CHICAGO--()--Growth in food and beverage industry value sales (sales through multi-outlets, including the convenience channel) has slowed from 5 percent in 2011 to 4.1 percent in 2012 year to date. This figure is representative of slower or negative growth pervasive in the food and beverage market that will continue for the remainder of 2012. A new Symphony Consulting Executive Briefing, “The U.S. Food & Beverage Market: YTD 2012 Trends and Outlook,” reports on and analyzes trends in specific food and beverage product categories and channels, as well as highlights shopper sentiments. Symphony Consulting is a business group of SymphonyIRI Group, Inc.
“Our comprehensive review of food and beverage trends for 2012 points to limited growth, with weak growth prospects for the remainder of the year”
“Our comprehensive review of food and beverage trends for 2012 points to limited growth, with weak growth prospects for the remainder of the year,” said Dr. Krishnakumar (KK) S. Davey, managing director, Symphony Consulting. “Shoppers are still making conservative and deliberate purchase decisions and are reluctant to open their wallets. With this in mind, manufacturer and retail decision makers must uncover select, high-growth categories, and target products and offers to very specific shopper groups.”
Small Is Beautiful When It Comes to Competitive Trends
Smaller food and beverage manufacturers (defined as companies with revenues under $1 billion) have demonstrated outsized growth in 2012. Value sales growth in 2012 YTD has increased an average of 7.9 percent versus one year ago, as compared to 3 percent for medium-sized businesses (revenues $1-5 billion) and 1.3 percent for large enterprises (revenues over $5 billion). Volume sales among small manufacturers have also outpaced competitors: 3.6 percent growth for small manufacturers versus 0.5 percent and 3.3 percent declines for medium and large manufacturers, respectively. Small manufacturers have discovered and successfully penetrated specific market niches, such as Greek yogurt within the yogurt category and single-cup coffee within the coffee category.
Medium and large manufacturers have enjoyed success in the alcoholic beverage and energy drink categories primarily. Anheuser Busch, for example, enjoyed value sales growth of 5.5 percent versus the large manufacturer average of 1.3 percent. Monster Beverage Group posted an astounding 27 percent value sales growth rate, versus the medium-sized manufacturer 3 percent average. Growth in these segments typically were due to very small price increases or price declines.
High Staples Prices Dampen Growth
Among staple products, such as milk, fresh bread and rolls, growth continues to be slow as shoppers react to continuously increasing prices by cutting back. Value sales of staples versus one year ago grew just 1.6 percent as compared to 4.8 percent for non-staples. Estimated volume sales have declined 2.5 percent in staple products versus growth of 0.2 percent for non-staples.
Contributing to weaker staples sales is the potential shift to new-age healthy snacks. Shoppers are increasingly avoiding traditional big meals and replacing them with more frequent, smaller meals comprising portion-controlled healthy products. Many healthy and relatively portable products, such as snack/granola bars, energy drinks and spreads (e.g., hummus), have witnessed volume gains in 2012.
However, not all non-staples are alike. While the category has grown on average, several areas of non-staples have fared poorly. Ready-to-eat meals, such as frozen dinners, frozen pizza and soup, saw value sales increases of just 0.3 percent in 2012 versus one year ago as compared to a non-staples category average of 4.8 percent. Shelf-stable cooking ingredients (e.g., shelf-stable seafood and canned/bottled fruit) and breakfast foods (such as frozen breakfast food and pancake mixes) have exhibited similar weak performance.
Shoppers Continue to Focus on Value and Deals
The briefing notes that shoppers continue to define value based largely on price, highlighting, for example, that 78 percent of shoppers state they will continue to seek deals in the future, and 56 percent are choosing stores based on lower prices offered.
Shoppers are opting to make more trips and purchase fewer items per trip to spread out the impact on their wallets, avoiding pantry-stocking trips that hit their wallets at once. In multi-outlets, shopping trips per buyer have grown 0.8 percent versus one year ago, while units per trip have declined 2.1 percent over the same period.
In addition, shoppers are increasing the number of stores at which they make purchases to lock in lower prices. Grocery and drug channels suffered from reduced trips per buyer (0.2 percent and 0.6 percent declines, respectively) while mass merchandisers excluding Walmart enjoyed 4.4 percent growth and dollar stores trips per buyer grew 7.2 percent.
Shoppers are rediscovering Walmart, which has reversed the trend of losing shoppers to other channels thus far in 2012. Walmart trips per buyer in 2009-2011 withered, with a CAGR of -1 percent, while rebounding 2012 YTD with growth of 3.2 percent over one year ago.
Report Offers Strategies for Growth
Citing continued rising prices due to this year’s drought and ongoing wariness to spend among shoppers, the briefing offers several potential growth strategies. Manufacturers must focus on investing in key areas of growth, developing a strong portfolio of potentially popular products, such as new-age snacks, and health and wellness-focused items. These must be offered at attractive price points to achieve sustained short- and long-term growth. Targeting fast-growing shopper segments, such as GenY and older Baby Boomers is also a critical strategy for success.
About the Report
The Symphony Consulting Executive Briefing, “The U.S. Food & Beverage Market: YTD 2012 Trends and Outlook,” is available from SymphonyIRI upon request. Results in this report were compiled from multiple sources, including SymphonyIRI’s ILD Panel database, ILD POS database, SymphonyIRI MarketPulse™ surveys and multiple outside sources. For more information about the report, please contact Dr. Krishnakumar (KK) S. Davey at Krishnakumar.Davey@SymphonyIRI.com
About Symphony Consulting
Symphony Consulting provides strategic insights and actionable recommendations to leverage growth with support from SymphonyIRI’s proprietary, granular data, analytics and technology assets. Symphony Consulting combines consumer, expert and analyst perspectives with financial store-level data to develop deep understanding of the market and the firm’s clients’ businesses. Solutions help clients address strategies for driving, funding and executing growth.
About SymphonyIRI Group, Inc.
SymphonyIRI Group is a global leader in innovative solutions and services for the CPG, retail and healthcare industries. SymphonyIRI uniquely combines powerful market and shopper information, predictive analytics, flexible technology solutions and consulting services to help its clients drive and grow their businesses. For more information, visit: http://www.SymphonyIRI.com.