The traditional supermarket channel is maintaining its position as the dominant outlet for grocery purchases, according to the results of Progressive Grocer’s latest annual research study of consumer expenditures.
While statistically flat in some key categories like fresh meat and produce, bakery, and service deli, grocery stores show improvement over last year’s study results, according to Schaumburg, Ill.-based Nielsen Co., as well as exclusive PG retailer research.
Sales in supermarkets accounted for just shy of a quarter (24.6 percent) of the nearly $2.06 trillion that U.S. consumers spent on all grocery store categories in all retail channels during 2014 — that’s up 0.4 percent over the numbers reported here a year ago. Supercenters boosted their share numbers 0.3 percent, with the combined total up nearly a full percentage point.
Traditional grocers should be happy with these results — amid the continued fragmenting of consumers’ dollars across mass, drug, dollar and convenience channels, supermarkets are standing their ground. Even as e-tailers build momentum in the fresh arena, grocers — who are increasingly discovering the benefits of click-and-collect as a strategy against all-online competitors — are getting it right.
Of course, it’s no time to relax; there’s still plenty of work to be done.
Traditional grocers’ emphasis on the fresh perimeter appears to be successful in protecting those categories from channel erosion, with alcoholic beverages, bakery, dairy, service deli, frozen foods, fresh produce and even general merchandise, and health and beauty care all showing at least some growth. Overall, total supermarket sales topped $485 billion in 2014, up 2.1 percent from a year ago, another sign that retailers are headed in the right direction.
Meanwhile, 98.3 percent of all shoppers make purchases at traditional grocery stores across all categories — that’s up from last year. However, in areas where grocers showed improvement — such as deli, bakery, and health and beauty — supercenters are right on their tail. Superstores also boosted their penetration among buyers of meat, produce and general merchandise, the last of which, along with alcohol, is among traditional grocery’s weakest categories.
Breaking it Down
In the grocery category (in which supermarkets held nearly 43 percent of all dollars spent, down a point from a year ago), center store (the grocery-food subcategory) continued to bottom out, registering 0 percent growth in 2014. This continues the downward spiral of the past several years, with 0.4 percent growth a year ago and 0.3 percent in 2012. Our findings support the position of many industry observers: center store is dying as the fresh perimeter continues to shine. Center store’s revival could rest on aggressive cross-merchandising efforts as part of shopper-centric, whole-store solutions that address consumer need states.
Elsewhere in grocery, alcoholic beverages remained flat, after a promising jump of nearly 4 percent last year over 2013, and a 4.7 percent rise in 2012. Total supermarket sales of alcoholic beverages are nearly $21.3 billion, up about $800 million year over year.
The overall perishables segment (59.1 percent of all sales at supermarkets, down 1.4 percent from a year ago) produced a 3.2 percent rise in sales in 2014. Among the standout categories: bakery in-store (service), dairy, deli in-store (service), fresh meat/fish/poultry, packaged meats, fresh produce, and floral. Both the service deli, with sales growth of 4 percent, and produce, with a sales increase of 4.4 percent, show that grocers are delivering on consumer demand for fresher, healthier foods, as well as convenience, as the deli grows in importance as a meal-solution destination. In response, grocers are upping their game in prepared foods, bringing shoppers restaurant-quality items and giving rise to the hybrid concept “grocerants.” Produce has seen growth over the past few years, up 6.5 percent in 2013 and 1.8 percent in 2012. Enhanced packaging is making fresh produce more convenient for snacking as well as meal preparation, and grocers are looking to cross-merchandise with other fresh categories to deliver convenient meal solutions along that continuum running from scratch cooking to ready-to-eat items.
Elsewhere in perishables, eggs enjoyed growth of nearly 11 percent, with supermarket sales that topped $3.7 billion in 2014 — a threefold increase since 2012. This reflects consumer demand for alternative proteins, as more have moved away from meat due to price, dietary or animal welfare concerns. This performance predates this year’s onslaught of bird flu, which has resulted in egg shortages and rising prices that will certainly impact the data we see a year from now.
The dairy snack, spread and dip category of the perishables segment continues to enjoy robust growth in the supermarket channel. This category, which includes items such as cheese spreads and hummus, grew 9 percent in each of the past two years, to just more than $1.6 billion in sales.
Frozen foods slipped 0.6 percent from a year ago, to just less than $30.2 billion in supermarket sales (61.2 percent of total dollars), in a multiyear downslide that saw the category drop 0.5 percent in 2013 and 0.9 percent in 2012. While breakfast is considered by some industry observers as presenting a great opportunity for grocers, in frozen the daypart produced just 0.3 percent growth.
Frozen meal starters provided a shock this year, plummeting more than 44 percent after a promising 63 percent surge a year ago, when a wealth of innovative meal kits crossing several brands and diverse ethnic cuisines hit the market. This steep dropoff suggests that comparable fresh solutions may be emerging as the next wave, as grocers cross-merchandise proteins with value-added produce items. Pizza, ice cream and frozen novelties all showed tepid growth, with ice emerging as the star — up 5 percent after dropping 7 percent a year earlier.
Floral, still a small segment of $864 million at supermarkets (12.4 percent of total sales, flat with last year), continues its modest, steady growth. This nonessential category was up 3.1 percent in 2014, 3.6 percent in 2013 and 4 percent in 2012.
Health and beauty care (18.5 percent share of $80 million) continues to benefit from consumers’ self-management of health: Cough and cold remedies were up 3.3 percent to $1.43 billion in 2014; vitamins were up 2.3 percent to $2.33 billion.
Value-added Growing, Snacking Shows Promise for Produce
With consumer interest in better dietary choices steadily on the rise, the fresh produce department is increasingly becoming the most influential destination for shoppers heeding the call to action. Fresh produce has long been the crown jewel of most supermarkets’ overall fresh statement, but it is taking on an even greater role in light of heightened consumer desire for more nutritious, less processed foods.
Though fresh produce purchases continue to reign supreme for main meals, the growing number of consumers who are embracing smaller meals and snacks are turning to a more robust base of conveniently packaged fruits and vegetables to fill the bill. To take full advantage of the ripe opportunities abounding with higher fresh vegetable and fruit consumption, the vast majority of grocers are playing up sensory cues with more impactful displays that accentuate a global and, as often as possible, local bounty.
The recent “Power of Produce 2015” report, commissioned by the Food Marketing Institute (FMI) and conducted by San Antonio-based 210 Analytics LLC, sheds ample light on both of the aforementioned points, as well as other insights pertaining to shoppers’ produce-buying patterns and behaviors:
- ➤ Value-added produce grows ahead of its conventional counterpart: 13 percent over 2014 for value-added, versus 3 percent for unprepared produce.
- ➤ Produce snacking and juicing show growth potential: 38 percent of households report consuming more produce as snacks, while 27 percent say they’re enjoying more produce as juices/smoothies.
- ➤ In-store execution is key: Price and promotions attract shoppers to the store, but when they arrive, they want clear signage, clearly marked prices, variety, freshness, good organization and product availability.
- ➤ Appearance trumps price when it comes purchasing: For both fruit and vegetables, the top purchase considerations are freshness/quality, followed by price.
- ➤ Megatrends influence the produce purchase: Six in 10 shoppers urge their stores to stock more organic and local items.
- ➤ Produce is a planned purchase, but a great opportunity for impulse exists: 57 percent of shoppers estimate that they frequently or almost always buy unplanned items when in-store.
Of all the categories analyzed, produce is the most steadily promoted year-round, which is consistent with grocers’ leveraging the category to drive store traffic. According to analysis by ECRM Data, the most common types of promotions are those in which no brand is specified.
Pricing, Personal Habits Impacting Sales of Meat and Seafood
Growth in meat and seafood is heavily influenced by consumers’ changing eating habits, which are being affected by pricing and concerns for nutrition, as well as animal welfare.
Dollar sales of overall refrigerated meat, approaching $2 billion, were up nearly 19 percent, primarily due to the higher prices of the past couple of years; unit sales rose just 3.5 percent, according to IRI. Sales leaps from brands like Richards Cajun were offset by slips in brands like Gwaltney and Thorn Apple Valley. Frozen meat sales were up 3.2 percent to just more than $1.4 billion.
Growth in packaged red meat, the largest meat segment, is forecasted to be flat, and then drop slightly through 2019, according to Mintel. Since beef supplies are predicted to remain tight for some time, consumers will continue to turn to less-expensive protein sources such as poultry and vegetarian items, according to Mintel.
The pork segment reached $10.8 billion in sales in 2014 and also is forecasted to decrease, reaching $10.9 billion in 2019. A shortage of pork, the result of disease, shrank U.S. supplies, which has driven up prices.
“Other meats,” which includes lamb, goat and game meats, is the only segment forecasted to grow, Mintel predicts. “Other meats” 2014 sales of $1.3 billion are expected to reach $1.5 billion by 2019. Category growth is being spurred by Millennials, who are comfortable eating a variety of meats, due to this population’s multicultural makeup.
“Consumers are seeking clarity on issues related to origin, naturalness and the humane treatment of animals, in order to gauge the quality of the products they consume,” says Julia Gallo-Torres, Mintel senior analyst for food and drink. “Further, because they value purity so highly, they are willing to pay more for products with claims that speak to these issues, such as all-natural, antibiotic- and hormone-free, and humanely raised.”
According to analysis by ECRM Data, beef ads represented just less than one-quarter of all meat circular promotions over the past year — likely in an effort to keep driving sales in the face of increasing beef costs. Along with chicken (13.9 percent) and packaged lunch meat (11.5 percent), these three subcategories make up about half of meat promotions.
Interestingly, the largest share of brand promotions comes from the aggregate of smaller, local brands, which are grouped together as “other” brands and make up 31.7 percent of all brand promotions. The next largest share is of promotions that aren’t tied to any brands (30.8 percent), followed by private label meat promotions (15.1 percent of meat promotions). Of the national brands, Oscar Mayer had the largest share of meat promotions, with 4.7 percent. While meat promotions are fairly steady year-round, there are noticeable spikes just before Thanksgiving and Christmas, with sharp declines the week following each, likely because consumers are still working through their holiday leftovers during these periods.
Meanwhile, overall refrigerated seafood rose just less than 0.9 percent to $406 million in dollar sales, with a drop in unit sales of nearly 1.5 percent. Sales of frozen seafood — still the overwhelming preference for consumers stymied by the higher prices and cooking challenges of fresh product — rose 3.4 percent to just more than $2.5 billion, with unit sales dropping 2.4 percent.
On the upside, the recent report from the 2015 Dietary Guidelines Advisory Committee strongly reaffirming seafood’s position as one of the healthiest options in the American diet bodes well for retail seafood departments.
Smaller portions and pack sizes are increasing in clout as the foremost department drivers, as cited by more than two-thirds of retailer respondents to an exclusive survey for PG’s Retail Seafood Review earlier this year. Also driving growth in the seafood department: U.S. wild-caught seafood, value-added products like marinated oven- and grill-ready products, single-serve portions, and domestic and imported farm-raised seafood.
As with other fresh categories, most seafood promotions (69.15 percent) aren’t associated with any brands, with store brands being the next highest in terms of promotions, according to ECRM. The supermarket channel dominates in seafood promotions, dedicating an average 3.15 percent of circular space to the category, compared with club (1.49 percent) and mass (0.35 percent). Not surprisingly, the 10 retailers with the most promotions are all grocers. Fish and frozen seafood are the most promoted subcategories, with 33.7 percent and 35 percent share of promotions, respectively, followed by shrimp (15.8 percent) and crab.
Free-from Needs Defining
While “free-from” is emerging as a more advanced — and obviously more encompassing — iteration of gluten-free, the industry must come together on a consensus of what the term means, and then work to educate consumers.
Enjoy Life Foods, maker of “allergy-friendly” products — and a recent acquisition of Mondelez International — focuses on producing products free of common allergens, including wheat/gluten, dairy, peanuts, tree nuts, egg, soy, fish and shellfish. Mintel reports that consumers are onboard with this, but also believe free-from products exclude unnecessary or excessive ingredients.
Consumers, particularly Millennial parents, are increasingly seeking out products free from trans fat, preservatives, growth hormones, GMOs, sodium, nitrates/nitrites, lactose and allergens, according to Mintel. Half of Millennial moms, for example, want to avoid unnecessary ingredients, and nearly as many consider free-from foods to be healthier than other foods. These sentiments are more in line with broader industry trends of healthier and less processed foods, rather than in response to dietary restrictions caused by intolerance or allergies.
About one in 13 children has a food allergy, a 50 percent increase from the late 1990s, according to the Centers for Disease Control and Prevention. An increase in food sensitivities is leading to a boom in free-from food products. The free-from market is estimated to be a $10.5 billion category, projected to grow to $23.9 billion by 2020, according to Statista. For retailers, the news is even better, with the average free-from basket ringing out at $102, compared with $46 for the average shopping basket, according to Kantar Retail Shopper Genetics.
According to analysis by ECRM Data, independent grocers lead in promotions of gluten-free products, with Kings, Foodtown, ShopRite, Dierbergs and Roche Bros. listed among the top 10 retailers ranked by effective ad count. Of the promotions run in this category, those representing private label manufacturers represent the largest share, at 11.5 percent, just more than twice the share of the top manufacturer’s share of 5.5 percent. The supermarket channel dominates promotions of gluten-free items, with more than a 98 percent share of ad support.
Healthy-indulgent Paradox Heats Up Commercial Baked Goods
Health, indulgence and portion size are not only driving in-store bakery sales, they’re also impacting the commercial bakery categories in center store.
Indulgence is certainly behind the 2.63 percent sales lift in pies and cakes, with pies gaining an impressive 4.32 percent. The pie and cake category now accounts for a whopping $1.05 billion in supermarket sales.
At the same time, whole grain and other health-related attributes are driving other segments of baked goods. With a nod toward better-for-you breakfasts as well as the all-day snacking trend, English muffin sales are up 3.72 percent, while bagels and bialys moved up a more modest 1.38 percent.
Sales of bakery snacks, meanwhile, increased 2.74 percent, with particularly strong showings from Hostess and Entenmann’s Little Bites.
Based on ECRM Data analysis of circular promotions, the greatest thing since sliced bread seems to be sliced-bread promotions, with shelf-stable breads taking the lion’s share (42.2 percent) of center store bakery product ads, almost four times the amount of that of the next highest-promoted item, lunchbox cakes, which represent 10.2 percent. Interestingly, promotions of these items take a noticeable dip around Thanksgiving and Christmas, as consumers tend to purchase fresh-baked bread and pastries for their holiday dinners.
Hot Cereal to Drive Category
Ready-to-eat (RTE) breakfast cereal continues its sales decline, with dollar sales down 3.9 percent from a year ago to $5.4 billion, according to IRI data for the 52 weeks ending April 19, 2015. Unit sales were down about the same, 3.5 percent, to 1.7 billion, while the average price of RTE cereal decreased by only a penny. This downtick can be attributed to consumers’ growing interest in other breakfast options like biscuits, sandwiches, snack bars and shakes, according to Mintel. Nearly 90 percent of Americans who eat cereal do so at breakfast, but the product is gaining traction at other eating occasions, with one-third of Americans claiming they eat it as a snack.
Mintel predicts that the breakfast cereal category will increase 4 percent by 2018, boosted mainly by hot-cereal products such as oatmeal, which consumers perceive to be healthier. While cold cereal dominates the category in both sales and product development, hot-cereal sales grew 7.2 percent between 2011 and 2013, while cold-cereal sales dipped 0.7 percent during the same period. For the 52 weeks ending April 19, 2015, hot-cereal sales increased 1.6 percent to $848 million, according to IRI, and unit sales were up 0.5 percent, accounting for 304 million. Some traditional cold-cereal players also are getting into the game; for example, the Kellogg Co. has launched the Special K Nourish hot-cereal product line.
The attributes consumers are looking for most when shopping cereal categories are health and nutrition claims like high fiber, high protein or low sugar, as well as superfood ingredients such as quinoa or chia. General Mills introduced Cheerios + Ancient Grains earlier this year; the cereal contains quinoa, a seed marketed as an ancient grain.
According to analysis by ECRM Data, the club store channel has the greatest percentage of ad support dedicated to RTE cereal promotions, with 2.09 percent of its ad mix dedicated to this category. That’s almost twice the amount of circular space that grocers have allotted to the category over the past year. In terms of individual retailers, however, Safeway outpromoted them all by a wide margin, with an effective ad count of 256.9, compared with No. 2-ranked Kroger’s 170. Price point and x-for are the most common promotional tactics in this category.
Ethnic Opportunities in Food and Beyond
Evolving demographics and changing tastes mean that demand for ethnic products continues to grow, not just for specific ethnic groups, but also for others looking to expand their food horizons.
Adventurous eaters — Millennial consumers in particular — are hungry for authentic ethnic experiences, which is driving demand for such products. Accordingly, Mintel reports that sales of ethnic food grew 15 percent from 2008 to 2013.
But while the idea of ethnic food consumption is an easy sell, encouraging consumers to use ethnic food products is a slightly tougher challenge, Mintel asserts in a January 2014 executive summary on the category. “Keeping these products top of mind to shoppers, and infusing consumers with the confidence that they can easily and affordably prepare these dishes at home, will be key to maintaining a strong pace of sales growth,” notes Beth Bloom, Mintel food and drink analyst.
Mexican/Hispanic offerings make up the largest segment measured here, and posted the strongest growth in the category, due to the affordability and widespread familiarity of these products, as well as an engaged Hispanic consumer base.
Interestingly, while industry analysts have been preaching the idea of selling solutions rather than components, Mintel reports that complete meals are losing share to ingredients among ethnic products. “This points to a focus on preparing scratch and semi-scratch meals at home, rather than relying on heat-and-eat products. Seasoning makers are helping to bridge the gap between scratch cooking and quick-prep offerings by developing spice blends that allow home cooks to duplicate intricate regional flavors without purchasing multiple ingredients,” Mintel says. “Packaged food manufacturers in the segment would do well to develop more complex dishes, with more developed flavor profiles, to allow home cooks to step up their ethnic food game.”
PepsiCo boasts the largest share of ethnic food sales, reaching $1.1 billion — 12 percent of all sales — in 2013, with strong brands such as Tostitos in the Mexican/Hispanic segment and Sabra in the Mediterranean/Middle Eastern segment.
The majority of ethnic food consumers seek spicy flavors, highest among those who eat Mexican/Hispanic and Cajun/Creole cuisine, while vegetable and herb flavors rule among those who eat Mediterranean/Middle Eastern food, meaning the cuisine can be a strong attraction to non-meat eaters and health-conscious consumers.
Meanwhile, there are opportunities for retailers in nonfood categories, too. Supermarkets trail way behind in ethnic hair care promotions (they hold only an 8.3 percent share of this $146 million market, according to IRI), but have an opportunity to easily boost their share, as those manufacturers that run the most ads are those with which the supermarket channel already has strong relationships, such as Procter & Gamble, according to an analysis of national circular ad promotions by ECRM Data. Stronger partnerships might help shore up sliding sales for grocers in this category, which fell 5 percent in 2014 and 2.4 percent a year earlier.
Dollar stores devote the most circular space to this category, ECRM reveals, followed by drug and specialty stores. Shampoo, conditioner and gel garner the largest share of category promotions, with each representing approximately one-quarter of all ethnic hair care ads. The remaining quarter is divided up among more specialty items such as texturizers, relaxers and hairdressing products.
Chocolate Continues to Charm
Chocolate candy remains a star performer in supermarkets’ confection aisles, driven by consumers’ love for the treat, combined with an uptick in snacking and an interest in health-related products.
Total chocolate candy sales were up 2.77 percent in the past year, and that growth isn’t expected to diminish any time soon. In fact, the National Confectioners Association expects the confection category to add $6 billion in growth over the next five years, led by chocolate confections.
Specialty brands, including Endangered Species and Creative Natural Products (the latter known for its innovative Chocolove brand), are making impressive inroads in the category, while distinguished upscale names, such as Lindt & Sprungli A.G. Chocolate and Ghirardelli, continue to grow.
Brookside Foods, the chocolate maker that Hershey acquired in 2011, is also performing well. The Brookside brand combines dark chocolate with the fruit flavors of goji berries, pomegranate and açai. Hershey is getting ready to add a Dark Chocolate Fruit & Nut Bar to the line in August.
Meanwhile, the not-so-upscale but health-conscious Atkins brand saw a whopping 71.11 percent lift in bagged chocolate bar sales for the year.
Nonchocolate candy is also standing its ground, with sales up just more than 2 percent for the year, driven by breath fresheners and nonchocolate chewy candy.
While gum sales were down a slight 1.78 percent, leaders of the category are continuing to experiment with new merchandising ideas to bring more innovation and efficiency to gum and other confection categories in the front end. Mars Chocolate N.A. and Wrigley, for instance, saw impressive returns after introducing racks illuminated with LED lights last year.
While supermarkets dominate candy promotions as a channel, it’s drug chains that make up six of the top 10 retailers in terms of effective ad counts for the candy category, with No. 1 Rite Aid running almost double the amount of candy ads as the top grocer, Acme Markets. According to ECRM Data, promotions are heaviest during the fall and winter, peaking for Halloween, Christmas, Valentine’s Day and Easter, and relatively light and steady during the summer. Packaged chocolate candy sales make up more than one-quarter of all candy promotions, with Hershey the toppromoted brand, with a 14.8 percent share of ad support, double that of the No. 2 brand, M&M’s.
Bold Flavors Spice Up Seasoning Category
The overall spice, flavoring and seasoning category, at $2.2 billion, experienced sales dollar growth of 2.37 percent, IRI data show, and to absolutely no one’s surprise, McCormick is still the leading brand in the category, although its dollar sales have declined by 2.47 percent; the next-largest brand, private label, saw a dollar sales dip of 1.83 percent. Others saw impressive growth, chief among them Frontier Natural Products Co-op, maker of the Simply Natural brand, which logged a 15.45 percent dollar sales uptick.
When it comes to the promotion of baking needs — a key usage occasion for the category — ECRM Data finds that spices, flavorings and seasonings took a 17.5 percent share, bested only by oils and shortenings, with a 21.7 percent share. Also according to ECRM, McCormick was the most promoted brand in the category, at 18.9 percent, and the most promoted supplier, at 30 percent; private label came in second in both instances.
McCormick earns its top spot through such promotional tools as the eagerly awaited Flavor Forecast, which, when last released, in December 2014, predicted the emergence this year of such trends as zesty Middle Eastern dips and spreads, sour-and-salt combinations, smoked spices, and the addition of fresh purées and juices to sauces and dressings. Further boosting the category is the explosion in popularity of ethnic cuisines offering a range of exotic flavors, spurring adventurous home chefs to purchase the proper ingredients, including spices, flavorings and seasonings, to recreate in their own kitchens dishes enjoyed in restaurants or viewed on television cooking shows.
Bottled Water Keeps Flowing
Dollar sales are up 5.8 percent in the nearly $5 billion bottled water category, according to IRI, with private label outpacing the rest of the pack in dollar sales growth by a wide margin. Other popular brands include Nestlé and Coca-Cola’s Glaceau Vitaminwater.
ECRM Data pegs bottled water’s share of promotions at a healthy 18.7 percent, outdone only by carbonated soft drinks, which boast a 35.7 percent share. As in dollar sales, private brands lead in promotions, capturing 14.9 percent of such occasions, while the next most-promoted brand, Dasani, also from Coca-Cola, sits at just 8.5 percent, ECRM finds.
Recent bottled-water category promotions have often involved partnerships with nonprofit organizations to advance a particular cause, as in the case of Midwestern grocer Hy-Vee’s placement of the Drink Up logo on packs and individual bottles of its store-brand spring water as a way to support the initiative through ongoing social media campaigns. Launched by the Partnership for a Healthier America, Drink Up encourages Americans to consume more water. Similarly, IGA has teamed with Wounded Warrior Project (WWP) for the fifth consecutive year to offer a number of exclusive co-branded WWP/IGA products from Memorial Day through Labor Day, including bottled water.
Among retailers, Safeway and Albertsons LLC, now merged, have the highest bottled-water feature ad counts (433 and 315, respectively), with Kroger, Roche Bros. and Target rounding out the top five, according to analysis by ECRM. The aforementioned Hy-Vee shows up at No. 7.
Rising Birth Rate Not Expected to Boost Baby Food Sales
In 2014, the U.S. birth rate ticked up 1 percent, the first increase since 2007, according to a National Center for Health Statistics study, which means the market for baby formula and food also is growing. Baby formula sales increased slightly more than 1 percent in the 52 weeks ending April 10, 2015, according to IRI, to slightly more than $2 billion, but unit sales decreased 2.4 percent to 134 million, with an average decrease of 55 cents per unit from the previous year. Dollar sales for the baby food category were up 3.3 percent during the same period, hitting $877 million, but unit sales saw a slight decrease of 0.1 percent, for a total of $633 million.
However, baby food and formula manufacturers are facing changing market trends that seem to indicate that sales won’t follow the birth rate increase. Many mothers are returning to breastfeeding and eschewing baby formula, according to Euromonitor’s “Baby Food in the U.S.” report. And while consumers are reportedly busier than ever, many mothers are making their own baby food as they become more concerned about processed products.
A bright spot is organic baby food. Stonyfield Organic YoBaby saw a nearly 10 percent increase in sales in the 52 weeks ending April 19, 2015, according to IRI — the highest dollar sales gain of any product monitored. Earth’s Best Organic 2 came in second, with an 8.2 percent sales increase, followed closely by Plum Organics Yum, at nearly 8.1 percent. However, unit sales haven’t fared as well, with Stonyfield seeing a 2.1 percent decline in units, while Earth’s Best increased nearly 4 percent and Plum Organics’ units grew by double digits — a 10.4 percent increase.
Brands play a key role when it comes to baby food promotions, as brand loyalty and trust drive many consumers’ decisions regarding their infants. According to analysis by ECRM Data, Gerber Products Co. represents more than 41 percent of category promotions, more than nine times the share of ads from private label manufacturers. Grocers with strong private-brand programs have an opportunity here to build on customer loyalty to their store brands and extend it into this category. Not surprisingly, with the volume of smaller items typically purchased in this category, x-for promotions are the most popular for baby food.
Liquid Products Juice Up Vitamins and Supplements
The vitamin category, encompassing the liquid vitamin and mineral, mineral supplement, multivitamin, and one- and two-letter vitamin segments, saw a 2.54 percent dollar sales lift, with IRI noting the biggest increase — 5.87 percent — in liquid products, indicating a shift in the way people prefer to ingest their vitamins and minerals. A new single-serve offering from Wojo Nutrition, designed to be blended with any beverage, is among the most recent innovations in the liquid segment.
Further, as discussed in this issue’s Front End section (page 16), protein supplements have grown in popularity, reflecting increased consumer interest in the health benefits of protein across various categories.
Vitamins far and away take the largest share of the category’s promotions, at 69.8 percent, ECRM Data finds. The most promoted brand is Nature Made, at 17.2 percent, while private label is in second place, at 15.2 percent. Among retailers with the highest vitamin ad counts, the first retailer not to operate principally in the drug store channel is Wal-Mart Stores Inc., with an effective count of 86.3 and a feature count of 101; Meijer, Kroger and Southeastern Grocers (formerly Bi-Lo Holdings LLC) come next among food retailers in ad counts. Of the various types of vitamin promotions, ECRM notes that BOGO, price point and percentage-off are the most deployed.
Interestingly, as PG Editor-in-Chief Jim Dudlicek reported in his coverage of the Natural Products Expo West trade show earlier this year, some vitamin and supplement manufacturers, including Mason Vitamins, are blurring the line between non-foods HBC and grocery with such products as coconut oil that can be used for cooking and baking as well as on skin and hair.
Pods, Green Products Could Drive Detergent Sales
Pods and green ingredients are two of the biggest trends in laundry detergent. While the overall category continues to struggle with a sales decline of 3 percent in the 52 weeks ended April 19, 2015, according to IRI, accounting for $2.2 billion, the packet/bar category, which includes pods, saw a sales increase of nearly 30 percent, with sales hitting $241 million.
The rising popularity of laundry detergent pods also has led to the introduction of the Detergent Poisoning and Child Safety Act of 2015 to Congress after several hundred children ingested the pods and were subsequently injured or poisoned. If passed, the legislation would require that manufacturers make the pod packaging less appealing to kids (the current argument is that pods are attractive to them because they look too much like candy), add detailed warning labels to packaging, and create gentler detergents that would be less harmful if ingested.
Green cleaning products also remain high on the consumer wish list, with 40 percent of U.S. consumers indicating they would pay more for cleaning tools that were more environmentally friendly, according to the Mintel Global New Products Database. But green cleaning is still a niche market, with total retail sales accounting for an estimated $600 million in 2014, according to Packaged Facts’ “Green Household Cleaning and Laundry Products in the U.S., 3rd Edition.” Wegmans Food Markets launched its own private label brand of green cleaning supplies last summer, including a laundry detergent with all active ingredients coming from plant or mineral sources like coconut and palm oils.
“While overall sales of home laundry products remain weak, opportunities exist in all segments for brands that tap into the emotional importance that consumers place on getting the job done right,” notes John Owen, senior household analyst at Mintel, in the market researcher’s “Home Laundry Products U.S., August 2014” report.
Much of the category’s weakness is attributable to consumers’ use of promotions and discounts to save money. Out of all the laundry supplies in store promotions, detergents were the products highlighted nearly 60 percent of the time.
According to analysis by ECRM Data, Procter & Gamble truly cleans up when it comes to laundry detergent promotions, with almost half of all circular ad promotions in the category from the manufacturer. Its brands, including Tide, Gain and Era, are among the most promoted brands across all channels of trade, with club and dollar leading the way in terms of share of circular voice (2.99 percent and 2.65 percent, respectively). Detergents represent just less than 60 percent of laundry product promotions, followed by fabric softeners (25.5 percent), bleach (10.3 percent) and stain removers (4.9 percent).