Progressive Grocer Product

WIN 2015

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1 4 Progressive Grocer Products Showcase / Winter 2015 CENTER STORE According to IRI's 2015 New Products Survey, consumers are looking for portable satiation and energy—and beverages are increasingly being used to fuel up on the go. • 45% of consumers are constantly looking for new beverage products that will help them meet their nutritional goals • 43% of consumers are constantly looking for new beverage products that add excitement to the daily diet • 33% of consumers are constantly looking for new beverage products that ofer protein • 26% of consumers are constantly looking for new beverage products that ofer a cafeine boost Source: IRI 2015 New Products Survey What's happening Where A number of beverage segments have reported growth and innovation of note recently. For one, the $13.8-billion beer category experienced healthy growth during the past year, supported by strong performance of craft beers. Craft beer sales hit $1.3 billion (IRI Multi-Outlet), up 21 percent versus the prior year. Craft accounts 4 percent of total beer sales. Within the supermarket channel, craft beer is on pace to achieve a third-consecutive year of more than 18 percent dollar sales growth, according to IRI data. Another notable beverage segment is tea and ready-to-drink (RTD) teas, which have experienced "stellar growth in recent years," according to London- and Chicago-based Mintel. The greater availability of both bagged and loose leaf and RTD teas and the growing interest in health and wellness have contributed signifcantly to tea's popularity and upward momentum, Mintel reports. Sales grew 20.6 percent from 2010-14, reaching $6.7 billion, Mintel reports. Further growth of 19.7 percent is forecasted from 2015-20, however, some of this will be attributed to anticipated price increases in the coming years. Refrigerated ready-to-drink tea, in particular, has surged in recent years, Mintel reports, crediting some of this growth to perceptions that it is an afordable, premium RTD tea option. Mintel shopper research shows that less than one in fve total consumers agree that refrigerated RTD tea is fresher than RTD tea on store shelves. Further, research shows that consumers perceived tea as being "multifaceted, making it a very versatile beverage (relaxing, energizing, healthy and/or hydrating) and giving it signifcant opportunity for continued growth," Mintel reports. Cofee posts more notable data and trends to watch. According to Mintel, foodservice remains the top competition for retail cofee purchases. Cofee – from simple dark brews to fancy, customized drinks – is accessible to nearly all consumers. Mintel's Beverage Tracker fnds overall cofee consumption at home dominates foodservice, however, specialty oferings are most consumed away from home. Overall in-home and out-of-home cofee consumption is in a "neck-and-neck competition," Mintel reports. A relatively newer cofee-consumption trend, single-cup cofee continues to see strong year-over- year growth despite negative attention surrounding the products' environmental impact. Single-cup sales are forecast to see the greatest gains of all segments, Mintel reports, based on current usage by core consumers and potential machine technology launches. Merchandising Matters Promotion plays a big role in center-store beverages, especially given the competitive nature in larger categories, such as carbonated soft drinks and water. Behemoth companies and massive brands fght for brand loyalty and consumer spend, driving attention to their brand with bold merchandising and marketing programs. According to Market Track, Chicago, carbonated soft drinks are the most promoted beverage subcategory, accounting for 35 percent of all beverage promotions. Bottled water comes up next, with 19 percent of the categories' support. Some notable trends include: • Despite losing 664 ads in the current year, Coca- Cola soft drinks were still the most promoted product within the beverage category. • The only products of the top 10 most promoted in which the number of promotions increased in the current year were Gatorade and Powerade. Source: 2015 Market Track, All U.S. Retailers, Circulars Only, Efective Ad Block Count PGPS Beer Category & Craft Segment Historical Dollar Sales Trends Total U.S. Supermarkets 15.2% 0.6% 2010 2011 2012 2013 2014 YTD 2015 1.0% 16.0% 14.6% 18.4% 18.9% 18.8% 4.0% 4.0% 4.4% 4.1% CRAFT BEER Source: IRI InfoScan Total US Food 2010 – 2014 and YTD July 5, 2015. All Beer data sourced: IRI Mid-Year 2015 Beer Category and Craft Beer Review, Sept. 3, 2015

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