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Let's Remember the Basics of Marketing
Sunday seems to be a day for food traditions and for the emotions
they conjure up. For some people it might be about the aroma of
freshly brewed coffee. Others might enjoy warm bagels or croissants.
For me, Sundays as a kid always meant a trip to the Lower East Side
of New York to buy the freshest of bagels, bialys, deli and the trip
to the 'appetizing store.'
This was the store that was the most special and exciting. Katz's
Deli was around the corner -- and great for a sandwich, but couldn't
compare to the 'appy' store in the mind of an eight-year old. Truth
was that many times I rushed through my sandwich with the hope that
my parents would also hurry so that we could get to the 'appy' store
faster.
My parents selected from the fish and cheeses, and my eyes were
glued to the assortment of special candies - candies that my
neighborhood candy store never even dreamed of selling or probably
even tasted. The store clerk was a 'merchant' - a great marketer who
knew what would attract people and get them to buy. He always gave me
a piece or two of candy to taste while I quietly and anxiously waited
for my parents to shop. His merchandising savvy was always rewarded
as I urged, begged and sometimes annoyed my parents till they would
order a quarter pound of candy just for me.
Forty years later, my 'food' Sunday starts with a trip to the
Farmers Market that luckily, is right around the corner from our
home. Stands of organic veggies, honeys, flowers, and breads along
with a dozen vendors making fresh omelets, crepes, burritos, fresh
juices, coffees and caramel corn creates a fresh food extravaganza.
It's our neighborhood's meeting and greeting place. Practically
everyone has a smile on their face as they juggle the bags hanging
from their arms.
One stand at the farmer's market sells freshly grilled corn,
which is a terrific concept. Imagine, hot fresh corn on the cob that
is roasted and mechanically rotated over an open fire. They offer an
assortment of add-it-yourself flavorings and spices. It is fun,
nutritious and should have a line around the block. But it doesn't.
The Farmer's Market officially opens at 8:00am. I can smell the
aroma from the cooking of the caramel corn stand a little after
7:00am as I watch Meet the Press. It's the neighborhood's wake up
call. Most stands are set up by 7:30am, and the smart shoppers get
there early to select the best produce and avoid the crowds.
Most weeks, the corn roaster isn't ready to sell his corn till
9:15 or so. As you would imagine, competing with a sweet smelling
caramel corn maker on one side and a 30 foot long table of colorful
fruits and vegetables on the other is a challenge for any marketer.
So, the corn roaster doesn't even try. There is no display of fresh
corn piled nearby or mini-samples offered to those who pass by.
I have witnessed shoppers who stop by the stand and are told that
the corn isn't cooked yet and walk away puzzled wondering why the
"corn man" even shows up.
His success is questionable. The price of an ear of corn over the
past five months or so has steadily risen. The price started out at
$1.50, and these days it's up to $2.25; which although I thoroughly
enjoy the corn, makes me question the value of this food
experience, and just how long this business will survive.
Food ideas and concepts are easy to create -- it's the execution
that matters!
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ACNielsen's latest annual Consumer & Market Trends Report is now
available. For information and to order
click here.
Warehouse Clubs have established themselves as a major retail channel
that is here to stay. Find out everything you need to know about the
consumers who shop this channel in ACNielsen's latest study.
Click Here
for more details.
The FMI/Rodale Shopping for Health survey of consumers is available.
Click here for more details.
ACNielsen's latest Private Label Trends Report is now available. For
information,
click here.
ACNielsen's 13th Annual Survey of Trade Promotion Practices is
available for $495.
Click here for more
details.
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November 8, 2004
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Labels Matter
In their constant battle to eat healthier, shoppers continue to
rely on nutrition labels for information that fuels their decisions.
According to Shopping for Health, FMI's annual report done
in conjunction with Prevention magazine, 83 percent of
shoppers say they regularly look at nutrition labels when buying a
product for the first time. Some 91 percent make their purchasing
decision based on the information they read on the label. Another
one-quarter of shoppers say they put an item back on the shelf and
don't buy it when they don't like what they read.
Shoppers say they have a number of reasons for this label
reading, ranging from specific diets to concerns about improving
their ability to avoid specific illnesses. For instance, 42 percent
of shoppers say they've purchased foods that claim to reduce the risk
of heart disease and 26 percent have bought products that claim to
help fight cancer.
For today's shoppers, here's an indication of what they say
matters most:
63% want food that is low fat.
55% seek food that is low in saturated fats.
52% want low calories.
48% look for information on sodium.
40% are hunting for low carbs.
However, many shoppers are also looking for foods high in certain
nutrients. Sixty-two percent look for whole grains, 51 percent look
for high amounts of calcium and a similar percentage look for vitamin
C content. In addition, 47 percent look for products that are
vitamin rich or fortified.
Interestingly for supermarket operators, most of these purchases
are being made in traditional food stores, although there is strong
competition from natural and health food stores. As with many
current competitive issues, organics bears watching to see how to
best serve and retain shoppers concerned about these products. Loyal
organics shoppers say they will go out of their way to shop at stores
that carry the products and information they seek.
Shopping for Health outlines many other issues, including
how shoppers feel about their diets, their stores and the kinds of
information they are hoping to get from retailers and manufacturers.
The study can be found at FMI's website,
www.fmi.org.
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In Search of Loyalty
Is customer loyalty becoming an oxymoron, or can retailers
develop a long-term bond that will keep customers coming back?
New retail formats are cropping up every day, retail channels
overlap one another and thanks to the Internet nothing is more than a
mouse click away. Retail technology has given us information on where
consumers shop and what they buy. But the essence of customer loyalty
is listening to people - finding out why they shop one particular
venue and avoid others - and creating a satisfying shopping
experience with repeat business that doesn't depend on having the
lowest prices in town.
Over the past several years, many have focused on frequent
shopper programs as a way to build business. According to the most
recent ACNielsen Homescan consumer panel survey, 81 percent of
households belong to at least one such program. The problem is that
73 percent of those households belong to more than one. It seems
that frequent shopper programs have become more about saving money
than building loyalty.
On their own, few of these programs help differentiate retailers
from one another because the business is no longer about just selling
products. It's about convenience, customer service, selection and a
myriad of other factors. The opportunity lies in discovering what
drives consumers to different stores and why a retailer may be strong
in one market but weak in another.
The issue is not just about dollar loyalty but emotional loyalty
which requires getting in synch with the consumer's mindset. This
January, ACNielsen Homescan will roll out
Shopper Trends, a new model that will quantify consumer
attitudes and identify the key drivers of a store's brand equity - as
well as how vulnerable retailers may be to new and existing
competition. The model applies Winning Brands(R), ACNielsen's
globally recognized brand-equity segmentation service, to retailer
equity and links it to the Homescan panel.
The analytical tools are in place. Customer loyalty doesn't have
to be as elusive and indefinable as it seems. There are tangible
reasons other than price for people to shop a particular store.
Finding out what they are has the potential to significantly impact
both loyalty and profitability.
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Leveraging Consumer Insights to Drive Retail Sales: Who Shops Where?
One of the most important steps when developing products, advertising
and promotions is clearly identifying which shoppers to target.
Unfortunately, many retailers ignore this valuable approach and
choose to target customers by geography instead. This may be one of
the reasons why we continue to see the retail successes at the
extremes and consumers leaving the more traditional middle retail
environments. Starbucks and Whole Foods continue to increase share
and profits, as do the lower cost "no frills" operations such as
Costco, Dollar and H&M.
As the dollar share of the Grocery Channel continues its decline
and other channels including Dollar, Club and Mass gain market share,
it's critical, especially for Grocery, to gain insights into exactly
which shopper attributes and lifestages are shopping in which
locations. Cross-Outlet*Facts, a syndicated offering from the
ACNielsen Homescan consumer panel, provides analysis of consumer
purchase behaviors across retailers and channels.
For example, while "Maturing Families" (those with one or more
children, not all under 6 or over 12 years old) represent just 21
percent of all US Households, they account for 25 percent of all
dollar sales across All Outlets. Clearly, identifying, attracting and
building a relationship with these shoppers can deliver an above
average return.
On the other hand, Older Singles (age 55+), who represent 15
percent of households, account for just nine percent of dollar sales
across All Outlets. The Drug Channel (100 Index) is the only Channel
getting its fair share of these shoppers.
Lower Income households, as expected, are more likely to shop at
Dollar Stores. However, some of the fastest growing segments being
drawn to Dollar Stores are households with higher incomes.
Click on thumbnail to enlarge, or click here.
African Americans spend more at Drug and Dollar Stores, while
Hispanic Households prefer to spend their dollars in the Club
Channel. Interestingly, Non-Caucasians represent a small part of
Wal-Mart sales, highlighting an opportunity both for the retailer as
well as for competitors. Please note that the data on Hispanics and
Asian Households include only acculturated households (those that are
bilingual or only speak English).
Click on thumbnail to enlarge, or click here.
Each of the 1,058 Homescan categories can be indexed by
Lifestage, as well as the more traditional measures of HH Size,
Income, Employment and Location. It is the understanding of the
composition of each category's sales volume, when analyzed against
factors such as "how many people buy", "how much they spend", "how
often they buy" and "how much they spend per trip" that can produce a
retail marketing road map, insuring that promotional and advertising
dollars are focused properly in order to maintain customers as well
as to fuel expansion with new customers.
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LabelTrends: Will Low-Carb move to Carb-Consciousness?
There is clear evidence that the low-carb diet craze is receding;
however, even as all those categories that have been negatively
affected continue their pro-carb fight (e.g., World Pasta Day and
Weight Watchers' The Truth about Carbs pamphlet), sales of those
products with any carb claim listed on the package front, such as
"lower carb", "carb reduced" and "for your low-carb lifestyle",
continue their sales growth, albeit at a dramatically much lower
rate, following F3's prediction at the end of the first Quarter of
2004.
LabelTrends tracked the sales of products with these types of
claims from January 1, 2003 through the end of September 2004 to
illustrate just how impactful the low-carb trend has been on the
packaged goods industry.
Click on thumbnail to enlarge, or click here.
As illustrated in the following chart, the first quarter of 2004
showed the steepest increase in quarter to quarter unit sales,
followed in the next quarter by a dramatic slow down in growth - a
trend that has continued and warrants continued monitoring. It may be
that for some consumers a two or three month lower carb diet was all
they needed to lose that 10-15 pounds, while for other shoppers these
products either illustrated little nutritional difference between
traditional products already on the shelf or failed to deliver on
what is still the most important trait of a successful food: taste.
Click on thumbnail to enlarge, or click here.
An interesting aside is that Nestle has just announced that it
plans to unveil a new line of Lean Cuisine products, called Spa
Cuisine that will be made with 100 percent whole-grain rice and
pastas. Whole grain pastas - which have a healthier nutritional
profile than traditional pastas - have in some cases deducted the
"fiber" from "total carbs" in order to promote a lower "net carb"
designation. We expect to see even more of a shift to whole grains,
which may be the key to the bread, rice and pasta revival.
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Private Label: Analyzing the Demographics
Sales of private Label products have grown at twice the rate of
branded products over the past six years; 48 percent vs. 22 percent.
According to an ACNielsen Homescan consumer panel survey, 24 percent
of households named having a good "Assortment of Store Brand
Products" as one of the key reasons for shopping in a particular
grocery store most often.
Private Label goods are now purchased by 99.9 percent of all
households, with shoppers purchasing a Private Label product
(excluding milk, bread and eggs) 59 times per year and an average
Private Label dollar purchase per occasion of $6.80. It is important
to note that since 1997, the frequency with which people purchase PL
products has increased by just three occasions per year; it is the
amount of dollars spent per occasion which is fueling the category's
growth ($5.06 in 1997 vs. $6.80 in 2003).
When examining the topline of just who is buying Private Label,
it is no surprise to see that a disproportionate share of sales comes
from households with 3+ members (124 index), households with kids
(121 index) and Blue Collar households (112 index). Nor is it
surprising to learn that Private Label is the most overdeveloped in
5+ member households and those with older kids (aged 13-17).
Interestingly, we find that the PL growth rate is greatest in those
households that are categorized as "living comfortably/affluent,"
underscoring the success of retailers' re-imaging of their store
brands and expanding into more gourmet and healthier Private Label
offerings.
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Stemming the Decline of Grocery Channel Trips
A lot is being discussed these days about the impact of Supercenter
roll-out on Grocery shopping trips. From a Homescan consumer panel
analysis of the Wal-Mart shopper, we know that as households become
heavier spenders within Wal-Mart, they make fewer trips to the
Grocery channel. However, when we examine the extent to which heavy
shoppers of specific formats make trips in and out of those formats,
we see plenty of opportunities for trip capture by Grocery retailers.
This is particularly true for the Hi/Lo (mainstream) Grocery
retailers who have high store count and many convenient locations
throughout the U.S.
In a joint ACNielsen/FMI study, we have calculated that Heavy
Hi/Lo Grocery shoppers (the highest 1/3 of shoppers based on annual
spending rates) make almost 220 trips across all outlets and that
about 80 of those trips are to a Hi/Lo Grocery retailer. This is a
much higher rate of trip capture than seen for Supercenters and for
the other two primary Grocery formats.
Click on thumbnail to enlarge, or click here.
When we examine trip behavior at the department level, we see
that Heavy Hi/Lo Grocery shoppers are the only shopper group to make
more Dry Grocery Department trips within their format. Many
non-Grocery retailers are looking to leverage the power of fast
moving consumer goods (such as those found in the Dry Grocery
Department) to drive shopper penetration, shopping trips and larger
shopping baskets. However, this looks like a great department that
Hi/Lo Grocery retailers can leverage to minimize further trip decay.
Click on thumbnail to enlarge, or click here.
While Heavy Hi/Lo Grocery shoppers make more Dry Grocery trips
within that format, they are doing so with a wider assortment than
what is available to Heavy Supercenter and Heavy EDLP Grocery
shoppers. Ninety-two percent of Heavy Supercenter shoppers buy 320
Dry Grocery Department items or less each year within a Supercenter.
That compares to 88 percent of Heavy EDLP shoppers and just 75
percent of Heavy Hi/Lo shoppers who buy 320 items or less in their
respective formats. This means that assortment above these 320 items
yields only eight percent additional heavy Supercenter Shoppers, 12
percent additional Heavy EDLP shoppers, and 25 percent additional
Heavy Hi/Lo Grocery shoppers.
While expanded variety is a strength for Hi/Lo Grocery retailers,
one must question whether all of the added assortment is worth the
added expense. In a time when retailers are looking for ways to
reduce costs to respond to competitive price pressure, is there an
opportunity for reduced assortment in some departments and
categories? This would enable Grocers to offer more attractive
prices for the growing number of value-conscious consumers; and it
could also help Grocery retailers free up shelf space for assortment
that their shoppers want and that other retailers can't easily
replicate or deliver as well.
Click on thumbnail to enlarge, or click here.
Please note that the above results are part of a joint
ACNielsen/FMI study on Shopping for Food in 2004. Stay tuned
for more announcements regarding the availability of the complete
study.
For further information or to arrange a comprehensive
presentation on consumer shopping patterns, please contact Todd Hale
at thale@acnielsen.com or
859-905-4615.
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The New American Consumer: Older, Fitter ...and Poorer?
One of the most important trends continues to be that of the aging
baby boomer and how this group of 76 million American consumers
continues change the way products are bought and sold.
The following is excerpted from ACNielsen's just-released
2004 Consumer & Market Trends Report, which offers CPG
companies and retailers a holistic review of consumers, both as they
are today along with a snapshot for the future.
Today's American consumer is a little older, a little grayer and
a lot more wrinkled than ever before. And that merely foreshadows the
demographic quake on the horizon. According to the U.S. Census
Bureau, the senior sector will increase by 204 percent between 2002
and 2100, numbering some 186 million, up from the 59 million
benchmark. Toward the turn of the next century, the largest cohort
within the senior segment will be among the 128 million older adults
65+ years of age.
Unfortunately for marketers serving this burgeoning stratum,
there is an inverse relationship between household income and
head-of-household age. While more mature seniors represent just eight
percent of households with incomes in excess of $70,000 per year,
they comprise more than one-quarter of households at the lower end of
the economic spectrum (less than $20,000 per year).
Click on thumbnail to enlarge, or click here.
One possible explanation for this wealth distribution pattern
might be the fact that although almost one-third of adults 55+ years
of age work, only 17 percent of 65+ seniors are employed. According
to the Bureau of Labor Statistics' Consumer Expenditure Survey,
seniors represented aggregate buying power of almost $600 billion
annually in the year 2000. Translating to an average $26,533 annual
spend by a 65+ senior household in 2000 (which pales next to a Boomer
outlay approaching $50,000 per year).
Changing boomer retirement prospects signal a happier note for
the future. A study conducted by the Met Life Mature Market Institute
suggests that fully half of all Boomers intend to work beyond
retirement, which will shift them to the higher end of the wealth
range. Data projections show that, when the last Boomer turns 65 in
2030, this contingent will control 40 percent of U.S. disposable
income and wield influence far beyond its 20 percent incidence rate
in the population.
Baby Boomers are bringing new attitudes into their golden years,
which may be helping to keep them young.
Click on thumbnail to enlarge, or click here.
Recognizing the special needs of older shoppers, MIT's AgeLab
busily explores innovative ways to help our next generation of mature
citizens "shop 'til they drop." Among the inventions: a computer
helper that communicates with the RFID tags on food packaging and
coaches shoppers on smart food choices consistent with their medical
conditions. Expect these electronic dialogues to reach all the way
into the kitchen and cupboards, where appliances will chat with each
other and packages on the shelf to maintain inventory levels, update
shopping lists, validate expiration dates and monitor automatic
cooking instructions.
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'Tis the Season for Wine and Spirits
With turkey, cranberries, and seasonal baking supplies filling the
retailer ads and in-store displays, Food retailers may want to be
sure that they also dedicate strong promotional support for the Wine
and Spirits categories this holiday season.
While the Beer category is not heavily dependent on the winter
holidays for significant dollar sales, the Wine and Spirits
categories are. In fact, indexing sales for the total Food, Drug, and
Liquor channels for the eight-week period ending mid January for the
Total Wine and Spirits categories against an average eight-week
period, sales during this holiday period are 30 percent higher.
Indexing holiday period sales by channel identifies a potential
opportunity for Food retailers, since the Liquor and Drug Channels
index higher than Food for Wine and Spirit sales. This suggests that
there is an opportunity for food retailers to capture some additional
sales from consumers during this peak season that are likely already
shopping their stores.
Click on thumbnail to enlarge, or click here.
Food retailers may want to consider emphasizing specific Wine and
Spirit products. While Table Wine overall is a popular meal time
beverage at holiday functions and represents a popular gift and party
item, sales of Red and Blush wines in particular are most dependent
on the holidays. In addition, premium imports tend to be more
important over the holidays, suggesting that consumers tend to
splurge over the holidays.
Sparkling Wine is perhaps the MOST dependent of all Wine &
Spirits categories on the holidays, owing more than one-third of
annual sales to this eight-week period. The premium Sparkling brands
tend to be actively sold and consumed during this time frame, with
prestige brands generating up to 40 percent of their annual sales
during this holiday window.
Where it is legal to sell Distilled Spirits in Food Stores,
retailers can look to the Cordials, Brown Spirits, and Brandy
categories to boost their holiday Spirits sales. The cordials
category is one of the most dependent on the holidays, with more than
one-quarter of all sales taking place during that eight-week window.
Brown spirits (Bourbons, Whiskeys, and Scotch) tend to perform well
during the colder winter months as well. Brandy, Cognac, and Irish
Whiskey sales especially thrive in the Nov/Dec/Jan holidays.
Another approach for Food retailers looking to boost holiday
sales is to support the category with feature ads and in-store
promotion activity during the peak selling period. Forty-two percent
of all Promoted Wine sales and 32 percent of all spirits promoted
sales take place during the eight week holiday window.
The importance of consumers who buy beverage alcohol products can
be seen in the following basket analysis that compares average
purchase amounts of shoppers who buy specific beverage alcohol
products vs. those that don't.
Click on thumbnail to enlarge, or click here.
Food retailers have a significant advantage over other channels
during the holidays in that they carry so many of the other items
needed for in-home entertaining. With a little more focus on the
beverage alcohol categories that are most popular around the
holidays, these retailers should be able to capture more seasonal
beverage alcohol sales.
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As the 15th Largest Category "goes to the cats & dogs" is there an opportunity for Grocery?
According to a University of Illinois study, there were an estimated
77 million cats and 65 million dogs in the US in 2002. How many of
their owners shopped at your store?
Grocery continues to have the highest overall Household Shopping
trips (70 per year) and when analyzing Pet Food buyer habits, there
may be an opportunity for supermarkets to gain sales in this category
Ninety percent of all canines are owned by city dwellers
(according to the University of Illinois study) which may well
account for the fact that the Pet Food category has a relatively low
shopping frequency (5 trips per household) and reports no
year-to-year gains in any retail channels.
Good marketing may well come from a twist on the advice from
legendary bank robber Willie Sutton: go where the dogs are! Inner
city retailers may have a unique opportunity to offer home delivery
of Pet Food, which is typically available in large and heavy
packaging, which could drive up buying frequency while strengthening
shopper relationships. One highly effective marketing concept that
may be worthy of testing is evolving food sampling to pet food
sampling. Dog food brands may find that sampling on city streets and
in parks may be even more effective in increasing sales.
Non-traditional sampling has proven to be highly effective; Red
Bull's in-bar sampling is just one such example.
Pet Food sales across all Outlets grew at just 1.3 percent in
2003 from a year before, while PETsMART and PETCO had annual sales
growth of 11 and 12 percent respectively, continuing to divert sales
away from Grocery and Mass. Household penetration based on "human
households" actually declined by three-tenths of one percent.
However, the dollars spent per buyer continues to increase.
Click on thumbnail to enlarge, or click here.
The trends in Pet Food are different for dogs and cats. Dry Cat
Food has gained share (3.5 percent) over Wet (decline of 0.2
percent), while the segments in Dog Food remain stable and are up 5.2
percent in Dry and 0.2 percent for Wet.
Merchandising reminder: Dog and cat treats spike during the
winter holiday season, a great opportunity for display merchandising.
Treat sales are up 3.8 percent as compared to the previous year.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Nov04pets2.jpg) and this
link for graph two (
http://www.factsfiguresfuture.com/enlarged/Nov04pets3.jpg)
The biggest shopper opportunity may well rest in the carts of the
Multi-channel (4+) buyers. These are the "heavy buyers" of Pet Food
who spending $229 per year (compared to single channel shoppers who
spent $61). Obviously, these consumers "shop around", and the
opportunity presents itself to capture these heavy category buyers
through expanded distribution in new, alternative and traditional
channels. Pet Food brands can help retailers and themselves with
channel-specific targeting of products and promotions including
in-store displays.
Future growth for Pet Food and the major segments (Dog and Cat
Food) will have to come from an increased buying rate via a better
understanding of the heavy category buyer.
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COUNTRY-TO-COUNTRY
Club stores such as Sam's and Costco have become very popular in
Puerto Rico and due to the soft economy on the island, many families
have turned to these stores for their primary grocery shopping. In
addition, Wal-Mart is very strong in Puerto Rico and, according to
the local ACNielsen marketing office, Puerto Rican shoppers embrace
one-stop shopping, saving time and saving money and as a result, ALL
of the largest Packaged Meat/Dairy/Frozen Food Categories in the
Grocery Channel in Puerto Rico are showing sales declines as these
dollars shift to other channels.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Nov04C2C1edit.jpg) and
this link for graph two (
http://www.factsfiguresfuture.com/enlarged/Nov04C2C2edit.jpg)
Reviewing sales of the same categories in the US highlights the
continuing impact of the low-carb diet on Packaged Meat, Unprepared
Frozen Meat/Seafood, Ice Cream, and Refrigerated Juices & Drinks.
Most important to note is the continuing increase in the dollar sales
of eggs, due to the re-imaging of this commodity through branding,
increased health benefits and consumer marketing.
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Remember when you could go to a diner or coffee shop and pay 50 cents
for a good tasting "bottomless" cup of coffee? That brew might still
exist in some small cities and towns, but for most Americans the
price of a cup of coffee easily tops a buck. Want a latte or
cappuccino and you'll most likely be paying with a five-dollar bill
and have just enough change for the tip jar.
Today, the least expensive cup of coffee is the one consumers
make at home. Last year, according to ACNielsen Strategic Planner,
Americans spent almost $3 billion on packaged coffee in our
supermarkets and other mass retailers (excluding Wal-Mart). However,
unit sales declined 2.4 percent in the 12-month period ending October
4, 2004 over the previous year.
The Grocery Channel continues to dominate retail coffee sales.
Click on thumbnail to enlarge, or click here.
The coffee experience has changed as a direct result of
Starbuck's and other ready-to-serve coffee retailers that changed the
paradigm of buying a cup of coffee. Now consumers are more aware of
the country of origin, type of grind and even the political statement
(Fair Trade) made by the brand of coffee. This new interest in coffee
(often compared to that of wine five years ago) has also created a
subcategory of "specialty coffees" and exotic whole bean offerings
that are now being sold in ALL retail channels and bought by ALL
Household Types.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Nov04cw1.jpg) and this
link for graph two (
http://www.factsfiguresfuture.com/enlarged/Nov04cw3.jpg)
It may appear that the differences between the canned national
brand ground coffees and specialty coffees have become less as the
major brands have introduced new flavors and offerings. But when it
comes to quality and taste, the actual differences have become more
pronounced as many of the canned ground coffees are using more
"Robusta" beans; which are cheaper and lower in quality. Not being
able to achieve a great cup of coffee at home, along with the
proliferation of available ready-to-drink coffee locations, may be
the reasons for the decline in store bought coffee unit sales.
The wild card, which may challenge the Grocery Channel's
stronghold on the category, lies in the new coffee machine
technologies: the single serve brew-in-a-minute appliances which use
proprietary pods or capsules. This next generation of coffee
packaging could open an opportunity for larger (and cheaper)
multi-packs that fit strategically in the Club and Mass Channels
outlets. Coffee drinkers never want to run out of their favorite
brew, and as the price per unit increases for those switching from
loose coffee to pre-portioned pods or capsules, expect these drinkers
to search for the lowest price at these outlets as well as online.
For Grocery to maintain its stronghold in this category, stores
will have to move quickly to offer this new subcategory and the
appliances before the Club and Mass Channels take ownership. One plus
for the Grocery Channel will be to offer a wide assortment including
organic, Fair Trade and flavored, which is typically limited in the
other channels.
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Facts, Figures and the Future is copyrighted and may not be
reproduced without prior permission. For more information about the
publication, please contact Phil Lempert at 323-860-3070 or via
e-mail at
PLempert@FactsFiguresFuture.com
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