Leatherhead's new report identifies many areas of growth in the US food and drink market
FOR IMMEDIATE RELEASE 23 September 2009
The US, the biggest food and drink market in the world, sets the trend in many product categories and recent research from Leatherhead Food Research’s Global Food Markets database suggests that it continues to be a highly dynamic marketplace.
Whilst retail sales growth in most food categories in the US has slowed during the current recession, there remain many areas of growth. Many of the most successful new products over the last few years have focussed on offering some type of health benefit or fortification. This is particularly prevalent in a category such as yoghurt and chilled desserts, worth US$6.9bn in 2008, up 4.4% on 2007. The trend toward natural ingredients has also gathered pace and is now the key driver in many categories.
A squeeze on disposable incomes due to the recession has assisted sales of some product categories such as meals being consumed in the home including soups, a category which grew 4.1% in 2008 to achieve retail sales of US$5.3bn. The relatively mature ready meals and pizza segments also both registered 2% growth in 2008.
The US savoury snacks market remains by far the largest in the world. In 2008, value sales exceeded US$26bn, up 4% on the preceding year. Despite the fact that many of the products sold are long-established, the rate of new product development remains high in this category. However in recent years, the industry has shifted its focus towards addressing health and obesity concerns (especially among children’s products), as opposed to the development of flavours.
With regard to flavours, innovation has been evident across a number of sectors especially fruit juice, carbonated drinks and soups. However, despite an ever-widening array of flavours to choose from, most consumers remain relatively conservative in terms of taste. In ice cream for example, vanilla remains the market’s most popular flavour, accounting for 32% of sales, ahead of chocolate with 21%, nut/caramel with 7% and strawberry with 5%.
Consumption in many categories has been influenced by the continued penetration of ethnic cuisines, for example, those based on Mediterranean, Mexican and other Latin American cuisines. Asian cuisines (such as Thai, Malay and Indian) have also become more popular in the restaurant sector which has filtered down into packaged foods. In frozen ready meals for example, Asian meals now account for a 23% share (Italian leads with 60%).
Meanwhile, the trend towards more expensive forms of chocolate confectionery (dark, specific varietals and functional versions) is sustaining growth in that category. Chocolate sales grew 3.1% to US$16.9bn in 2008.
Rising commodity prices dramatically pushed up prices and hence value sales in a number of basic food categories such as pasta and edible oils. An escalation in milk prices and other production costs also pushed cheese sales up 7.6% to US$14.1bn in 2008. Growth in the market has also been driven by increasing consumption of cheese as a snack as well as growing interest in quality cheeses as witnessed by the success of many imported lines.
Interestingly, one of the strongest growth areas in recent years has been pet food, with sales up 4.9% in 2008. With 75 and 90 million, increasingly pampered, pet dogs and cats respectively in the country, it is perhaps not surprising.
Nestlé, PepsiCo and Kraft remain the key players across the packaged grocery sector. Nestlé for example takes major shares of the chocolate drinks market (38% in 2008), ice cream (37%), frozen ready meals (31%), pet food (31%), and bottled water (30%) categories as well as smaller shares in a number of other product sectors. PepsiCo dominates savoury snacks (46% share) and has a 31% share in carbonated drinks, a 29% share in chilled fruit juice and drinks, and 20% share in bottled water. Kraft leads in cookies/crackers (46%), coffee (39%), frozen pizza (35%) and cheese (15%) and has smaller shares across a number of other categories.
The merger of Mars and Wrigley has created a more dominant force in confectionery: combined 28% share in sugar confectionery for example (with Hershey at 14%), Mars holding a 32% share in chocolate (Hershey leading at 41%), and Wrigley dominating chewing gum (62% share).
Private label has been growing its share in the recession including in categories such as cooking oils (30% share in 2008), breakfast cereal (10%), chilled fruit juice and drinks (10%), bottled water (9%) and dried/ambient soups (9%) as consumers seek to downgrade from premium brands.
Future growth among the established product sectors is forecast to be highest in pet foods, yoghurts and chilled desserts and RTD tea (all achieving growth of above 9% in value between 2009 and 2012). Kitchen cupboard essentials such as soups, coffee, cooking oils and pasta will also see value growth and will benefit from continued economic uncertainty as consumers reign in spending on eating and drinking out.
Forecast Top 10 Food & Non-alcoholic Drink Growth Categories in the US, 2009-2012
Source: Leatherhead Food Research, Global Food Markets database
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