CHICAGO — The food and beverage market is experiencing slow and negative growth in 2012, as evidenced in value sales slowing from 5% in 2011 to 4.1% in 2012, according to SymphonyIRI. Value sales are sales through multi-outlets including convenience outlets.
“Our comprehensive review of food and beverage trends for 2012 points to limited growth with weak growth prospects for the remainder of the year,” said Krishnakumar S. Davey, managing director, Symphony Consulting. “Shoppers are still making conservative and deliberate purchase decisions and are reluctant to open their wallets. With this in mind, manufacturer and retail decision makers must uncover select, high-growth categories, and target products and offers to very specific shopper groups.”
Smaller companies with revenue under $1 billion are doing the best in 2012, with their value sales growth increasing an average of 7.9% year-to-date as compared with 3% for medium-sized businesses and 1.3% for large enterprises. Volume sales from smaller manufacturers also have exceeded competitors with 3.6% growth for smaller manufacturers compared with declines of 0.5% and 3.3% for medium and large manufacturers, respectively. Small manufacturers have gotten into niche markets such as Greek yogurt and single-cup coffee with much success.
Consumers are cutting back on staple products such as milk, fresh bread and rolls due to price increases. Value sales of staples grew just 1.6% in the past year compared with 4.8% for non-staples, and volume sales have declined 2.5% in staples compared with 0.2% growth in non-staples.
Consumers also still define value on price with 78% of shoppers saying they will continue to seek deals in the future and 56% of consumers saying they are choosing stores based on lower prices. Shoppers also are making more trips to the store and purchasing fewer items per trip to spread out the cost.
SymphonyIRI said to achieve growth, manufacturers must focus on investing in key areas of growth and developing a strong portfolio of popular products such as new-age snacks and health and wellness items.
These products must be at good price points and targeted at fast-growing shopper segments such as GenY and older baby boomers.