Store Brands

SEP 2016

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Straight Talk 8 Store Brands / September 2016 / www.storebrands.info Healthy disruption: 21 st century food preferences By Jordan Rost he food industry is no stranger to federal regulations. However, the types of mandates imposed have largely shifted in the last decade, heavily influenced by consumer demand for greater transparency. In addition, rising costs of health care, expanded access to information, a desire for self-care and the aging population have created a greater focus on health and wellness. This shift toward healthier lifestyles is evolving the consumer packaged goods (CPG) industry, particularly on the food and beverage side. Food has become the primary vehicle by which consumers are taking back control of their personal health. It's becoming less about what's removed from our foods, and more about what's not added to our foods. In the 1980s and '90s, food marketers made food healthier by reducing the "bad" stuff, and products claiming to be low-calorie, low-sugar, reduced-sodium and fat-free saw growth. More recently, center-store products with at least one of these characteristics have been contracting. Today, consumers view healthful food as trending toward raw and natural, with nothing added. Claims such as GMO-free, gluten-free, no artificial colors, no artificial flavors, organic, and natural and kosher are becoming more common. And these "21st century claims" are winning, seeing a compound annual growth rate of 6 percent. So who is the driving force behind the upward trend of 21st century considerations? As the fastest-growing segment of the U.S. population, multicultural consumers are at the cutting edge of social and demographic change, transforming mainstream America in a variety of ways, including food consumption. These groups are increasing by 2.3 million people per year, creating tremendous market opportunities for food retailers. The three largest multicultural groups — Hispanics, Asian- Americans and African-Americans — have larger household sizes than average, indicating a growing influence on the CPG industry. Multicultural consumers have already made noticeable contributions to center-store products with 21st century health characteristics. For the 52 weeks ending Dec. 26, 2015, multicultural households contributed 27 percent of dollar sales ($121 billion) toward total wellness claims. Multicultural preferences for health Beyond their strength in numbers, multicultural shoppers represent significant buying power, and retailers should home in on their nuanced preferences toward modern health claims. Hispanic households exhibit above-average sales for low-glycemic, omega-3 and organic claims. On the other hand, Asian- Americans show above-average sales for GMO-free, low-glycemic, hormone-/antibiotic-free, and natural and organic claims. African-American households, in general, exhibit below-average sales of food products with health claims such as low fat, low calorie and natural attributes. And it's worth looking a level deeper to generational breakouts. Multicultural millennials show attitudes toward nutrition and healthy lifestyles comparable to total multicultural consumers but are even more prone to consuming organic foods. Opportunity for store brands Over the last five years, private brand food items with one or more characteristics of 21 st century claims have been on the rise, despite unique peaks and valleys over the years. Organic has continued to outpace previous growth rates with each passing year; natural continues to grow, although it has plateaued in the last three years following a peak in 2013. Private brand products with no artificial colors have garnered nearly 16 percent dollar growth year-over-year since 2014, while those with no artificial flavors have grown 9 percent. And new federal regulations requiring GMO labeling may quickly spike the GMO-free category into growth before the end of the year. As the U.S. population continues to rapidly diversify, store brand product marketers have a significant opportunity to hone their attention on the intersection of multicultural consumers and their affinity for 21 st century health characteristics. SB Jordan Rost is vice president of consumer insights for Nielsen. His work explores emerging trends and shifting buying and media consumption behaviors and helps manufacturers and retailers make more informed business decisions. He shares his expert industry insights via thought leadership content, industry talks and with Nielsen's clients.

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