Times & Trends Special Report:
Impact of Hurricane Katrina

Report Three: Two Weeks After

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 special edition of Times & Trends provides an in-depth analysis of consumer purchase behavior in the Gulf Coast in the week following Hurricane Katrina. This report is the second in a four-part series.

This free summary is also accessible via the GMA Web site  at http://www.gmabrands.com/publications/gmairi.cfm

Introduction

As Gulf Coast consumers make plans to rebuild their lives following Hurricane Katrina’s devastation, CPG manufacturers and retailers are examining and enhancing disaster plans in an effort to ensure that they are prepared to meet consumer needs during catastrophic events.

This four-part series provides insight into consumer purchase behavior across product categories before and after Hurricane Katrina to provide the CPG industry with strategic guidance in disaster planning efforts.

The first two reports in this series highlighted huge surges in demand across select product categories, including protein-rich shelf-stable foods, beverages, flashlights and batteries as consumers stocked up before the hurricane and sought to meet basic needs in its aftermath. This third report examines sales and pricing trends two weeks after Hurricane Katrina hit the Gulf Coast on August 29, 2005.

Key Findings

• Total CPG demand remains elevated but is stabilizing. Significantly heightened demand for CPG products the week following Hurricane Katrina has lessened somewhat, but dollar sales are still 3 percent above the pre-hurricane period as consumers rally to help victims with product donations.

• Hurricane-related food and beverage sales remain strong but shift in focus.
  Demand for shelf-stable foods and beverages skyrocketed in the weeks before and immediately after the hurricane. While growth has slowed slightly among the food categories, shelf-stable beverage category growth is exceptionally strong. Bottled water is an exception – growth peaked in the week following Katrina, but sales have tapered as consumers shift to other beverage alternatives.

• Total CPG demand remains elevated but is stabilizing. Significantly heightened demand for CPG products the week following Hurricane Katrina has lessened somewhat, but dollar sales are still 3 percent above the pre-hurricane period as consumers rally to help victims with product donations.

• Hurricane-related food and beverage sales remain strong but shift in focus.
  Demand for shelf-stable foods and beverages skyrocketed in the weeks before and immediately after the hurricane. While growth has slowed slightly among the food categories, shelf-stable beverage category growth is exceptionally strong. Bottled water is an exception – growth peaked in the week following Katrina, but sales have tapered as consumers shift to other beverage alternatives.

• Consumers have resumed spending on baby care, frozen foods and healthcare.
  Total U.S. sales across these departments declined in the week prior to Katrina as Gulf Cost consumers focused on immediate priorities and avoided foods requiring refrigeration. Sales bounced back in the week after the hurricane and remain strong as consumers catch up on missed purchases.

• Anticipated CPG price increases have not materialized (with a few exceptions).
  Despite concerns that hurricane-related fuel cost increases would be passed on to consumers, total CPG pricing is actually below pre-hurricane levels. Furthermore, speculation that coffee and sugar retail prices would rise due to production and/or port disruptions has not held true. Chocolate prices, however, have increased significantly.
  
   

Source: IRI's Times & Trends Reports
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