Consumer Trends

1
Consumer Trends
2
Intro

• The following slides identify the key consumer
  trends influencing new product development
• Health and Nutrition
• Natural/Organic
• Ethnic Flavors as mainstream
• Snacking
• Convenience
• Handheld/portable

3
Health and Nutrition

• Trend toward total wellness, inside and out
• products enriched with vitamins, antioxidants
• Balance
• portion control meals and snacks
• indulging in small ways
• Products formulated for older consumers
• nutrition advantages
• easy to handle and consume (packaging)

Mintel 10 trends for next 5 years, 2006
4
Health/Nutrition
2 trends convenient, portion-controlled package
Salmon package claim of heart healthy Omega-3
fatty acids Brownwood Acres Blueberry Juice
Concentrate touts health benefits including
anti-aging and alzheimers, cancer prevention and
urinary tract health Nabisco 100 calorie packs
5
Natural/Organic

• Natural/organic foods are expected to grow 63 to
  more than 46 million by 2010 (Progressive
  Grocer, 5/24/06)
• 2005 natural/organic sales were 28.3 billion
• 57 of consumers purchase natural products.
  (Mintel/SPINS/ICR 2004. Base 1008 adults, 18)
• Beginning in late 2006, Wal-Mart plans to roll
  out a complete selection of natural and organic
  foods in its nearly 4,000 stores. (New York
  Times, 6/4/06)

6
Natural
Hormel Natural Choice Deli Meats Whole Foods
Natural Angus Beef Burgers 7-Up All Natural
7
Ethnic Flavors are Mainstream

• 7 of 10 shoppers 25-39 purchase ethnic foods at
  least once a month. (FMI Trends in the United
  States)
• Ethnic flavors are where its at. The Hispanic
  population is the fastest growing ethnic group
  and they are influencing trends. Jicama,
  cilantro, chipotle, and jalapeno have all become
  mainstream ingredients in casual restaurants due
  to this trend. Brian Kolodziej, Director of
  Culinary, Bennigans
• Bold new flavors are hot. People want a spicier
  taste profile so ingredients like habanero and
  chipotle peppers have become common. Pan Asian,
  beyond Chinese, is very hot. Curry and Indian
  flavors are also emerging. Teriyaki is holding
  its own. Andy Johnston, Schwans Foodservice

8
Ethnic
Stouffers Wok Frozen Meals Jose Ole Frozen
Taquitos Ethnic Gourmet Lemongrass Basil Chicken
9
Snacking

• Busy lifestyles have changed traditional eating
  habits
• Americans will miss almost 150 core meals/year by
  2010
• average consumer skipped 62 lunches in 2005 will
  increase to 65 by 2010
• average consumer skipped 59 breakfasts in 2005
  will increase to 64 in 2010
• Making up for core meals with more frequent
  snacking
• Out-of-home evening snack market is worth 137
  billion in sales, second only to lunch (148
  billion)
• Snacks are versatile
• We have a beef Monster Taco and a regular taco
  on our snack menu. Snacks cross all demographics.
  Theyre being ordered as both snacks and meals.
  Jim Broussalian, Jack In the Box

Source Food Institute Report 4/17/06
10
Snacking
McDonalds chicken snack wrap to launch this
month. Chicken strip wrapped in small tortilla
with lettuce, cheese and ranch sauce. Designed to
appeal to late night and in-between-meals diners.
Power Bar Nut Naturals McDonalds Chicken Snack
Wrap Oberto Beef Jerky Crisps
11
Convenience

• Consumers are time-starved
• 68 of married mothers and 75 of single mothers
  with children under 18 are employed
• Both parents work in 63 of married with kids
  families
• Women work an average of 7 hours a day (men 8)
• One in five adults bring work home
• Women spend an average of 3.5 hours a day doing
  household chores

U.S. Bureau of Labor Statistics and Census
12
Convenience

• 44 of all weekday meal preparation requires 30
  minutes or less (NPD National Eating Trends and
  Snack Track)
• Product features that highly influence food
  purchase decisions (Yankelovich Partners, 2004)
• Ease of preparation 62
• Resealable packaging 41
• Freshness dating 35
• Ease of clean up 30
• Ease of opening 27
• Pre-cooked 16

13
Convenience Products Where in the Store?

• Refrigerated convenience foods are outpacing
  sales of both frozen and shelf-stable meal
  solutions.
• Dollar sales change versus year ago, Food, Drug
  Mass (including Wal-Mart)
• 8.2 Refrigerated
• 4.7 Frozen
• 2.5 Shelf-Stable
• Much of this growth is coming from side dishes

14
Refrigerated Convenient Meal Solutions
79.0
Dollar Sales Change vs. Prior Year Food, Drug,
Mass (including Wal-Mart)
18.1
16.5
6.7
6.1
5.6
Side Dishes
Prepared Salad/Fruit/Coleslaw
Handheld Entrees
Fresh Cut Salad
Dinners/ Entrees
Pizza
IRI Times Trends Convenience Products, October
2005
15
Frozen Convenient Meal Solutions
Dollar Sales Change vs. Prior Year Food, Drug,
Mass (including Wal-Mart)
18.2
8.2
7.3
3.1
1.8
Multi-Serve Dinner/ Entrees
Handheld Entrees
Side Dishes
Single-Serve Dinners/ Entrees
Pizza
-6.2
Pot Pies
IRI Times Trends Convenience Products, October
2005
16
Shelf Stable Meal Solutions
Dollar Sales Change vs. Prior Year Food, Drug,
Mass (including Wal-Mart)
25.9
Dry Salad/ Side Dish Mix
Dry Dinner Mixes with Meat
4.5
4.4
Dry Soup
3.9
3.5
2.4
0.7
0.6
0.5
Prepared Chili
Prepared Pasta
Dry Dinner Mixes (add meat)
Micro-wave Pkg Dinner
Prepared Dinners/Entrees
Dry Mac Cheese Mix
Condensed Wet Soup
-2.1
-2.5
Instant Breakfast
Ready-to-Serve Wet Soup
-29.5
IRI Times Trends Convenience Products, October
2005
17
New Product Pacesetters - Convenience Items

• Convenient meal and snack solutions are prevalent
  in the annual New Product Pacesetters Lists
• 2004 New Product Pacesetters (Millions )
• CarbSmart ice cream frozen novelties  137
• Pepsi Vanilla Diet Pepsi Vanilla soft drinks  
  125
• Diet Coke with Lime soft drink   119
• Sprite Remix soft drink   113
• Yoplait Nouriche yogurt breakfast smoothie   89
• Smirnoff Twisted V flavored malt beverage   83
• Healthy Choice Flavor Adventures frozen dinners  
  80
• Nabisco Ritz Chips crackers   76
• Dannon Light n Fit Carb Control dairy-based
  smoothie cups 75
• Mountain Dew LiveWire soft drink   72

Source IRI InfoScan Reviews
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New Product Pacesetters - Convenience Items

• 2005 New Product Pacesetters (Millions )
• Slim-Fast Optima diet line 166
• Budweiser Select beer 123
• Frito-Lay Light salty snacks 112
• Nabisco 100 Calorie Packs 107
• Cherry Vanilla Dr. Pepper soda 107
• Kraft Carb Well multi-category line 89
• Bertolli Dinner for Two frozen skillet dinners
  88
• Gatorade Lemonade 80
• Coke C2 mid-calorie cola 77
• Banquet Crock-Pot Classics frozen dinners 71
• Quick and easy is no longer enough multiple
  benefits including nutrition, greater
  portability, quality and value are all expected.
  IRI Times Trends Convenience Products,
  October 2005

19
Convenience
Oscar Mayer Fast Franks Banquet Crock Pot
Classics Bertolli Skillet Dinners for Two
20
Convenience

• Reasons why consumers purchase convenient foods
• to save prep time 70.1
• portability 55.9
• individual packaging 34.4

Stagnitos New Product Magazine, May 2004
21
Handheld/Portable

• Where are portable foods consumed? (Stagnitos
  New Product Magazine, 2004)
• at home 72
• in the car 44
• at the office 39
• at a recreational activity 17
• at school 14
• Commuters spend more than 100 hours in their car
  a year (U.S. Bureau of Labor Statistics and
  Census)
• Average commute time is 25.5 minutes
• 3.4 million Americans have a commute that takes
  90 minutes or longer each way.
• This is the fastest growing segment of commuters

22
Handheld/Portable

• Only 60 of meals are prepared and eaten at home
  (NPD National Eating Trends)
• 78 of households order carryout or delivery at
  least once per month (Business and Industry
  Magazine, 5/2004)
• 17 of all supermarket shoppers eat their main
  meal away-from-home at least three times/week
  (Food Marketing Institute)
• 72 of meals purchased at QSRs are taken to go
  (NPD Data)
• Applebees Curbside To Go has become the
  fastest growing part of the companys business
  (Applebees Annual Report, 2004)

23
Handheld/Portable
Kraft Philadelphia To Go (bagel kit) Nestle/Chef
America Hot Pockets
24
Handheld/Portable
Cheez-It Gripz (rip-and-tip package for one-hand
eating) Yoplait Go-Gurt (portable yogurt tubes)
25
Handheld/Portable
Wild Garden Hummus to Go Cocoa Puffs Go
Bags Kelloggs Special K Drink N Crunch cereal
cups
26
Handheld/Portable
Dreyers Dibs Ice Cream Snacks Smuckers
Uncrustables Grilled Cheese Sandwiches Dempsters
Ready-to-Eat Portable Waffles
27
Handheld/Portable
Campbells Soup at Hand Chef 5 Minute Meals (self
heating, includes utensils, napkin, salt and
pepper)