July 2005 Times & Trends Executive Summary:
The Enjoyment Factor: Consumers’ Unwavering Demand for Taste, Indulgence and Variety


IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This month’s Times & Trends provides an in-depth analysis of consumers’ purchasing habits with respect to foods and beverages consumed primarily for pure enjoyment, rather than nutritional value.
This free summary is also accessible via the GMA Web site  at http://www.gmabrands.com/publications/gmairi.cfm

INTRODUCTION

Consumers spend one-third of their CPG food and beverage budget* on products consumed for pure enjoyment rather than nutritional value. Unwavering demand for taste, indulgence and variety has sustained spending and consumption of “enjoyment” food and beverage categories as consumers continually balance health and enjoyment in their diets. Sales among enjoyment categories increased 1.1% vs a growth rate of 2.6% for other food and beverages within food, drug and mass channels (excluding Wal-Mart).

The ability to grow enjoyment categories’ share of total food and beverage spending will be limited by healthy eating trends that will drive a slow, gradual increase in allocation of spending to products with nutritional value. However, there are substantial opportunities for manufacturers and retailers to grow their share of enjoyment spending through new products/product mix and distribution strategies aligned with their target consumers’ preferences.

This report provides an in-depth analysis of “enjoyment category” trends in aggregate and across product segments (e.g., “light” enjoyment and premium products), channels and consumer segments to help manufacturers and retailers identify and capitalize on current and emerging opportunities.

   
* Analysis based upon sales of 33 IRI Reviews® food and beverage categories determined to be consumed primarily for pure enjoyment, rather than nutritional value or as a meal component. Please see full report for complete listing of categories. 


“ENJOYMENT CATEGORY” OPPORTUNITY – PRODUCT DEVELOPMENT

  • Premium enjoyment products are an attractive niche. Premium products, which offer rich tastes and typically have higher calories and fat as well as higher prices, are experiencing relatively strong growth, as illustrated by dollar sales trends within chocolate candy and ice cream/sherbet/frozen novelties. Significant upside potential in premium enjoyment food and beverages is possible through new products and increased distribution across mass market channels.
     

  • “Light” versions of enjoyment foods yet to take off. While “light” versions of enjoyment beverages, such as beer and carbonated beverages, represent a large share of their markets, lighter versions of food categories analyzed, including ice cream, salty snacks and chocolate candy, have not made major inroads. Tapping into market potential for healthier enjoyment foods will require taste enhancements and targeted marketing, including initiatives to reach consumers suffering from chronic health conditions, whose dietary needs are ongoing, not a fad.
     

    
*Light category sales reflect the sum of all products with “light” or similar descriptors (i.e., light, reduced fat, reduced calorie, low carb, etc.) in the product name and known healthy alternative brands.
** Beer sales reflect food and drug channels only.  
Source: IRI InfoScan® Reviews

 

“ENJOYMENT CATEGORY” OPPORTUNITY – CONSUMER SEGMENTS

  • Older generations spend big on enjoyment. Baby Boomers and older generations allocate a significantly higher proportion of their total food and beverage spending to enjoyment categories than Generation Xers and Echo Boom adults. The difference in spending is driven not by underlying attitudes toward healthy eating but by differences in the types of enjoyment products consumed. Older consumers spend more of their dollars on higher- ticket wine and spirits, for instance, while younger consumers allocate more of their spending to salty snacks and carbonated beverages.
     

  • Presence of children has a major impact on enjoyment category spending. Households with children spend more on enjoyment products than those without due to larger household sizes; however, those without children spend a much higher share of their total budget on enjoyment products, making them a prime target for higher-end food and beverages.

“ENJOYMENT CATEGORY” OPPORTUNITY – CHANNELS

  • Drug stores and mass merchandisers earn above-average share of enjoyment category spending. Both drug stores and mass merchandisers hold a significantly higher share of enjoyment category spending than they do across total food and beverages. These channels represent potential upside for enjoyment product manufacturers with a limited presence currently and are a sizable competitive threat to grocers across these categories.
     

  • Channel selection for enjoyment categories varies considerably across consumer segments. Major generational differences are evident in where consumers buy their enjoyment foods and beverages. For instance, while supercenters are a critical channel for reaching Echo Boom adults, as they allocate 20% of their spending to this channel (vs the total household average of 10.4%), drug stores are a critical component of distribution strategies targeting older vs younger generations. Retailers must ensure that their enjoyment category product mix is in alignment with their core consumers’ preferences.

     

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Source: IRI's Times & Trends Reports
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