Although retail sales growth in most food categories in the US has slowed during the recession, there are many areas of growth. Many successful new products over the last few years have focused on offering health benefits or fortification. This is prevalent in a category such as yogurt and chilled desserts, worth $6.9bn in 2008, up 4.4% on 2007. The trend toward natural ingredients has also gathered pace and is now a key driver in many categories.
A squeeze on disposable incomes has assisted sales of meals being consumed in the home, including soups, a category that grew 4.1% in 2008 to achieve retail sales of $5.3bn. The relatively mature ready meals and pizza segments also both registered 2% growth in 2008.
The US savoury snacks market remains by far the largest in the world. In 2008, value sales exceeded $26bn, up 4% on the preceding year.
Despite many of the products sold being long-established, the rate of new product development remains high in this category. However, in recent years, the industry has shifted its focus towards addressing health and obesity concerns (especially among children’s products), as opposed to the development of flavours.
With regard to flavours, innovation has been evident across a number of sectors, especially fruit juice, carbonated drinks and soups. However, despite an ever-widening array to choose from, most consumers remain relatively conservative in terms of taste. In ice cream for example, vanilla remains the market’s most popular flavour, accounting for 32% of sales, ahead of chocolate with 21%, nut/caramel with 7% and strawberry with 5%.
Consumption in many categories has been influenced by the continued penetration of ethnic cuisines, for example, those based on Mediterranean, Mexican and other Latin American cuisines. Asian cuisines (such as Thai, Malay and Indian) have also become more popular in the restaurant sector, which has filtered down into packaged foods. In frozen ready meals, Asian meals now account for a 23% share (Italian leads with 60%).
Meanwhile, the trend towards more expensive forms of chocolate confectionery (dark, specific varieties and functional versions) is sustaining growth in that category. Chocolate sales grew 3.1% to $16.9bn in 2008.
Rising commodity prices dramatically pushed up prices and hence value sales in a number of basic food categories such as pasta and edible oils. An escalation in milk prices and other production costs also pushed cheese sales up 7.6% to $14.1bn in 2008. Growth in the market has also been driven by increasing consumption of cheese as a snack as well as growing interest in quality cheeses, as witnessed by the success of many imported lines.
Nestlé, PepsiCo and Kraft remain the key players across the packaged grocery sector. Nestlé takes major shares of the chocolate drinks market (38% in 2008), ice cream (37%), frozen ready meals (31%), pet food (31%) and bottled water (30%) categories, as well as smaller shares in a number of other product sectors.
PepsiCo dominates savoury snacks (46% share) and has a 31% share in carbonated drinks, a 29% share in chilled fruit juice and drinks, and 20% share in bottled water. Kraft leads in cookies/crackers (46%), coffee (39%), frozen pizza (35%) and cheese (15%), and has smaller shares across a number of other categories.
The merger of Mars and Wrigley has created a more dominant force in confectionery: combined 28% share in sugar confectionery for example (with Hershey at 14%), Mars holding a 32% share in chocolate (Hershey leading at 41%), and Wrigley dominating chewing gum (62% share).
Private label has been growing its share in the recession including in categories such as cooking oils (30% share in 2008), breakfast cereal (10%), chilled fruit juice and drinks (10%), bottled water (9%) and dried/ambient soups (9%) as consumers seek to downgrade from premium brands.
Future growth among the established product sectors is forecast to be highest in pet foods, yogurts and chilled desserts and RTD tea (all achieving growth of above 9% in value between 2009 and 2012).
Kitchen cupboard essentials such as soups, coffee, cooking oils and pasta will also see value growth and will benefit from continued economic uncertainty as consumers reign in spending on eating and drinking out.
Source: Leatherhead Food Research
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