- THE MAGAZINE
- FOOD MASTER
|Source: Symphony IRI, Finding the New Normal|
According to Finding the New Normal, a consumer packaged goods report from Symphony IRI, shoppers are expected to remain frugal when purchasing consumer packaged goods in 2013 despite continued signs of economic recovery and strengthening. Though GDP growth and the Consumer Index are expected to remain steady at 4.1 and 2.1 percent, respectively, an expected drop in the unemployment rate from 8.1 percent in 2012 to 7.7 percent in 2013 will provide signs of economic growth.
Symphony IRI also expects consumers to continue to reduce the number of channels they visit. Three percent more consumers shopped at fewer than five channels from Q1 to Q4 2012, a trend Symphony attributes to consumers limiting themselves to channels offering the best value. Consumer focus on value has been reinforced by negative news about federal budget deficits and the costs of implementing the Affordable Care Act, Symphony says.
Performance across the 10 largest CPG categories was mixed. Energy drinks, wine, bottled water, beer/ale/alcoholic cider and natural cheese all gained traction supported by “on the go convenience and home-based eating and entertaining and, for energy drinks, evolving lifestyle trends.” Categories with diminishing sales in 2012, in order from the greatest to the least, included chocolate candy, milk, fresh breads and rolls, carbonated beverages and salty snacks.
The fastest growing category was energy drinks, which continued its recent strong growth thanks to a number of new market entrants and innovations like smaller packaging driving down average price. Innovation also played a role in growing the weight control/nutrition liquids/powders category with products like Ensure with Revigor and PediaSure SideKicks. Likewise, single-cup coffees have continued to accelerate growth in the coffee category.
Symphony also says alcoholic beverage categories benefitted from consumers’ home-based dining and entertaining rituals. Value-hunting consumers have increased the frequency with which they dine in and entertain at home in the struggling economy. Wine has also benefitted from increased penetration in the marketplace as a result of younger consumers’ preference for sweeter wines.
Food prices increased by 2.5 percent in 2012 due in part to an extended drought in the Midwest, although the full extent of the drought’s effect on pricing is likely to be felt in 2013. Symphony predicts 3 to 4 percent inflation in food prices for 2013. Peanut butter had the largest price increase at 28.9 percent, followed by snack nuts and seeds, coffee, shelf-stable seafood, baby accessories and refrigerated meat.
Shelf-stable seafood and refrigerated meat, among other categories with large price increases, saw significant gains in private label sales. Private label categories have obtained widespread acceptance as a value-based alternative to national brands, with 94 percent of consumers saying private label offers the same or better value than national label competitors.