Top food trends in 2009 announced
Good news, bad news: Private label sales jump, brand names tumble
Lower income bracket represents major potential for retailers
Premium wine cask sales brimming over

Top food trends in 2009 announced

Food trends, like flexible packaging industry, driven by value, sustainability.

The Food Channel, in cooperation with the World Thought Bank and International Food Futurists, has released its “Top Ten Food Trends for 2009.” The list highlights some of the largest industry movements that consumers, foodservice professionals and food manufacturers and retailers should watch for in the coming year.

“Not surprisingly, the majority of the 2009 trends have a ‘value’ message, reflecting the downturn in the economy and how the lifestyle around food is affected,” says Kay Logsdon, editor at The Food Channel. “We live this daily; food is a constant even in a bad economy. Identifying these trends will help us all do a better job of adjusting and even thriving.”

Top 10 Food Trends for 2009

1. Home on the Range: Downsized economy breeds new generation of home chefs, more food-savvy than their predecessors.
2. Foodie 2.0: Growth of virtual and non-virtual food communities.
3. Going, Going Green: Kitchens go eco-conscious.
4. Living La Vida Locavore: Eating locally and seasonally, both at home and in restaurants.
5. TMI?: Is seeing the calorie count on the menu Too Much Information (TMI), or will it lead to healthier choices?
6. FrankenFood: The rise of bioengineering and genetically modified food; the next evolution of last year’s Functional Food trend.
7. Food Philanthropy: Individuals and companies address world hunger.
8. Food Insecurity: The call for tighter food controls, after the tomato and jalapeño pepper scares of 2008.
9. Brewing Business: Striking a balance when cost is an issue; the divide widens between the exotic and day-to-day food needs.
10. Where in the World...: is the next flavor trend coming from? It’s all about globalization and variety.

Good news, bad news: Private label sales jump, brand names tumble

Costco predicts store brand share to reach 25%; Kraft, Sara Lee, Kellogg brace for impact.

Costco’s sales of private-label products may reach 25% market share, up from just below 20%, within the next few years, according to a recent report by the Private Label Manufacturers Association. Some store brand items, such as olive oil, have become so popular that Costco no longer stocks a national brand equivalent.

Costco chief executive officer Jim Sinegal notes that Costco has benefited from consumers dining at home by selling more prime-grade meat that used to go almost exclusively to restaurants.

Costco’s expanding line of private-label products includes Kirkland Signature environmentally friendly cleaning products, like a liquid laundry detergent made with palm and coconut oils, and a larger Kirkland wine selection. Further, the retailer has nearly replaced all of its branded spices with store brands according to PLMA’s report.

Conversely, three of the biggest name-brand companies-Kraft Foods, Sara Lee and Kellogg-told financial analysts that the push on private label is impacting their bottom lines.

Kraft was hurt by inventory reductions by retailers across the board, including Wal-Mart, the world’s largest retailer. “Wal-Mart is cutting its inventories-they are quite public with that fact. All of our retailers are cutting back,” Kraft chief executive officer Irene Rosenfeld says.

At Sara Lee, one analyst identified “aggressive private label competition” as one of the primary drivers responsible for the company’s poor earnings.

Kellogg’s chief executive officer David MacKay comments that store brands are gaining market share in the cereal category. “We are seeing retailers...push the private label pretty hard,” MacKay says. He adds that some retailers reduced inventory in the fourth quarter, a result of price increases Kellogg made in the third quarter.

Lower income bracket represents major potential for retailers

Even during a recession, opportunities to target the growing lower-income shopper group are emerging.

The Lower Income II Report: Serving Budget-Constrained Shoppers in a Recessionary Environment may force manufacturers to rethink their marketing approaches to lower earners: The existing notion that they spend less and therefore represent less economic opportunity is wrong.

The report released by Information Resources Inc., used internal panel data and a Census Bureau survey to predict an increase in the number of lower-income households in the U.S. from 45.6 million in 2008, to 52 million in 2019. In this period, says the report, spending on consumer packaged goods for this group will increase from $87.6 billion to $105.2 billion. (The report defined “lower income” as households earning less than $35,000 annually.)

The report notes that consumers in this group demand a wider assortment of affordable products and are put off by a lack of product innovation, development and ineffective marketing. By taking an honest look at what share of their sales comes from the lower-income bracket and making a more targeted effort in this segment, the report suggests that companies can differentiate themselves and succeed in previously untapped opportunities.

IRI found that manufacturers tend to regard lower income households as one group, when it actually consists of several “micro-segments.” Those segments positioned to drive the greatest share of sales growth in the economic downturn include households with children, Hispanics, African Americans, seniors over 65, and 25 to 34-year-olds, IRI found.

Premium wine cask sales brimming over

Sales in 3-liter boxed wine category grew 32% in fourth quarter 2008.

As many Americans trim their budgets of discretionary spending, sales of 3-liter premium wine casks-or “boxed wines”-showed double digit growth in the fourth quarter of 2008, says a new Nielsen study. Sales in this category climbed 32% in the last 13 weeks of 2008, outpacing all other wine categories.

Considering all of 2008, premium wine casks grew 31%; by comparison, table wine (the dominant wine sector) grew 4.4%. Total table wine sales for the year reached $9.6 billion, while premium wine cask sales racked up $110 million.

The study attributes premium wine cask growth to the package’s inherent value: One cask holds the equivalent of four bottles and are approximately 40% less expensive than the equivalent amount of average table wine.

“In today’s economy, consumers are seeking value with necessarily compromising quality, and this has contributed to premium wine cask success,” says Danny Brager, vice president, Beverage Alcohol at Nielsen.

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