious degree.
Subway incorporated the movie's witty dialogue into an amusing TV commercial promoting its Smokehouse BBQ Chicken sub. Meanwhile in the actual film, Audi made a return appearance.

Celebrities DO Make A Difference

Brand name sunglasses such as Aviators by Randolph Engineering and London Calling by Initium Eyewear (the company's website even features a banner reading "As Seen in Iron Man 3") also made an appearance, as did products from the Fred Perry clothing label--namely a classic Fred Perry Twin Tipped shirt worn by African American actor Don Cheadle on screen.

It's worth noting that Packaged Facts' research reveals that African Americans tend to be very fashion forward and often set apparel trends picked up by other consumer segments. So pairing bankable African American movie stars like Cheadle with trendy apparel and other products could be the perfect inroad into this highly influential consumer segment for some marketers and manufacturers.

Don't believe me? Google what megastar Will Smith did for the popularity of Converse All-Stars after name-dropping the brand in his film I, Robot in 2004.

-- Daniel Granderson
   Market Research Analyst

Thursday, May 23, 2013

The Whole Story About Dairy


Most Daily Dose of Dairy™ readers are involved in the development and marketing of one or two dairy product categories. Common combinations are cheese and whey, milk and ice cream, and yogurt and dips. But we all recognize the contributions each product category makes to the overall healthful halo that dairy products possess. It is important that we occasionally do a “check in” to make sure we have not lost focus of our purpose, which should be to offer consumers the best tasting, most nutritious, affordable and sustainable dairy products.

For long, dairy has been recognized for its nurturing and nourishing qualities. This video from the Global Dairy Platform (GDP) is less than 2.5 minutes and does a fabulous job-reaffirming dairy’s role in life.
View the video HERE.

“The image of wholesome nutrition for families has been, and remains, a key to its place at the world table,” says Donald Moore, GDP executive director. “Those attributes, however, are only part of the story. Dairy plays a much larger role--in our lives and our communities--than is commonly appreciated by consumers. This is why we developed this video…to tell dairy’s whole story.”

Established in 2006, GDP’s mission is to align and support the dairy industry to promote sustainable dairy nutrition. For more information, visit HERE.

“Our members are leading dairy corporations, cooperatives and associations who have united to resolve issues affecting the future viability of the global dairy sector,” explains Moore. “The GDP and its members work to promote the nutrient richness of dairy products, bring balance and research to the role of milkfat in the diet and provide clarity on how dairy is managing its relationship with the environment. Now more than ever, as the world’s population increases by 75 million people per year, the time is right to tell the story of dairy’s power as a sustaining life force, as well as the dairy goodness we bring to billions of people every day.”

 

Research Highlights 


DAIRY PROTEIN: THE GOLD STANDARD. With a groundbreaking report by an Expert Consultation of the Food and Agriculture Organization of United Nations (FAO) recommending a new, advanced method for assessing the quality of dietary proteins, GDP hosted a Protein Marketing Workshop for its members to prepare and position the dairy industry to benefit from this new information. The new method—the Digestible Indispensable Amino Acid Score (DIAAS)--enables researchers to differentiate protein sources by their ability to supply amino acids for use by the body. The new method demonstrates the higher bioavailability of dairy proteins when compared to plant-based protein sources.

Data in the FAO report shows whole milk powder to have a DIAAS score of 1.22, far superior to the DIAAS score of 0.64 for peas and 0.40 for wheat. When compared to the highest refined soy isolate, dairy protein DIAAS scores were 10% to 30% higher. GDP is working in collaboration with its members to develop a strategy to communicate dairy protein’s superiority.

For more information on the FAO report, view 
HERE.

CHANGING THE CHEESE PARADIGM. GDP initiated a Wageningen University (Netherlands) meta-analysis of completed human clinical studies to evaluate the effects of cheese consumption on blood cholesterol levels from published clinical trials. Additionally, work on a series of animal studies and human clinical trials on the effects of cheese fat content and maturation continues to progress at the University of Copenhagen. The outcome from this research is poised to show that moderate cheese consumption does not have a negative impact on heart health.

Building on that effort, GDP serves as the secretariat to the Dairy Research Consortium (DRC), an alliance among six leading dairy industry associations that collaborates on pre-competitive research into the nutritional and health benefits of dairy. In April 2013, the DRC agreed to investigate the beneficial health outcomes related to the consumption of full-fat (whole milk) dairy products.

This is just a “skimmed” part of the “whole” story. There is so much more we are learning every day about this great food known as milk.

According to GDP, the key for dairy at this moment in its history is not to invent a new story about ourselves, but to understand where our story has taken us, how it might further unfold, and what threads unify the tale.



-- Donna Berry
    Food Scientist, Consultant

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

Friday, May 10, 2013

Are Your Kids the Food Deciders in Your Home?


In recent years, growing numbers of Americans have expressed a desire to practice healthy eating habits, according to news and market research reports. Yet somewhat paradoxically, more households are also turning over at least some of the food purchase decisions to a population demographic not known historically for exercising great judgment: Children and teenagers.

A recent report by the NPD Group indicates that parents let their children make breakfast-related food choices about a third of the time, and lunch selections about a quarter of the time. Parents still hold the control over dinner choices, though, ceding to children only three percent of the time, according to the report.

In addition -- and somewhat less surprisingly -- kids and teens are the main deciders when it comes to fast food choices, according to a poll last year from Viacom's youth channel, Nickelodeon: fully 85 percent of fast food choices within households are dictated by children or teens.

The Nickelodeon market research report also found that parents in general were more "inclusive" in terms of making purchasing choices with input from their children across the board, according to Time Magazine:

"This effect is more pronounced when dollars are at stake — 71% of parents say they solicit opinions from their kids regarding purchases. Nearly all let the kids weigh in when what’s being bought is mainly for the kids themselves, but more than two-thirds of parents take their kids’ views into consideration when making family purchases."

And the Nickelodeon study also found that more than a quarter of parents say they ask for their kids' input before buying items for themselves.

These parallel trends may help explain why analysts at Packaged Facts report a marked increase in consumers' health and wellness related purchases (including more vegetables and fruits and fewer high-sodium, high-carb items annually), yet also note that breakfast-food items, in general, are fast becoming Americans' favorites.

-- Amy Alexander

Thursday, May 9, 2013

Baby Boomers Beware: Millennials Are Coming



Take a look at how each group uses technology and it is evident that Baby Boomers and Millennials operate differently. From using iPads for notetaking during meetings rather than legal pads (Millennials), to preferring BlackBerry smartphones over iPhones (Boomers), it is clear that a generation gap exists. When you get into personal interactions....well.  I don't have enough fingers (or toes for that matter) to count how many times my parents have prefaced a personal anecdote with "Back in my day...."

Where the  workplace and consumer markets are concerned, generational translations define how we interact.  I've held numerous training workshops for my parents to show them how to competently operate their smartphones. Conversely, they taught me the intrinsic value of face-to-face communication over social communication via mobile apps.  For Millennials (those born in the period 1981-2000), this symbiosis is essential to the evolution of the global society and workforce.

This relationship is illustrated in the global spending market.  Business intelligence indicates that the global leaders in spending will shift from Baby Boomers (those born between 1946 and 1964)  to millennials in the coming years. Boomers control 50% of overall assets in the United States.  Additionally, 70% of disposable income in the U.S. is possessed by their demographic.

Baby Boomers have the influence to set trends in the market, as well as the resources to power the market through difficult economic circumstances.  With high salaries and diverse investment portfolios, they are comfortably the leaders in the global spending market in the present.

Meanwhile, Millennials are taking an indirect route to wealth. For the past several years,  high youth unemployment rates and an over-saturated job market are restricting career opportunities for them. Conventional paths to high-salaried jobs have been blocked or truncated.  One detour that some Millennials are using to wait out or go around the soft job market is higher education.  This global student market is establishing itself as a viable sub-segment in the Millennial demographic.

Higher education represents an opportunity to acquire skills and certification that appeals to prospective employers.  College degrees are becoming the standard for jobs that require minimal skill.  The corporate demand for candidates with advanced degrees is increasing by the minute.  Millennials are adapting to these trends and acting accordingly.

The rising costs of higher education in the U.S. has also led students to seek opportunities abroad.  This will expand the student base and increase diversity in new entrants in the international job market.  This confluence of student diversity and the desire to increase earning potential is creating a robust atmosphere of talent and drive.  Whether furthering an existing career or changing career paths, higher education is the gatekeeper to the goals of the Millennial generation.  

Education lending will also thrive because of the younger generation.  The increased importance of obtaining a college degree paired with a higher cost of living will force people to borrow money in order to maintain their lifestyle and accomplish their goals.  The number of people enrolled in higher education increased by 26% in the period of 2007-2012 which amounts to about 193 million people.  And the student market will continue to borrow while balancing major risks accompanying the accumulation of debt. Recent data shows that the salaries earned by graduates aren't enough to pay off their debt. And this is limiting economic recovery and the ability to keep students above the poverty level. 

Millennials are tech savvy, socially and politcally progressive, and not conservative when it comes to spending money.  They are acquiring the qualifications and credentials to earn the money to support their lifestyle in the face of the risks identified earlier.  There's a perfect storm brewing and marketers are stacking up the sandbags to divert the flood into their funnels.  When storm is over, Millenials will emerge as new leader of the global spending market.


-- Richard Washington

Tuesday, April 30, 2013

Consumer Wellness Concerns Drive Grocery Sales



Weight management concerns are top of the mind for a substantial portion of today's grocery-aisle cart-pushers -- consumers, that is. Weight control, weight loss, and obesity are topics that rank among the most urgent health-related drivers: as reported in Packaged Facts’ report, "Weight Management Trends in the U.S.", two out of five adults, representing 88 million consumers, are currently watching their diet to either lose or avoid gaining weight.

Weight concerns play out variously across the food and beverage aisles, in terms of the foods we seek out and those we try to avoid.

Wegmans supermarkets, for example, introduced its Greek yogurt in late 2011 following a two-year development period that included consumer input. The company launched six varieties under its Food You Feel Good About label, leveraging the high protein and low carbohydrate content of the yogurt, so that it would appeal to both health and weight conscious consumers. Wegmans’ product scored additional points for being free of artificial sweeteners, colors, flavors, preservatives or thickeners.

Consumers Demand Healthy Items 

Somewhat paradoxically, although many shoppers officially frown on highly processed or “artificial” foods, consumers continue to respond positively to the development and engineering of food and beverage products that are either explicitly designed to address specific health concerns and nutritional trends, or that amp up the intake of marquee nutrients that are widely associated with specific health benefits.

According to Packaged Facts survey data, nearly half of grocery shoppers like the idea of food and beverage products that are formulated to address specific health conditions or concerns, and two out of five like to use nutritionally enhanced food and beverage products.

In part to compete with the rising tide of store-brand products, “name” brands are increasingly innovating in the area of health and wellness. Many recently introduced national or specialty brand food and beverage products feature the addition of ingredients such as antioxidants, calcium, protein, or omega-3 to deliver more nutritional value—and to capture more consumer dollars.

More generally, processed food manufacturers and foodservice operators alike are focusing on offerings that deliver nutritional benefits consistent with the recommendations of the Dietary Guidelines for Americans, 2010. This focus notably includes a priority on children’s nutrition and obesity concerns.

Concern Over Children's Nutrition is  Paramount

In the National Restaurant Association (NRA) What’s Hot 2013 Chef Survey, four of the Top 20 trends relate specifically to children as diners:

  • Kids’ meals (#3 out of 20)
  • Children’s nutrition (#5)
  • Whole grain items in kids’ meals (#10)
  • Fruit/vegetable children’s side items (#15).

For grocery store shoppers, low-sugar, low-fat, and low-salt products continue to claim their place in the shopping cart.

According to the 2012 International Food Information Council (IFIC) Foundation Food & Health survey, for example, 78% of consumers are cutting calories by drinking water or low- and no-calorie beverages. In categories such as fruit juices and drinks, where commodity input costs have risen sharply in recent months, line extensions offering health benefits such as reduced calories from sugar are a key way to capture more sales from consumers, as noted in a Standard & Poor’s Current Environment Report (November 15, 2012).

At the same time, allergies and other food restrictions are increasingly in the spotlight—or rather in its glare—when it comes to ingredients that shoppers are seeking to avoid. Over a fourth of food shoppers agree that food restrictions, food avoidances or food allergies play an important role in what their households eat, according to Packaged Facts survey data. Gluten-free has been the most prominent trend here, with Packaged Facts estimating a compound annual growth rate of 28% over the 2008-2012 period for the gluten-free foods market in the United States.

Retailers & Producers Respond With Action

Food retailers are also thinking outside of the box (or package) altogether in addressing the specific wellness concerns of their customer base. Through its pharmacies, for example, Winn Dixie is offering free cholesterol and glucose screenings to Winn-Dixie Reward Card holders, as well as partnering with OneTouch, a manufacturer of blood sugar meters for diabetes management. This initiative is more than a general goodwill gesture: according to Simmons data, adult Winn-Dixie shoppers are half again (index of 149) more likely than U.S. adults on average to suffer from type 1 or type 2 diabetes.

It is also essential to note that, particularly in the wake of the Great Recession, consumer perceptions about wellness are undergoing a sea change, moving beyond purely personal nutrition, healthcare, and fitness goals and concerns to a more thoughtful consideration of the self in relation to the community, the environment, and the broader world. As such, local, organic, natural and sustainable remain key attributes and badges of honor within the broader context of health trends.

Wellness and sustainability concerns will continue as hot topics across farms and food factories, grocery store aisles, and grocery shopping lists both because food and beverage manufacturers seek the higher margins that these value-added products can command, and because our persistently high obesity and chronic illness rates, and the overwhelming healthcare costs these trigger, demand it.

-- David Sprinkle