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The Latest Magic Bullet is Shot in the War on "Fat"
Researchers at the Imperial College London hit the US media hard
this past Thursday by reporting that a SMALL trial involving 24
people injected them with a digestive system hormone resulted in a
reduction of 33% of food consumption. This study has demonstrated the
potential for this hormone (peptide YY 3-36) to curb appetite. The
peptide, known as PYY, is actually produced by the digestive system
as part of our inherent appetite control system. It also reinforces
the fact that we are well in the age of the nutraceutical, and our
shoppers are ready to buy.
One of the major stumbling blocks to the actual marketing of PPY
is that since it is a naturally occurring hormone in our bodies, it
cannot be patented...and therefore none of the major drug companies
have expressed interest, yet. Which leaves a huge opportunity for
food companies... if the science proves that this hormone if added to
our foods could actually reduce the amount one consumes.
Now, I am not suggesting that it is good business to develop
foods that have a built-in automatic shut off value (and if so, yes,
they MUST be labeled as such). But do we have a choice... as
America's "fat" levels continue to rise?
We do have a choice - and on the front lines of this war are the
supermarkets and food brands which need to work hand in hand to
continue offering our shoppers more healthy alternatives to the
current way of eating.
Your shoppers will get a jump start in the 'fat war' as Dr. Phil
and The View begin yearlong series on obesity. Prime time specials
hosted by Katie Couric on NBC and Meredith Viera on ABC will prompt
more shoppers to be asking you for weight management information and
tools. It's a great opportunity to strengthen your relationship with
your customers by providing in-store weight management tours and
clinics, recipe demonstrations and educational information.
In this issue of F3 you'll read the highlights from the latest
FMI Survey that can help your company focus on much needed "fat"
strategies. More up to the minute findings in F3 include: Low Carb is
heating up the diet food aisles, but will the trend last? F3
forecasted the growth in organics a year ago, and the latest numbers
prove that this category has just begun to grow. James Russo's
Economic Snapshot tells us good news is on the way, and our Channel
Watch continues to track dollar sales, number of shoppers and
shopping trips across 6 retail channels. Private label growth may be
double that of CPG brands, but there are some PL declines as well.
F3 is here to help you get closer to the shopper, please feel
free to email me your thoughts and questions so that we can continue
to make Facts, Figures & the Future one of your most valued tools!
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September 8, 2003
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A Weighty Issue
Health, nutrition and obesity are hardly new stories at this
point. We all see constant reports that consumers are increasingly
worried about their health and how they are eating. It seems that
every day we see a new medical study detailing just how bad the
problem is becoming.
The challenge we face is getting a sense of why shoppers are
behaving the way they do and figuring out how to help them change. A
new FMI study called
Healthy Lifestyles: From Parents to Kids provides some
insights as to why this issue is so troubling and so widespread and
offers a look at why the road to improvement will be so difficult.
It comes down to this: Shoppers want to eat better, but the lack
of time, money and simple know-how stop them from making any changes.
Asked why they can't maintain a better diet, more than
one-third of shoppers blame the lack of healthy foods at fast food
and takeout restaurants. The more time-stressed the household, the
worse the concern gets. Almost half of single-parent households cite
this concern, possibly because time pressures are causing this group
to use fast food restaurants most often. Even one-fifth of shoppers
without children say they are too busy to try eating healthier.
Time isn't the only issue on their minds, however. Single
parents also cite tremendous concerns about the cost of healthy
foods, which might provide another reason why these shoppers are
frequenting low-cost fast food restaurants.
Shoppers also say they are confused by all the conflicting
information they are given about diets. Nearly half of shoppers with
children believe that in five years the experts on diet and nutrition
will completely change their minds about certain foods.
The shopper survey also clearly shows that shoppers are willing
to be led toward more healthy products and wish supermarkets would do
more to help educate them on healthy choices. Of course, the flip
side is whether shoppers would actually use these services if they
were offered. After all, can information combat the pressure of time
and money?
This is an issue that the entire industry must continue to focus
upon and work together to help solve. The supermarket these days is
full of products that are easier to prepare than ever. Time savings
can be found in perishables or grocery aisles, in meat or frozen
foods. And delis and prepared food departments are now commonplace.
Likewise, price is a powerful issue and 70-cent hamburgers are hard
to beat. Yet here again, the supermarket has a powerful
counterpoint: Eating at home remains an economical choice in so many
ways.
However, the industry has struggled to make powerful inroads in
eating trends. Will the issue of health tip the balance? That
remains to be seen.
(To order a copy of the Healthy Lifestyles report click on
the cover image to the left of this column.)
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Upside Potential in the Back of the Store
Tucked in the back of many chain grocery stores is a department
with significant upside potential - the pharmacy. To grasp the size
of the market for prescription medicines consider the following:
Over three billion prescriptions were dispensed in 2002, and
the volume continues to grow - up 4 percent in 2002 according to IMS
Health.
Some 61 percent of Americans suffer from at least one of 14
chronic ailments, and 68 percent of those treat their ailment with
prescription medicines, according to the ACNielsen Homescan Rx/OTC
Service.
Grocery channel Rx customers spend more per year than non-Rx
customers even when you remove the value of their Rx spending - 13
percent more.
However, an analysis of ACNielsen Homescan consumer panel
information shows that the grocery channel captured just 20 percent
of all pharmacy shopping trips last year - compared to 57 percent for
the drug channel.
Convincing a pharmacy shopper to switch pharmacies is not easy,
but new ACNielsen research points to several areas of opportunity for
grocery retailers. First and foremost, Rx shoppers want their
pharmacy to be convenient. In a survey earlier this year we asked
consumers what features are most important in a pharmacy. Among the
top answers were: convenience to their home, a less than 20 minute
wait for their prescription to be filled, and ease of ordering
refills either on the phone or online.
In many ways drug stores have an edge over grocery stores when it
comes to convenience. They are more likely to be stand-alone stores,
which makes it easier for customers to get to the store. Plus, their
smaller size makes it easier to get in and out quickly. Grocery
stores could make their pharmacies more convenient by locating them
closer to the front of the store.
Grocery retailers' core strength, a wide selection of food, could
be further leveraged if they began tailoring their marketing
communications and merchandising to the needs of specific ailment
sufferers. For example, let's take a closer look at the cholesterol
medication market. Some 23 percent of households contain a high
cholesterol sufferer, and, at over $12.5 billion in sales, high
cholesterol remedies constitute the single largest Rx category. An
ACNielsen purchasing analysis revealed that high cholesterol
sufferers buy a disproportionate amount of olive oil, cooking sprays,
sugar and salt substitutes, diet cola, low calorie salad dressing,
frozen breakfast foods, margarine, and vitamins & minerals.
Direct mail campaigns targeted at cholesterol sufferers could
emphasize these products; low cholesterol products could be
merchandised together; and, pamphlets available at the pharmacy
counter could suggest meals and ingredient lists tailored to those
with high cholesterol.
With the aging of the U.S. population, Rx sales appear to have
limitless potential. Whether grocery retailers get their fair share
of Rx sales depends on their ability to understand and meet the
unique needs of customers who suffer from various ailments.
For more information about the ACNielsen Rx/OTC Service, contact
Rick Stefany at 908-284-0530.
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How Many Days Are Enough?
Each year we hear about the increased stress and strain on U.S.
workers as they experience expansion in both their work days and work
weeks. When is the last time you worked a 40-hour work week? When
is the last time you took all of your allotted vacation time?
Without question, the availability of more and more
consumer-packaged-goods products on the shelves of alternative retail
channels is driving the decline in shopping trips to the Grocery
channel. But, look at all of the businesses that are open six and
seven days a week. The folks who are employed in those businesses as
well as many of the remaining U.S. workforce don't have time to shop.
They are too busy working. Additionally, this extended work week
has led to a shift in shopping behavior. For the third year in a row
Sunday is the most important shopping day within the Grocery channel.
Click on thumbnail to enlarge, or click here.
Almost two-thirds of the households in our Homescan Consumer
Panel are telling us that they are looking for ways to get their
cooking, cleaning and shopping done faster. And, as noted below,
products that offer more convenient consumer solutions in the areas
of food preparation and home cleaning are winning at retail. At the
same time, products that either help us ease our stress or heal our
other work-related ailments are showing strong retail sales growth.
Click on thumbnail to enlarge, or click here.
While big-box retail formats like Supercenters and Food/Drug
Combo stores are on the rise and provide U.S. consumers convenience
via one-stop shopping, small-box retailers like Walgreens, Dollar
General, Family Dollar, and Dollar Tree are opening stores at a more
rapid pace and provide consumers convenient shopping solutions via
quick and easy access. With the expected growth rate among the U.S.
population of persons 65 years of age and older, the battle for
one-stop shopping versus quick and easy access will continue into the
next next 2-3 decades.
Click on thumbnail to enlarge, or click here.
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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Private Label, Now the #1!
Private Label sales increases have exceeded the CPG market average as
consumers are, in fact, spending more on Private Label on every
shopping trip and for two basic reasons. Private Label's role in
current categories is growing by
offering second and third tier products, and we also see
expansion into "new" categories, which typically hold higher price
tags (i.e., small household appliances). The largest source of
Private Label growth has been its sales expansion in existing
categories as it now holds the #1 share position in 25 percent of all
categories that offer a store brand.
To quantify the idea of Private Label evolution, we compared
2002's Private Label sales across all outlets to the comparable
figure 5 years prior. Over this period, the increase in Private
Label sales is twice that of Branded items. Dollars spent on Private
Label items have risen nearly 40 percent over this same time period.
We examined unit sales of Private Label and its branded
counterparts over the past year, ending April 2003, across all the
major consumer package goods departments of Dry Grocery, Dairy, Deli,
Meat, Frozen, Alcohol, Health & Beauty, Non-Food, and General
Merchandise. The results were that Private Label growth outpaced the
CPG average as its unit sales grew at five times the rate of the
branded products; with close to a 20 percent average share across all
CPG categories.
Click on thumbnail to enlarge, or click here.
An important note is that dollar sales for Private Label are
growing considerably faster than unit sales.
Private Label is showing the greatest growth in the Meats and
Produce categories, which is frustrating for the companies that long
struggled with the notion of how to brand these typically commodity
oriented departments. Now that 'value-added' has been added to the
packages of lettuce, fruit, poultry, fish and meat, retailers are
furthering their strength by replicating this successful model. By
"branding" these perishable categories, it helps further the
retailer's name and equity in highly visited and frequently purchased
departments.
In the frozen food case, double digit sales increases for Private
Label Ice, and Frozen Unprepared Meats add up to a warning sign for
all branded manufacturers in the Frozen Food category: and it's time
to be planning reinforced branding efforts and gearing up for an
offensive marketing position.
Click on thumbnail to enlarge, or click here.
It is not necessarily rosy for all Private Label products. Store
brands are experiencing some challenges in certain categories.
Struggling Private Label sales for Frozen and Refrigerated
Juice/Drinks as well as notable sales declines for high ticket items
such as Detergents and Disposable Diapers suggest that those CPG
brands which continue to deliver above average performance are less
at risk. Eggs, typically one of the leading Private Label categories,
is also showing declines as more value-added and branded products
(e.g., see-thru cartons, logos stamped on individual eggs, organics,
hormone-free, and cage-free) make their way into shoppers' carts.
Click on thumbnail to enlarge, or click here.
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Organic Sales Booming
Since The Inception of the
USDA National Organic Program
SPINS and ACNielsen are reporting on organic sales by
classifications defined under the USDA's National Organic Program
(NOP) in effect since October 2002. We are tracking sales by each
class within conventional food, drug, mass, and the natural
supermarket channel (e.g. Whole Foods, Wild Oats) across 20 food and
beverage categories.
The organic Milk, Half & Half, Cream, Frozen Entrees, Pizzas and
Convenience Foods categories are experiencing particularly strong
growth even with a relatively long history of organic offerings in
both natural and mainstream channels. Growth in other categories is
driven by a variety of factors including organic line extensions and
product reformulation from conventional to organic. Substantial
growth in the Chips, Pretzels & Snacks categories is in part due to
an organic line extension by Kettle Foods and chip giant Frito Lay's
entrée into the natural and organic market.
Click on thumbnail to enlarge, or click here.
Products which contain certified organic ingredients in the
95-100% range are eligible to bear the USDA seal; and indications are
that consumers find the seal to be very important to their buying
decisions. Across channels, 100% certified organic sales are growing
at 21% while the 95-99% organic ingredient classification is booming
at 26%. With a 60,000+ store universe, mainstream retailers are now
moving more volume in organic food and beverage products and seeing
faster rates of growth across NOP organic class than in the 850-store
Natural Channel 'A'-size universe.
Click on thumbnail to enlarge, or click here.
The Cold Cereals category is seeing particularly strong gains in
organic. Cold Cereals in the 95-99% organic class are enjoying an
astounding 64% growth rate. The Natural channel represents a larger
share of organic cold cereal sales than the Mainstream with over 45%
of SKU's being able to use the USDA seal in that channel. Mainstream
organic cereals are gaining steam however with 75.5% growth - far
outpacing non-organic cereal growth of 3.9%.
Click on thumbnail to enlarge, or click here.
To learn more about the Natural and Organic Consumer report
please contact SPINS at 415-957-4400.
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ECONOMIC SNAPSHOT: Indicators Falling In Line
With the first nine months of economic data, corporate earnings,
consumer spending and retail sales close to complete, the U.S.
economy appears poised for a sustained albeit gradual recovery. The
equity markets have been digesting the overall positive 2nd quarter
earnings results (avg +10% across the S&P 500 on top of 7% sales
gains). While Markets tend to over swing like a pendulum, it is hard
to ignore the broad based gains of DOW, NASDAQ, S&P 500 and S&P 500
Retail Index all up 11%, 33%, 13%, and 34% respectively YTD. As the
markets continue to price in a recovery, a drill down into an
ACNielsen aggregate of leading economic indicators further
illustrates the position that a macro level recovery in the next 3-6
months should strengthen.
Click on thumbnail to enlarge, or click here.
As expected, one of the last, but perhaps the most important
components of a recovery is the jobs data. With productivity near 6%,
corporations are using existing workers to boost output instead of
hiring. However, this may be changing, as layoffs have reduced, and
the 4-week moving avg of jobless claims stands below the critical
400,000 marker. Finally, with all 62 world stock markets gaining this
year the U.S economic engine has the weight of a global recovery on
its shoulders. At the controls of this engine are U.S consumers who
account for close to 70% of the $10 trillion dollar US economy.
Insights into their spending patterns and outlet preferences can be
seen in the results of the latest retailer earnings. An earnings and
stock price analysis of 18 leading retailers representing close to
25% of total U.S. retail sales offers the following: Discounters;
Wal-Mart, Target, *Kmart (Yes, Kmart: from time of new KMRT stock
offering) and Dollar Retailers; Dollar General, Dollar Tree and
Family Dollar are all trading at or near 52 week highs. While
Wal-Mart, with 20% income gains, has lead discounters, all three
dollar retailers have realized, once again, double-digit earnings
results. The effect of pricing pressures and intense competition
continue to be felt across club retailers Costco and BJs and are most
clearly seen within the food class of trade which has experienced low
single digit sales gains.
So what do retailers look for in the critical final three months
of 2003? Consumers right now are enjoying cash from record levels of
refinancing, tax credit checks, rising disposable income, increased
optimism and low inflation rates. All these factors should bode well
for a strong back to school and holiday selling season. If they do
not we still have the paltry 2002 same store sales comparisons of
1.4% to boost results.
For further information or to arrange a comprehensive
presentation on the State of the Economy and its impact on the Retail
sector please contact James Russo at
James.russo@acnielsen.com
or 516-682-6068.
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Low-Carb: The Next "BIG" Thing? The answer is YES.
No question about it, low-carb is the "it" diet. Magazine covers
proclaim its success. Stores that specialize in selling just low-carb
foods are popping up while our traditional supermarkets are clearing
their shelves to accommodate this fast growing category. Low-carb
diet books are among the best sellers, and their authors are treated
like superstars.
The truth is that the low-carb diet is not new - it's beginnings
date back to 1863 when a fat undertaker, best known for his celebrity
clientele, shared his physician's advice to stop eating bread,
butter, milk, sugar, beer and potatoes in a self-published work
entitled "Letter on Corpulence."
The low-carb diet, as it makes its way on the supermarket
shelves, is based on the theory that over-consumption of
carbohydrates and the way our bodies process them, is the key factor
in obesity. The diet is based on restricting processed and refined
carbohydrates and limiting the consumption of sugars, breads, pastas
and starchy vegetables.
While hundreds of "low-carb" products are touting their benefits
to supermarket buyers... the truth is that the Food & Drug
Administration has not issued a definition of "low-carb" and as a
result any such claims are unauthorized. And listing Low Carb on the
front of the package is not allowed. Many of these product packages
also proclaim "net carbs," "net impact carbs" or "net effective
carbs" which also do not have FDA definitions, and according to the
governmental agency, are questionable calculations. These numbers are
determined by subtracting from total carbohydrates those
carbohydrates that have a negligible effect on blood sugar. Examples
are fiber and sugar alcohols including: maltitol, lactitol, sorbitol
and erythritol.
We polled our SupermarketGuru.com Consumer Panel to find out just
how the "low-carb" phenomenon is doing, and here's what they had to
say:
When participants were asked if they are following a low-carb
diet, 75 percent answered yes. When asked if they felt that the
low-carb diet trend would last, 81% said yes. Over half of those
(51%) said they felt it would last forever, and 19 percent said 5
years, The chart below shows what low-carb products participants said
they buy. Low-carb protein bars rank number one (54%), followed by
low-carb bread (41%), low-carb ice cream (31%), and low-carb
chocolate (30%).
Click on thumbnail to enlarge, or click here.
When asked what is the most motivating reason for buying low-carb
products, the majority answered that they are trying to lose weight
(60%), and only 1 percent answered that low carb products taste good.
Click on thumbnail to enlarge, or click here.
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How Shoppers Shop
When queried, most shoppers will admit that if they had a shopping
list everytime they went grocery shopping, odds are that they would
save money and shorten the length of their shopping trips. In the
current economy where, according to the Promotion Marketing
Association's Coupon Council, 79% of all people in the U.S. are using
coupons, and according to the latest ACNielsen Consumer Pre*View
Survey, 29% of the respondents are saying that their household is
"worse off financially" than they were a year ago, the question is
just what are shoppers doing to stay within budget.
In the August 2003 SupermarketGuru.com Consumer Panel, 1754
people from all 50 states in the U.S. shared their habits on just
"how they shop."
Click on thumbnail to enlarge, or click here.
Surprisingly, only 3% admitted to never using a shopping list,
and 77% said they did at least 50% of the time. In preparing the
list, over half the respondents write down just the general product
category with 13% listing the brand itself -- underscoring the
strength of brands.
Click on thumbnail to enlarge, or click here.
Price was reported to be the most important factor influencing
the selection of groceries, followed by "sale items" which was tied
with "freshness" as the second most important factor. The "value"
equation for today's consumers is a moving target consisting of a
balance of price, quality, relationship and service which adjusts
with each product category and brand. This survey reinforces the
importance for brands to go beyond the traditional marketing mix and
be sure to deliver in their messaging and products a compelling
'experience' to attract shoppers.
Notable is the relatively low score of "easy to prepare" with
just 58% of the shoppers selecting it as an influence in product
selection; which may well indicate that ease of preparation for all
food products has become mainstream rather than the exception.
Click on thumbnail to enlarge, or click here.
Next month in F3 look for the survey results which will focus on
the types of cuisine currently being consumed and the changes our
respondents intend to make in their diets for 2004.
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COUNTRY-TO-COUNTRY: Fastest Growing Products in "The Nordic Grocery Market"
This month's Country-to-Country compares the fastest growing products
in U.S. grocery stores in 2002 with the fastest growing products in
"The Nordic Grocery Market," a grouping of countries that includes
Finland, Denmark, Norway, and Sweden.
Ice Tea/Ice Coffee is one of the categories with the highest
overall growth in both Sweden and Norway. In Norway, Ice tea/coffee
showed the strongest growth in the Beverage category and more than
doubled its volume from the previous year! Ice tea/coffee surpassed
product groups such as Tea, Chocolate drinks and Still water in sales
turnover. RTD ice tea represented 74% of the sales turnover in this
product group. The strong growth and new launches in this product
group from major Beverage suppliers led to a more natural place for
these products in refrigerated display cases in the Beverage section.
In Sweden too, Ice Tea has seen a number of new product launches
during the year doubling its volume and almost tripling its value
during 2002.
Another large product group showing high growth is telephone
cards. In Norway, Telecommunication/starter kits were one of the
fastest growing product groups in 2002 compared with 2001, showing a
growth of EUR 27 mill up to a total value of EUR 83 mill. The main
product in this group was Top-up cards. In addition, there were some
Starter kit sales with and without mobile phones. The total growth in
value was 48.1%, and the growth in volume was 41.5%. This growth is
associated with significant improvements in the distribution of
Top-up cards. Telenor ASA was still the market leader in this product
group, while Netcom GSM AS came in second.
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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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