CARB-CUTTING SHOPPERS · 2013-10-17 · carb dieting is competing against low-fat/cholesterol, low-calorie/sugar and low-salt dieting for weight-loss results. Awareness and interest

AUGUST 2004

CARB-CUTTING SHOPPERS

Stirring Up CPG Food & Beverage Categories

Low-Carb Sales ClimbConsumer interest remains high – major

manufacturers enter the arena

“Sweetened” Categories Up for GrabsSweetened snack bars, candy, desserts, soft

drinks and cereals go low-carb & low-cal to win

Will Carb-Cutting Rise or Demise?Too early to predict - concerned dieters are

trying alternative routes, reading labels

© Copyright 2004 Information Resources, Inc. All rights reserved.

2

August 2004

Table of Contents

3. WelcomeConsumers’ overweight issues present opportunities to the CPG industry.

4. MethodologyIRI’s InfoScan® data compare naturally low-carb products to total carb branded activity.

5. Introduction & HighlightsThe carb-cutting trend is still going strong – but the battle for the healthier minded shopper has just begun.

6. Naturally Low-Carb Products Lead GrowthEngineered carb-branded activity generated less than $1billion new growth in the latest year. Carb-branded extensions of well known brands are driving recent growth.

8. Beverage Drinking Shifts from Sugar to Low-CalDiet soft drinks and bottled water see double-digit growth – OJ & regular soft drinks sag. Michelob Ultra leads carb-branded beverage sales.

10. Bacon & Eggs Revival Paces Breakfast GrowthCarb-crazy consumers load-up on high cholesterol products, abandoning fiber and low-fat benefits of cereals.

13. Low-Carb Brands Benefit from Strong DisplaysRetailers early on have given low-carb products the best display locations in supermarkets. Can this last?

15. Does Low-Fat History Predict The Future?Using low-fat/no-fat branded foods to predict the future of carb-branded activity: five years of growth, then declines. Carb-cutting easily could peak earlier – weight-stressed adults are turning to multiple dieting strategies, including low-fat, low-cholesterol, low-cal and low-sugar.

16. ImplicationsToo early to predict carb-cutting’s rise or demise – but there are major CPG industry opportunities to support the healthier-minded shopper.

17-18. Next Steps – The IRI Solution & Data Sources


3

August 2004

Welcome to Times&TrendsConsumers’ overweight issues present opportunities to the CPG industry

Copyright © Information Resources, Inc., 2004. Confidential and proprietary. No part of this document may be reproduced or distributed in any form or manner without written consent of IRI.

While every precaution has been taken to ensure the accuracy of this document, Information Resources, Inc. does not make any representations or warranties about the information contained in this document and such information is subject to change without notice.

The products depicted in this document are examples of some of the products described in this report. Names and photographs of products and/or companies contained herein do not represent sponsorship of the product or company by IRI or sponsorship of IRI's products and services by the respective companies.

The world is growing fatter. The World Health Organization estimates that 1.3 billion people globally are overweight or obese. Overlaying this situation is the low-carb diet craze – led by popularity of the Atkins diet –and its impact on the food & beverage shelves of consumer packaged goods (CPG) retailers. The CPG industry is all stirred up and attempting to take advantage of new growth opportunities. The purpose of this report is to summarize low-carb trends in the latest year and most recent 12 weeks through mid-June.

Source: World Health Organization, International Obesity Task Force; USA TODAY 2.5.04

23.1%

47.0%

47.0%

47.0%

62.0%

56.4%

26.2%

57.5%

61.0%

63.7%

67.0%

67.6%

Japan

Brazil

France

Australia

USA

England

MenWomen

Global Examples - % Overweight

The Low-Carb Trend Has Broad Interest – Cutting Carbs Is Not Just For Dieters.

50%

33%

20%27%28%

39%

Jul 9-11, 2002 July 8-11, 2004

% Actively include Carbs% Actively avoid Carbs

% Don't think about Carbs

More Consumers Avoid Carbs In Their Diets.

Source: Gallup Poll, The Gallup Organization, July 21, 2004

Information on consumers’ inclination to limit carb consumption is all over the media. The sense is that interest is broad – diet or not – and will persist even after the diet is history.

Opinion Dynamics Corp: reported that 26 million Americans are on a low carb diet today. Seventy million are limiting their carb intake informally – Time Magazine, May 3, 2004.

Mintel: Three of five low-carb dieters say that they plan to limit carb intake for life – Time Magazine, May 3, 2004.

The Gallup Organization: estimates that 27% of Americans actively avoid carbs – Gallup Poll, July 21, 2004.


4

August 2004

MethodologyShoppers are finding low-carb foods in three complementary ways:

Naturally Low-Carb

Low-Carb Umbrella Brands

Low-Carb Brand Extensions

1.

2.

3.

Many categories that are naturally low-carb – products listed in Atkins’ Carb Gram Counter on the Atkins website, which naturally contain under 10g carbs per serving, or products recognized or advertised as being low-carb, such as diet soda and light beer.A limited number of upstart companies launched low-carb umbrella brands – this is how it all started. Atkins gained attention with its low-carb diet and created a line of shelf stable and frozen foods (over 40 items, many in “high-carb”categories) and a distribution network to conventional CPG food channels. Carb Solutions, CarboRite, CarboWise, Keto, Le Carb and others have followed suit. The entire brand is designed explicitly for low-carb dieters, competes in multiple food & beverage categories that are ordinarily high-carb and “carb” is either part of the brand name or is extremely prominent on the packaging.Many CPG companies launched new low-carb branded line extensions – brands are either defending their businesses in perceived “high-carb” categories (Breyer’s Carb Smart ice cream, Sara Lee “Delightful” & Hershey’s 1carb candies) or taking advantage of the sudden interest in “low-carb” categories (Michelob Ultra) – “You want low-carb? We’ve got it!”Extensions are hand-selected at the brand level based on “carb” being part of the brand’s name or companies clear positioning of the brand as low-carb, such as Michelob Ultra.(see note below)

InfoScan Data Compare Naturally Low-Carb Products To Total Carb-Branded Activity

Atkins Carb Gram Counter – Total Carbs (g) per individual portion:Bacon – 0.1g Barbecue Sauce – 4.0g Cream Cheese – 0.8g Egg, whole – 0.6g Greens, mixed – 1.6g Half & Half Cream – 1.0g Ketchup – 4.2g Margarine – 0.0g Mayonnaise – 0.1g Medium White Wine – 0.9g Olives, green – 2.5g Peanut Butter, regular – 6.2g Peanuts – 3.4g Salad Dressing – thousand island – 4.8g Soy Milk – 4.4g Soy Nuts – 4.5g Spinach, raw – 1.1g Tomatoes, canned – 5.2g Tuna, canned, oil packed – 0.0g

This report’s analysis compares “naturally low-carb” product trends to “carb-branded activity” – the combination of low-carb umbrella brands (2) and low-carb branded extensions (3). For definitive carb information and extended trend monitoring, CPG managers need to connect with IRI’s new “CarbTracker” service, launched in this quarter (see page 18 for a detailed description).

What is or is not “naturally low-carb” can be subjective. This report included product types named in Atkins’ Carb Gram Counter, as well as advertised low-carb segments such as low-cal soft drinks and light beers. The Atkins dieter and carb-cutting shopper actually have a wide variety of items to choose from that are under 10 grams per serving, illustrated at the right. From their website, Atkins lists 408 products, 274 of which are under 10 total carbs per serving. This report based its selection of “naturally low-carb” products on this list.

Note: Due to the difficulty of accurately tracking carb-related package claims, IRI makes no representation that every food or beverage product currently making no/low/reduced carb claims has been captured. Products included were selected by brand, not by UPC, so while all the major low-carb brands should be represented, there may be some small items which are not. Also excluded are established brands which are primarily marketed toward diabetics or whose primary positioning focuses on reduced sugar or calories, even though they may now be adding carb-related claims to their packaging.


5

August 2004

SUMMARY: Carb-Cutting Still Trending Strong –Battle For Dieters’ Attention Just Begins

CPG companies are launching carb versions, carb packaging, reduced-calorie and artificially sweetened products to stimulate dieting shoppers’ interest and trial –ultimately, taste satisfaction and price versus dieting results will determine who wins

Shoppers are faced with unavoidable weight control and associated health issues. Two-thirds of Americans are overweight. The CPG industry’s opportunity to serve these consumers with products that satisfy but also support weight-loss goals is enormous.

There’s been an unprecedented consumer response to the low-carb diet. Low-carb dieting is easy, effective and fast. Reporters are claiming that carb-cutting is declining – but store sales trends do not show that to be the case. Yes, the jury is still out on its long term effectiveness. The major positive sales impact of this craze is with naturally low-carb products – like eggs, bacon, light beers, & others –estimated to have grown as a group over $4 billion in annual sales in the latest year.

Food Manufacturers are jumping in with low-carb line extensions. Companies launching multi-category offerings, package blurbs and “we’re low-carb” ad campaigns – are taking over a larger share of carb-branded activity from carb companies like Atkins. Total carb-branded activity, in aggregate over $1 billion in sales, is estimated to have grown over $800 million in annual sales through June 13, 2004.

Portable, between meal snacks & beverages is the likely carb-cutting battleground. Soft drinks & beer, snack bars, candy and other sweets are predicted to sustain consumer carb-cutting or calorie-cutting interests. However, lower-calorie or artificially sweetened, diet versions may take over shoppers’attention and taste satisfaction. Pepsi Edge and Coke C2 competition has just begun and will challenge dieters to reconsider their options. Artificially sweetened line extensions are growing rapidly.

Retailers are evaluating low-carb stocking, merchandising & shopper communications strategies.Carb-brands have received unusually strong display support and are often displayed in multiple locations with multiple carb-brands. “Healthier Eating” sections are being tested within categories and as separate departments. Food ads are flagging a deluge of new entries. The jury is still out on which strategies and which best practices consumers will respond to more than others.

Taste approval, price/value and weight-loss results – the ultimate test. Many carb-company products are premium priced compared to brand carb-extensions, which are more competitively priced. Klondike’s Carb Smart – a much better value to the carb-cutting shopper – doubled Atkins’ Endulge share of frozen novelties in latest 12 weeks of data.

Concerned overweight shoppers are trying multiple diets. IRI MedProfiler™ data shows that low-carb dieting is competing against low-fat/cholesterol, low-calorie/sugar and low-salt dieting for weight-loss results. Awareness and interest is heightened. Media and government news may sway dieters in new directions away from carb-cutting.

Low-carb could go the route of low-fat. The low-fat branded craze in the early 90s – including SnackWell’s & WOW! branded snacks – saw about five years of growth and then has declined ever since. However, consumers may sustain interest in selected naturally low-carb products as they did with naturally low-fat yogurts.

In the 12 weeks ending June 13, 2004, carb-branded extensions of well known brands, such as the multi-category Carb Option launch, accounted for nearly 60% of all carb branded sales activity.


6

August 2004

Naturally Low-Carb Products Lead Growth Naturally low-in-carbs activity generated over $4 billion incremental sales in the latest year – estimated at 36% of total Food & Beverage consumption, $78 billion

Given the wide range of naturally low-carb products, this segment of total CPG food & beverage sales is large –around $78 billion in annual sales, growing $4 billion up to 36% of total sales.

Carb Branded Activity has quadrupled in size, to over $1.1 billion in annual sales, up to 1% of total food & beverage sales.

This growth has been fueled by hundreds of new product introductions; IRI is now tracking sales of more than 80 low-carb brands.

$74.1

$138.8

$0.3

$78.4

$137.2

$1.1

Products Naturally Low in Carbs

All Other Product Types

Carb Branded Activity

$ Billions, Food, Drug & Mass Merchandiser outlets, excluding Wal-Mart

YR 6/13/04YR 6/14/03

35% 36%

Naturally Low in Carbs – 36% of Latest Year’s Food/Beverage Consumption ($217 Billion)

YR 6/14/03 YR 6/13/04

CPG Brand Low CarbExtensions (Breyer'sCarb Smart, etc.)

Low Carb New UmbrellaBrands (Atkins, etc.)

Source: InfoScan® Reviews: Dollar Sales; Latest 52-Week & 12-Week Growth in Millions/% Change – 6/13/04 vs. Year Ago.See page 18 for source details.

All Forms of Carb Branded Activity –Add Up to 1% of CPG F&B Sales

$ Millions

$1,125

Engineered Carb Branded Activity Generated $800 Million In The Latest Year

Carb Branded Activity – four times as big as it was a year ago – grew approximately $815 million in the year ending June 13. The sales emphasis has reversed from roughly 55/45 in favor of upstart new brands and companies, like Atkins, to close to 60/40 in favor of large CPG brand extensions from large CPG companies, like Michelob Ultra and Breyers’ Carb Smart.

56%

44% 43%

57%

$310

Carb Options – like Carb Smart is from international CPG giant,

UniLever – launched in 2004, across 32 products in 13

different categories, extending from the company’s category

anchors Lipton, Ragu, Wishbone, Skippy, Lawrey’s

and others.


7

August 2004

Natural & Engineered Low-Carb Products Complement Each OtherNaturally low-carb growth is strongest in beverage, dinner and breakfast consumption products – while over half of the carb branded activity growth is in snack meals and sweetened snacks & desserts

Atkins’ packaged goods penetration started in “wellness” snack bars –the nutritional or energy kind that get consumed as either portable meals or a nutritional in-between snack. However other carb-branded sweet snacks – such as frozen novelties and ice creams – were not too far behind. Michelob Ultra accounts for 88% of the carb branded activity beverage growth.

Carb Branded Activity growth highly concentrated in snack meals,sweetened snacks & desserts and beverages.

A comparison of the growth by the three carb groups reveals that over 70% of naturally low-in-carb product growth came in beverage, dinner & breakfast consumption, while nearly 80% of engineered low-carb brand growth came in snack meal/lunch solution, sweet snack & dessert and beverage consumption – complementing each other. Over 75% of all other food & beverage category declines came in dinner, sweet snacking & desserts and beverage consumption – high-carb categories.

The next five pages drill-down detail on the five most active low-carb battlegrounds: Beverages, Dinner Solutions, Breakfast Solutions, Snack Meal/Lunch Solutions and Sweets – Snacks & Desserts.

InfoScan® Reviews: 572 Food & Beverage Types, 67 from Supermarkets only; 175 are naturally low in carbs as defined by the Atkins Diet “Carb Gram Counter”, under 10 total carb grams per serving (light beers are included included);

Dollar Sales; Latest 52-Week Growth in Millions/% Change – 6/13/04 vs. YA.

Share of Latest Year’s Sales Growth by Food & Beverage Consumption Groups

FOOD & BEVERAGES TOTAL

Beverages

Dinner Solutions

Breakfast Solutions

Snack Meal/Lunch Solutions

Prep Ingredients

Salty Snacks

Sweets – Snacks & Desserts

Naturally Low-in-Carb Product Growth

Total Carb Branded Activity Growth

All Other Products Declines

+$4,300 Mil = 100% +$815 Mil= 100%

($1,600 Mil) = 100%

33%

20%

19%

9%

9%

5%

4%

21%

28%

4%

13%

4%

4%

26%

23%

6%

13%

32%

1%

1%

24%


8

August 2004

Diet soft drinks & bottled water see double-digit growth – OJ & regular soft drinks sagBeverage brands are attacking the carb craze in different ways – including the introduction of low-carb and diet, low-calorie or reduced-calorie versions. Time will shake-out the winners. Right now, low-cal soft drinks –naturally low in carbs – lead growth, but Pepsi’s Edge and Coke’s C2 reduced-calorie launches are stirring things up. 1.5%

7.1%

($361)

$1,437

$188

Beverage ProductsNaturally Low inCarbs


All Other BeverageSolution Types

Dollar Growth ($ millions)

-1.0%

6.0%

% ChangeLatest Year Ending 6.13.04 vs. Prior Year Latest 52

WeeksLatest 12

Weeks

Beverage Winners & Losers – Sales Growth in $ Millions

$388

$341

($100)

($329)

10%

18%

-4%

-4%

Low Calorie Soft Drinks

Bottled Water

Rfg Orange Juice

Regular Soft Drinks

11%

20%

-5%

-4%

Latest 52 Weeks % Chg


Growth: $ Mil

Beverage Drinking Shifts From Sugar to Low-Cal

+192% +94%

Source: InfoScan® Reviews – data through 6/13/04

Low Carb Beers Competitively Priced –Light Beers’ Sales Growth Versus Year Ago Driving Beer Consumption

$20.10$20.50

Michelob Base Michelob Ultra

BeerMichelob Ultra is line-priced

Most Low-Carb Brand Extensions Are Priced Competitively Within Their Product LineMichelob Ultra – for example – is line-priced versus the brand’s “regular” counterparts.

The “All light beers are naturally low in carbs – but I’m the lowest”advertising battle has spurred growth of light beers – up 6% for the latest year and 7% in the latest 12 months.

Michelob Ultra accounts for 85% of the total Carb Branded Beverage sales activity in the most recent twelve weeks and 43% of the light/low-carb beer growth.

Source: InfoScan Reviews - Total US FDMx; 12 Weeks Ending 12/28/03Price-per-case shown.

Light Beers

Michelob Ultra

% Share Sales

Source: InfoScan® Reviews – data through 6/13/04 versus Year Ago

7%

64%



6%

169%

6.7% 7.1%

$ Sales Growth


9

August 2004

CPG frozen dinner products begin to push out low-carb branded and recipe extensionsCarb-counting consumers are feasting on simple dinner options –primarily basic items like red meat, chicken, fish, natural cheese and salad fixings. The more flavorful prepared entrees and dinner items are suffering. But some brands – like Lean Cuisine – are starting to launch new low-carb recipes to fill the void for shoppers who want more interesting and flavorful carb choices. -3.4%

4.6%

($470)

$47

$872Dinner SolutionProducts NaturallyLow in Carbs

Carb Brand DinnerSolution Activity

All Other DinnerSolution Types


-1.7%

5.3%

% ChangeLatest Year Ending 6.13.04 vs. Prior Year

Latest 52 Weeks

Latest 12 Weeks

Dinner Solution Winners & Losers – Sales Growth in $ Millions

$190$145$135

($49)($60)

($209)

10%8%7%

-12%-4%-6%

Fresh Cut Salad KitsNatural Cheese Chunks

Frozen Chicken

Dry Dinner MixesSpaghetti/Italian Sauces

Frozen Entrees

7%8%7%

-7%-3%

-7%



Growth: $ Mil

Dinner Consumption Shifting – But to Where?

+4622% +6063%


CPG Dinner Product Consumption – Second in Overall Sales – Untapped by Carb Branded Activity

Prepared Low-Carb Dinners & Entrees On Their Way They’re coming! Carb-branded dinner-focused prepared entrees, pastas and sauces are being launched.

While most of the Atkins diet focus is on do-it-yourself preparation – having a sizable impact on fresh meat, poultry and fish – CPG dinner & entrée manufacturers have been on the sidelines. Not for long.

Dreamfields pasta is new in the marketplace, as is Lifechoice frozen dinners. Currently, shoppers’ appetite for flavorful frozen and shelf-stable prepared dinner items is underserved by carb branded activity.

2%

6%

8%

10%

13%

13%

20%

28%

0%

1%

1%

9%

19%

43%

4%

23%

Baby Food

Salty Snacks

Prep Ingredients

Breakfast Solutions

Sweets – Snacks & Desserts

Lunch & Snack Meal Solutions

Dinner Solutions

Beverages

Share of Consumption –

YR 6.13.04

% CPG Food & Beverage Sales

% Carb Branded Sales Activity

Source: InfoScan® Reviews – data through 6/13/04 - % Share of Total CPG $ Sales


10

August 2004

Bacon & Eggs Revival Paces Breakfast Growth

Will it last? Breakfast eaters in the past year have modified their feelings toward fresh eggs and bacon – the two largest breakfast growth giants – both naturally low in carbs, accounting for the bulk of this consumption area’s annual growth. It appears to be at the expense of high fiber cereals –many who have recently launched either low-carb versions, “carb-specific” package blurbs or reduced-calorie versions. The trend in the latest 12 weeks is directionally the same, but slowing down.

-2.0%

9.6%

($65)

$102

$835Breakfast ProductsNaturally Low inCarbs


All Other BreakfastSolution Types

Dollar Growth($ millions)

-0.4%

14.1%


WeeksLatest 12

Weeks

Breakfast Solution Winners & Losers – Sales Growth in $ Millions

$548

$199

($50)

($160)

25%

11%

-6%

-3%

Fresh Eggs

Rfg Bacon

Hot Cereal/Oatmeal

Ready-To-Eat Cereal

19%

5%

-6%

-3%



Growth: $ Mil

Carb-crazy consumers load up on high cholesterol products, abandoning fiber

+1327% +1920%


Stocking Locations Of Low-Carb Branded Products All Over The Store! Defined “Low-Carb” Location & Natural/Organic Location Command The Most Number Of Items.

Low-carb Products Are Primarily Getting Stocked In Specialty Locations Within Supermarkets

Avg # Carb Branded Items Stocked Per Section55

4536

2520

1412

109

655

Defined Low Carb Non-Display Stocking Item

Defined Natural/Organic Stocking Location

Dietary Products

Energy Bars

Breakfast Bars

Frozen Food Aisles

Ready to Eat Cereal

Dessert/Baking Mixes

Salted Snacks

Dry Pasta Sides

Dry Pasta

Shelf Stable Bread/Buns

Atkins & Carb Solution breakfast bars could be found in 1 of 3 or all 3 locations – the “low-carb” section, the “organic/natural” section and the “breakfast bar” section.

Mosaic InfoForce Low Carb Study, Supermarket Data from Feb 2004


11

August 2004

With convenience and portability being key underlying benefits, naturally low carb products – like lunch meats and cheese slices –are soaring. Nutritional snack bars have the most carb branded names – Atkins, Balance Carb Well, Carb Options, Carb Slim, Carb Solutions, CarboLite, CarboRite, CarbWise, and EAS Carb Control among them – and are still growing.

Portability and perceived healthier snacking driving many “quick-meal” bar choices

-4.0%

3.3%

($227)

$262

$410

Snack Meal/LunchSolution ProductsNaturally Low inCarbsCarb Branded Activity

All Other SnackMeal/Lunch SolutionTypes

Dollar Growth($ millions)

-1.5%

3.1%


WeeksLatest 12

Weeks

Snack Meal/Lunch Solution Winners & Losers – Sales Growth in $ Millions

$146$114$98

$46

($37)($45)($59)($61)

5%20%

25%19%

-2%-4%

-6%-4%

Sliced Lunchmeat Nutritional/Energy/Low Carb Bars

Natural Cheese Slices Dried Meat Snacks

Fresh Bread Canned Condensed Soup Diet/Protein Supplements Processed Cheese Slices

5%8%

30%14%

-4%-2%

-7%0%



Growth: $ Mil

Low-Carb Meats, Meat Snacks & Cheeses Growing

+155% +118%


Most Carb-Branded Activity Commands Premium Pricing –Long-Term Growth in Question as Consumers Evaluate “Price versus Results” Satisfaction

Low-Carb Brand Pricing Apt To Be A Long Term Consumer IssueAtkins – as well as other new low-carb brands - are typically priced at a significant premium versus “regular” brands.The higher priced wellness, energy & low-carb branded bars segment of portable snack and meal bars category has slowed down in growth.

$5.54 $4.60

$9.34

$18.48

NatureValley

QuakerChewy

Power Bar Atkins

Snack BarsAtkins at a significant

premium

Total US FDMx; 12 Weeks Ending 12/28/03Price-per-pound shown.


8%-2%

6%-4%



17%6%8%

-12%

Wellness/Energy/Low Carb BarsBreakfast/Cereal/Snack Bars

Granola BarsRice Snack Squares


12

August 2004

5%52%

6%14%

-14%2%

-6%

Sweet Snacks & Desserts Winners & Losers – Sales Growth in $ Millions



Growth: $ Mil

7%74%

7%13%

-15%-1%-5%

Fz Novelties Diet Candy

Chocolate Candy Box/Bag/Bar=>3.5Oz Sugarless Gum

Weight Control Candy/Tablets Ice Cream

Cookies

Cookies, desserts, ice creams – providing a perfect arena for low-carb, low-fat & low-calorie competitionAll of the sweet snacking and dessert manufacturers seem to be getting into the low-carb or low-cal competition. There’s a frenzy of new items in all of the key “sugar-sweetened”consumption areas. Frozen novelties and diet candy lead in the latest year’s sales growth. New entries – like Ben & Jerry’s Carb Karma – are heating up carb-branded competition.

-3.0%

23.1%

($447)

$197

$174Sweet Snack &Dessert ProductsNaturally Low in Carbs


All Other SweetSnack/Dessert Types


-1.6%

25.3%


WeeksLatest 12

Weeks

$138$104$87$68

($49)($54)

($185)

Low-Carb Sweet Snacks & Novelties Gaining

+592% +722%


Competitively Priced Low-Carb Sweets Are Carving Out Decent Share Growth

Carb-Branded PricingWill Play A Role In Sweet Snack & Dessert CompetitionAtkins is priced at a significant premium versus “regular” brands, while Breyer’s & Klondike Carb Smart are line-priced versus their “regular” counterparts.

$1.14$1.49 $1.27 $1.28

$3.55

Category Edy's BreyersRegular

BreyersCarbSmart

Atkins

Total US FDMx; 12 Weeks Ending 12/28/03Price-per-pint shown.

Ice CreamBreyer’s Carb Smart line-priced;

Atkins at a premium


Frozen Novelties $ Sales Growth 5%



7%

1.4%1.8%

1.5%3.4%

Atkins Endulge ShareKlondike Carb Smart Share


13

August 2004

Low-Carb Brands Benefit From Strong DisplaysLow-carb products are getting the best display locations in supermarkets – can this last?

Retailers have keyed in on the low-carb craze by giving carb-branded items lots of display presence. A Mosaic InfoForce low-carb study early in the carb movement in the grocery channel revealed that low-carb activity is securing the best display spots in the supermarket.

6%

42%48% 46%

65%

11%3%

32%

Lobby Front EndCap

Back EndCap

AO End Cap Perimeter In Aisle Seasonal &Promotional

Shipper


% Display by Location for Low-Carb Branded Products

Snack Bars And Diet Candy Have The Most Carb-Branded UPC’s In Their Displays

14

9

7

6

5

4

4

4

4

Nutritional Snack Bar/Granola Bar

Diet Candy

Weight Control/Protein Supplement

Frozen Regular Entrees

Cheese Snacks

Low Calorie Soft Drinks

SS Bread (No Canned Bread)

Muffin Mix

SS Dry Soups/Soup Mixes


Average # Low-Carb Items Displayed by Category

With extensive flavor activity and multiple carb brands entering the fray, low-carb sweet snacks are commanding the most number of items per display.


14

August 2004

Healthier Eating Sparks Low-Carb InterestThe low-carb consumer is particularly concerned about nutrition & healthier living

An IRI AttitudeLink™ analysis “2004 Shopper Satisfaction Survey” revealed that attitudes of low-carb consumers toward nutritional benefits and healthier living indexed very high. There’s an opportunity for manufacturer and retailer category managers to take advantage of this, working together to create nutritional information best practices at store level. Companies with category shares at stake are communicating nutritional carb-facts in print and TV ads.

THE LOW-CARB CONSUMER is particularly concerned about healthier living & nutrition.

Index vs Total Households: Low-Carb Consumer

111Avoid foods high in saturated fat

146Often choose snacks based on their nutritional value

139Often read nutritional labels

125Exercise 3-4 timeseach week

Source: IRI 2004 Shopper Satisfaction Survey(based on low-carb breakfast/snack/nutrition bar

shoppers’ responses)

Is Low-Carb Dieting a Fad? Consumers Say No

Source: Supermarket Guru Survey - 2003

82%

18%Yes No

1%8%

19%10%

51%

6 Months 1 Year 5 Years 10 Years Forever

% Consumers Believing LowCarb Dieting will Last…

If yes, how long do you think the trend will last?

Do you think the low-carb trend will last?

The strength and length of interest in carb dieting or making product selections based on carb levels will be heavily influenced by packaging changes – carb package blurbs – and advertising. Consumers are discovering from informational communications that brands they’ve known for years (like Planters) are low-carb foods.

51% of Consumers Surveyed Feel Low-Carb Dieting Will Last “Forever”


15

August 2004

Does Low-Fat History Predict the Future?Using Low Fat/No Fat Food to predict the future: five years of growth, then declines

Many if not most of the low-carb growth giants are also high in fat. And recent diet research has concluded that the low-carb diet, while effective in losing weight early if followed properly, is no more effective than a low-fat diet after a year’s time in losing weight. So low carb’s future is questionable.The growth of reduced-fat branded products – launched in the early 90s –fizzled in five years, and has declined ever since. With low-cal competition and potentially negative research on the long-term impact of higher cholesterol consumption, low-carb consumption could be in for a shorter ride.

Weight-Stressed Adults Turn To Multiple Diets.

Low-fat products developed a

reputation of lacking flavor compared to

category expectations, and not

necessarily all that low in calories.

% of Overweight Adults Who Worry About Their Weight – And Take Action:

Source: IRI’s MedProfiler Health & Wellness Survey Overweight adults defined by both BMI and self reported

perception.

20%

20%

20%

30%

40%

60%

Low-salt & sugar diet

Low-carb diet

Low-cal diet

Low-fat diet

Tried 2+ diets in pastyear

Very concerned aboutmy weight

9%5%

9%5%

1%

-7%-12% -12%

-5% -6% -6% -7%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Reduced Fat Branded Products Change In Dollar Sales Versus The Prior Year

NA

Sources: IRI’s “How America Avoids Fat” study, 1996; Times&Trends “Light, Lean, Low & Less-of” reports; based on InfoScan Reviews scanner data – Supermarkets, Drugs, Mass

Merchandiser channels, excluding Wal-Mart after August, 2001.

40% of concerned consumers surveyed tried 2 or more diets in the past year – low-carb has lots of competitionIRI’s unique ability to track consumers with health issues and link their attitudes with their shopping behavior provides insights on the kind of choices weight-challenged shoppers are making. Clearly, the Atkins or low-carb diet is not the only game in town, and shoppers are as much interested in low-fat and low-cal information as they are about carbs.


16

August 2004

Implications – Too Early To Predict Low-Carb’s Rise or Demise –But The Industry Opportunity Is Huge

The battle for dieting and more nutritionally conscious shoppers has just begun

The current evidence is that healthier, nutritional eating and weight-loss objectives are driving significant shopper shifts and growth. Most natural low-carb products are growing – not just carb-branded products. Here’s a summary of the apparent opportunities.

Catering to Healthier Minded ShoppersAll of the consumer mindset evidence from Gallup to IRI’s MedProfiler says that a major chunk of the overweight population is now interested in attacking the problem through healthier eating. The overwhelming interest in carb-cutting is further evidence that shoppers are looking for healthier products.

Providing a Balance of Taste Satisfaction, Price/Value & Dieting SupportA key lesson of the “Low-Fat Era” in the early 90s is that healthier items cannot fall short in either taste or dieting expectations. When word got out that many higher priced low-fat, low-cholesterol new items were also high in calories, the excitement of “low-fat” deflated quickly.

Natural Low-Carb Categories Continue to Dominate CPG Growth

69%

9%18%

Latest 52 Weeks Latest 12 Weeks

71%

19%

28%

% Share of Food&Beverage Growth

10 Largest Natural Low-Carb Growth Categories

% Share Carb Branded Activity Growth

Michelob Ultra

Atkins

Natural low-carb products continue to thrive – but the

early carb brand leaders share of

growth has diminished.

Providing Nutritional Information, Options & DirectionManufacturers and retailers have a major opportunity to serve the customer and support America’s need to curb the obesity crisis. The industry needs to enhance efforts to provide critical nutritional information, provide healthier products and support anxious shoppers’ and dieters’ interest in weight loss.

It’s critical that CPG food & beverage companies and retailers work together to provide shoppers with the information they need to make healthier choices in advertising, packaging, merchandising and shelf presentation.

9.2%

Carb Growth Pace Still Strong

Latest 52 Weeks% Change in $ Sales

10 Largest Natural Low-Carb Growth

Categories

10 Largest Carb-Branded Products

Latest 12 Weeks

8.7%

+223% +180%

Source: CarbTracker’s Top 10 Naturally Low-Carb Categories & Carb Brands in Growth/InfoScan® Reviews –Supermarkets, Drugs, Mass excluding Wal-Mart combined; data through 6/13/04


17

August 2004

Next Steps: The IRI SolutionCPG manufacturers & retailers need to build effective strategies to appeal to more health-minded consumers. The solution: the right information, content, analytics & software.

Challenge

Category managers, as well as the broader CPG industry, must understand the needs of the growing number of Americans who are overweight. Obese consumers are increasing purchases of healthier products at almost double the rate of the total population and have substantially increased purchases of nutritional products.

There’s a huge opportunity to extend respected brands and brand reputations into healthier eating and dieting areas.

However, critical to building a strategy will be the right information and analytical plan.

Solution

IRI has two new strategic services that can deliver ongoing insight into consumer attitudes and behavior on carb-cutting and health and wellness issues.

CarbTracker™ is the CPG industry’s most complete source of sales results for the low-carb industry. It provides CPG manufacturers and retailers with quarterly updates on the status and market trend of carb-branded items and natural low-carb categories, like fresh eggs & bacon. This syndicated service is available now.

HealthTracker is also a new syndicated service designed to continually monitor and understand the impact of health and wellness trends in attitudes and awareness on consumer behaviors – including obesity and dieting.

Information Resources, Inc. – Positioned to Help Understand & Address Emerging Consumer Health & Wellness Trends

IRI provides a unique combination of Content, Analytics, and Software

Information Resources, Inc. is a leading global provider of market content, analytic services and Business Performance Management (BPM) solutions to the CPG, retail and healthcare industries. IRI's clients include the leading CPG, retail, and healthcare companies in the world. IRI's market content and analytic services provide these companies with market and consumer insights. IRI's BPM solutions uniquely combine its breakthrough enterprise analytics software, market content and analytic models to provide a total view of the market and to enable maximum business performance across marketing, sales and operations. IRI's solutions enable the consumer-driven real-time CPG and retail enterprise. More information is available at www.infores.com


18

August 2004

Data SourcesInfoScan ReviewsIRI’s InfoScan ® Reviews service is based on point-of-sale scanner data from U.S. supermarkets, drugstores, and mass merchandisers (excluding Wal-Mart). This combination of outlets is commonly referred to as “FDMx.” Sales from membership only club stores, convenience stores, dollars stores, limited assortment and specialty stores are not included in the Reviews (although IRI does track sales in these outlets as part of other IRI services). The Reviews service reports distribution, sales, price and trade promotion measures; note that dollar sales and price measures reflect Lowest Reported Dollars (capturing only those FSP discounts advertised in retailer sales fliers or “features”) through CY2001, but reflect Net Dollar Sales (after all advertised and unadvertised Frequent Shopper Program discounts are deducted) for CY 2002 forward. The Reviews service tracks 572 food & beverage product types, including standard-weight, bar-coded packaged goods only (excluding sales of random weight meats, produce, etc.).

Other IRI Data & Insight SourcesThe Consumer Network™ Household Panel – which tracks household level purchasing behavior, drawing from purchase and attitudinal information through 70,000 proprietary hand held barcode scanners, a nationally representative household scan of allbarcoded purchases at home linked to key demographics.

The MedProfiler™ Service – which identifies medical conditions such as diabetes and obesity at an individual level within IRI panel households, updated annually in the fourth quarter. Consumers identified diets of different kinds that they participated in and their purchase of different food categories.

The Retailer Satisfaction & Shopping Attitudes Study – a fourth quarter 2003 survey of roughly 5,000 shoppers within the IRI panel, who rated descriptive statements about their shopping behavior and attitudes toward shopping as well as about their lifestyles. They went on to rate selected store shopping attributes against specific channels of trade and selected retailers in their local area.

New! IRI’s CarbTracker™ ServiceCarbTracker is designed for clients who are interested in tracking cross-category sales of products specifically targeted at low-carb dieters. This is a syndicated report delivered in Excel spreadsheet format. This report provides brand-level dollar sales for the past four calendar years, latest four quarters, and latest 52-week time period, with change versus year ago. All of the major categories in which low-carb brands compete are represented: beer, bread, sweet baked goods, pasta, salad dressing, sauces and condiments, ice cream, candy, snack foods, etc. Brands included in this report are selected based on the word "carb" being in the brand name, augmented with some manually selected brands that are primarily positioned as low-carb (e.g., Atkins, Keto, Michelob Ultra, Skyy Sport). This report does not include brands who’s primary positioning is low-cal or low-sugar (e.g., diabetic candy, diet soda, light beer), and it does not include individual UPCs that are labeled as no/low/reduced carb but which are placed under anexisting brand-name whose primary positioning is not low-carb (these are generally inconsequential).

New! HealthTracker™ ServiceHealthTracker combines IRI’s industry-leading market content, consumer household panel information, and advanced analytics capabilities, with advanced attitudinal segmentation tools and proprietary data sources from HealthFocus International, to provide a unique proactive tool that monitors changes in the health and wellness marketplace. Knowledge generated by the HealthTracker Service can be used to support multiple business decisions including risk management, public health policy, marketing priorities, new product development, and brand management directives.

Mosaic InfoForceMosaic InfoForce is the leading provider of in-store data collection and retail merchandising services, with over 2,100 permanent employees located nationwide to collect information on store conditions every week, as well as take action to fix unfavorable conditions, covering up to 250,000 retail outlets. Mosaic InfoForce provides cost-effective ways for manufacturers to monitor and defend shelf space, manage retail execution issues in today’s dynamic marketplace and to allocate their field resources effectively, all while maintaining a competitive edge at retail. Mosaic InfoForce is a joint venture between Mosaic Group, Inc. and Information Resources, Inc.

Documents

CARB-CUTTING SHOPPERS · 2013-10-17 · carb dieting is competing against low-fat/cholesterol, low-calorie/sugar and low-salt dieting for weight-loss results. Awareness and interest