carb-cutting shoppers

AUGUST 2004
CARB-CUTTING SHOPPERS
Stirring Up
CPG Food & Beverage Categories
Low-Carb Sales Climb
Consumer interest remains high – major
manufacturers enter the arena
“Sweetened” Categories Up for Grabs
Sweetened snack bars, candy, desserts, soft
drinks and cereals go low-carb & low-cal to win
Will Carb-Cutting Rise or Demise?
Too early to predict - concerned dieters are
trying alternative routes, reading labels
2
August 2004
Table of Contents
3.
Welcome
Consumers’ overweight issues present opportunities to the CPG industry.
4.
Methodology
IRI’s InfoScan® data compare naturally low-carb products to total carb
branded activity.
5.
Introduction & Highlights
The carb-cutting trend is still going strong – but the battle for the healthier
minded shopper has just begun.
6.
Naturally Low-Carb Products Lead Growth
Engineered carb-branded activity generated less than $1billion new growth in
the latest year. Carb-branded extensions of well known brands are driving
recent growth.
8.
Beverage Drinking Shifts from Sugar to Low-Cal
Diet soft drinks and bottled water see double-digit growth – OJ & regular soft
drinks sag. Michelob Ultra leads carb-branded beverage sales.
10.
Bacon & Eggs Revival Paces Breakfast Growth
Carb-crazy consumers load-up on high cholesterol products, abandoning
fiber and low-fat benefits of cereals.
13.
Low-Carb Brands Benefit from Strong Displays
Retailers early on have given low-carb products the best display locations in
supermarkets. Can this last?
15.
Does Low-Fat History Predict The Future?
Using low-fat/no-fat branded foods to predict the future of carb-branded
activity: five years of growth, then declines. Carb-cutting easily could peak
earlier – weight-stressed adults are turning to multiple dieting strategies,
including low-fat, low-cholesterol, low-cal and low-sugar.
16.
Implications
Too early to predict carb-cutting’s rise or demise – but there are major CPG
industry opportunities to support the healthier-minded shopper.
17-18.
Next Steps – The IRI Solution & Data Sources
© Copyright 2004 Information Resources, Inc. All rights reserved.
3
August 2004
Welcome to Times&Trends
Consumers’ overweight issues present opportunities to the CPG industry
The world is growing fatter. The
World Health Organization
estimates that 1.3 billion people
globally are overweight or
obese. Overlaying this situation
is the low-carb diet craze – led
by popularity of the Atkins diet –
and its impact on the food &
beverage shelves of consumer
packaged goods (CPG) retailers.
The CPG industry is all stirred
up and attempting to take
advantage of new growth
opportunities. The purpose of
this report is to summarize lowcarb trends in the latest year and
most recent 12 weeks through
mid-June.
The Low-Carb Trend Has Broad Interest
– Cutting Carbs Is Not Just For Dieters.
Information on consumers’ inclination to limit carb
consumption is all over the media. The sense is that
interest is broad – diet or not – and will persist even after
the diet is history.
Opinion Dynamics Corp: reported that 26 million
Americans are on a low carb diet today. Seventy million
are limiting their carb intake informally – Time Magazine,
May 3, 2004.
Global Examples - % Overweight
Men
Women
England
67.6%
56.4%
USA
67.0%
62.0%
47.0%
61.0%
France
47.0%
57.5%
47.0%
Brazil
26.2%
23.1%
Japan
Source: World Health Organization, International Obesity
Task Force; USA TODAY 2.5.04
More Consumers Avoid Carbs In Their Diets.
% Actively include Carbs
% Actively avoid Carbs
% Don't think about Carbs
50%
39%
28%
33%
27%
20%
Mintel: Three of five low-carb dieters say that they plan to
limit carb intake for life – Time Magazine, May 3, 2004.
The Gallup Organization: estimates that 27% of
Americans actively avoid carbs – Gallup Poll, July 21,
2004.
63.7%
Australia
Jul 9-11, 2002
July 8-11, 2004
Source: Gallup Poll, The Gallup Organization, July 21, 2004
Copyright © Information Resources, Inc., 2004. Confidential and proprietary. No part of this document may be reproduced or distributed in any
form or manner without written consent of IRI.
While every precaution has been taken to ensure the accuracy of this document, Information Resources, Inc. does not make any representations
or warranties about the information contained in this document and such information is subject to change without notice.
The products depicted in this document are examples of some of the products described in this report. Names and photographs of products
and/or companies contained herein do not represent sponsorship of the product or company by IRI or sponsorship of IRI's products and services
by the respective companies.
© Copyright 2004 Information Resources, Inc. All rights reserved.
4
August 2004
Methodology
Shoppers are finding low-carb foods in three complementary ways:
1. Many categories that are naturally low-carb – products listed
in Atkins’ Carb Gram Counter on the Atkins website, which
naturally contain under 10g carbs per serving, or products
recognized or advertised as being low-carb, such as diet soda
and light beer.
2. A limited number of upstart companies launched low-carb
umbrella brands – this is how it all started. Atkins gained
attention with its low-carb diet and created a line of shelf stable
and frozen foods (over 40 items, many in “high-carb”
categories) and a distribution network to conventional CPG food
channels. Carb Solutions, CarboRite, CarboWise, Keto, Le
Carb and others have followed suit. The entire brand is
designed explicitly for low-carb dieters, competes in multiple
food & beverage categories that are ordinarily high-carb and
“carb” is either part of the brand name or is extremely prominent
on the packaging.
3. Many CPG companies launched new low-carb branded line
extensions – brands are either defending their businesses in
perceived “high-carb” categories (Breyer’s Carb Smart ice
cream, Sara Lee “Delightful” & Hershey’s 1carb candies) or
taking advantage of the sudden interest in “low-carb” categories
(Michelob Ultra) – “You want low-carb? We’ve got it!”
Extensions are hand-selected at the brand level based on
“carb” being part of the brand’s name or companies clear
positioning of the brand as low-carb, such as Michelob Ultra.
Naturally Low-Carb
Low-Carb Umbrella Brands
Low-Carb Brand Extensions
(see note below)
InfoScan Data Compare
Naturally Low-Carb Products To
Total Carb-Branded Activity
This report’s analysis compares “naturally low-carb” product trends to
“carb-branded activity” – the combination of low-carb umbrella brands
(2) and low-carb branded extensions (3). For definitive carb
information and extended trend monitoring, CPG managers need to
connect with IRI’s new “CarbTracker” service, launched in this quarter
(see page 18 for a detailed description).
What is or is not “naturally low-carb” can be subjective. This report
included product types named in Atkins’ Carb Gram Counter, as well
as advertised low-carb segments such as low-cal soft drinks and light
beers. The Atkins dieter and carb-cutting shopper actually have a wide
variety of items to choose from that are under 10 grams per serving,
illustrated at the right. From their website, Atkins lists 408 products,
274 of which are under 10 total carbs per serving. This report based
its selection of “naturally low-carb” products on this list.
Atkins Carb Gram Counter – Total Carbs (g)
per individual portion:
Bacon – 0.1g
Barbecue Sauce – 4.0g
Cream Cheese – 0.8g
Egg, whole – 0.6g
Greens, mixed – 1.6g
Half & Half Cream – 1.0g
Ketchup – 4.2g
Margarine – 0.0g
Mayonnaise – 0.1g
Medium White Wine – 0.9g
Olives, green – 2.5g
Peanut Butter, regular – 6.2g
Peanuts – 3.4g
Salad Dressing – thousand island – 4.8g
Soy Milk – 4.4g
Soy Nuts – 4.5g
Spinach, raw – 1.1g
Tomatoes, canned – 5.2g
Tuna, canned, oil packed – 0.0g
Note: Due to the difficulty of accurately tracking carb-related package claims, IRI makes no representation that every food or beverage product
currently making no/low/reduced carb claims has been captured. Products included were selected by brand, not by UPC, so while all the major
low-carb brands should be represented, there may be some small items which are not. Also excluded are established brands which are
primarily marketed toward diabetics or whose primary positioning focuses on reduced sugar or calories, even though they may now be adding
carb-related claims to their packaging.
© Copyright 2004 Information Resources, Inc. All rights reserved.
5
August 2004
SUMMARY: Carb-Cutting Still Trending Strong –
Battle For Dieters’ Attention Just Begins
CPG companies are launching carb versions, carb packaging, reduced-calorie and
artificially sweetened products to stimulate dieting shoppers’ interest and trial –
ultimately, taste satisfaction and price versus dieting results will determine who wins
Shoppers are faced with unavoidable weight control and associated health issues. Two-thirds of
Americans are overweight. The CPG industry’s opportunity to serve these consumers with products that
satisfy but also support weight-loss goals is enormous.
There’s been an unprecedented consumer response to the low-carb diet. Low-carb dieting is easy,
effective and fast. Reporters are claiming that carb-cutting is declining – but store sales trends do not
show that to be the case. Yes, the jury is still out on its long term effectiveness. The major positive sales
impact of this craze is with naturally low-carb products – like eggs, bacon, light beers, & others –
estimated to have grown as a group over $4 billion in annual sales in the latest year.
Food Manufacturers are jumping in with low-carb line extensions. Companies launching multicategory offerings, package blurbs and “we’re low-carb” ad campaigns – are taking over a larger share of
carb-branded activity from carb companies like Atkins. Total carb-branded activity, in aggregate over $1
billion in sales, is estimated to have grown over $800 million in annual sales through June 13, 2004.
Portable, between meal snacks & beverages is the likely carb-cutting battleground. Soft drinks &
beer, snack bars, candy and other sweets are predicted to sustain consumer carb-cutting or caloriecutting interests. However, lower-calorie or artificially sweetened, diet versions may take over shoppers’
attention and taste satisfaction. Pepsi Edge and Coke C2 competition has just begun and will challenge
dieters to reconsider their options. Artificially sweetened line extensions are growing rapidly.
Retailers are evaluating low-carb stocking, merchandising & shopper communications strategies.
Carb-brands have received unusually strong display support and are often displayed in multiple locations
with multiple carb-brands. “Healthier Eating” sections are being tested within categories and as separate
departments. Food ads are flagging a deluge of new entries. The jury is still out on which strategies and
which best practices consumers will respond to more than others.
Taste approval, price/value and weight-loss results – the ultimate test. Many carb-company
products are premium priced compared to brand carb-extensions, which are more competitively priced.
Klondike’s Carb Smart – a much better value to the carb-cutting shopper – doubled Atkins’ Endulge share
of frozen novelties in latest 12 weeks of data.
Concerned overweight shoppers are trying multiple diets. IRI MedProfiler™ data shows that lowcarb dieting is competing against low-fat/cholesterol, low-calorie/sugar and low-salt dieting for weight-loss
results. Awareness and interest is heightened. Media and government news may sway dieters in new
directions away from carb-cutting.
Low-carb could go the route of low-fat. The low-fat branded craze in the early 90s – including
SnackWell’s & WOW! branded snacks – saw about five years of growth and then has declined ever since.
However, consumers may sustain interest in selected naturally low-carb products as they did with
naturally low-fat yogurts.
In the 12 weeks ending June 13,
2004, carb-branded extensions of
well known brands, such as the
multi-category Carb Option
launch, accounted for nearly 60%
of all carb branded sales activity.
© Copyright 2004 Information Resources, Inc. All rights reserved.
6
August 2004
Naturally Low-Carb Products Lead Growth
Naturally low-in-carbs activity generated over $4 billion incremental sales in the latest
year – estimated at 36% of total Food & Beverage consumption, $78 billion
Given the wide range of
naturally low-carb products,
this segment of total CPG food
& beverage sales is large –
around $78 billion in annual
sales, growing $4 billion up to
36% of total sales.
Carb Branded Activity has
quadrupled in size, to over
$1.1 billion in annual sales, up
to 1% of total food & beverage
sales.
This growth has been fueled
by hundreds of new product
introductions; IRI is now
tracking sales of more than 80
low-carb brands.
Engineered
Carb Branded
Activity
Generated $800
Million In The
Latest Year
Carb Branded Activity – four
times as big as it was a year
ago – grew approximately
$815 million in the year ending
June 13. The sales emphasis
has reversed from roughly
55/45 in favor of upstart new
brands and companies, like
Atkins, to close to 60/40 in
favor of large CPG brand
extensions from large CPG
companies, like Michelob Ultra
and Breyers’ Carb Smart.
Carb Options – like Carb Smart
is from international CPG giant,
UniLever – launched in 2004,
across 32 products in 13
different categories, extending
from the company’s category
anchors Lipton, Ragu,
Wishbone, Skippy, Lawrey’s
and others.
Naturally Low in Carbs – 36% of Latest Year’s
Food/Beverage Consumption ($217 Billion)
Products Naturally Low in Carbs
All Other Product Types
Carb Branded Activity
$78.4
$74.1
36%
35%
$1.1
$0.3
$137.2
$138.8
YR 6/14/03
YR 6/13/04
$ Billions, Food, Drug & Mass Merchandiser outlets,
excluding Wal-Mart
All Forms of Carb Branded Activity –
Add Up to 1% of CPG F&B Sales
CPG Brand Low Carb
Extensions (Breyer's
Carb Smart, etc.)
$1,125
57%
Low Carb New Umbrella
Brands (Atkins, etc.)
$310
44%
43%
56%
YR 6/14/03
$ Millions
YR 6/13/04
Source: InfoScan® Reviews: Dollar Sales; Latest 52-Week & 12-Week Growth in Millions/% Change – 6/13/04 vs. Year Ago.
See page 18 for source details.
© Copyright 2004 Information Resources, Inc. All rights reserved.
7
August 2004
Natural & Engineered Low-Carb Products Complement
Each Other
Naturally low-carb growth is strongest in beverage, dinner and breakfast consumption
products – while over half of the carb branded activity growth is in snack meals and
sweetened snacks & desserts
Atkins’ packaged goods penetration started in “wellness” snack bars –
the nutritional or energy kind that get consumed as either portable meals
or a nutritional in-between snack. However other carb-branded sweet
snacks – such as frozen novelties and ice creams – were not too far
behind. Michelob Ultra accounts for 88% of the carb branded activity
beverage growth.
Carb Branded Activity growth highly concentrated in snack meals,
sweetened snacks & desserts and beverages.
A comparison of the growth by the three carb groups reveals that over
70% of naturally low-in-carb product growth came in beverage, dinner &
breakfast consumption, while nearly 80% of engineered low-carb brand
growth came in snack meal/lunch solution, sweet snack & dessert and
beverage consumption – complementing each other. Over 75% of all
other food & beverage category declines came in dinner, sweet
snacking & desserts and beverage consumption – high-carb categories.
The next five pages drill-down detail on the five most active low-carb
battlegrounds: Beverages, Dinner Solutions, Breakfast Solutions, Snack
Meal/Lunch Solutions and Sweets – Snacks & Desserts.
Share of Latest Year’s Sales Growth by Food & Beverage Consumption Groups
Naturally Low-in-Carb
Product Growth
FOOD & BEVERAGES TOTAL +$4,300 Mil = 100%
Total Carb Branded
All Other
Activity Growth Products Declines
+$815 Mil
= 100%
($1,600 Mil)
= 100%
Beverages
33%
23%
21%
Dinner Solutions
20%
6%
28%
Breakfast Solutions
19%
13%
4%
Snack Meal/Lunch Solutions
9%
32%
13%
Prep Ingredients
9%
1%
4%
Salty Snacks
5%
1%
4%
Sweets – Snacks & Desserts
4%
24%
26%
InfoScan® Reviews: 572 Food & Beverage Types, 67 from Supermarkets only; 175 are naturally low in carbs as defined by the
Atkins Diet “Carb Gram Counter”, under 10 total carb grams per serving (light beers are included included);
Dollar Sales; Latest 52-Week Growth in Millions/% Change – 6/13/04 vs. YA.
© Copyright 2004 Information Resources, Inc. All rights reserved.
8
August 2004
Beverage Drinking Shifts From Sugar to Low-Cal
Diet soft drinks & bottled water see double-digit growth – OJ & regular soft drinks sag
Beverage brands are attacking
the carb craze in different ways
– including the introduction of
low-carb and diet, low-calorie or
reduced-calorie versions. Time
will shake-out the winners.
Right now, low-cal soft drinks –
naturally low in carbs – lead
growth, but Pepsi’s Edge and
Coke’s C2 reduced-calorie
launches are stirring things up.
Latest Year Ending 6.13.04
vs. Prior Year
Dollar Growth ($ millions)
Beverage Products
Naturally Low in
Carbs
$1,437
Carb Branded Activity
All Other Beverage
Solution Types
% Change
Latest 52
Weeks
7.1%
6.0%
+192%
$188
($361)
Latest 12
Weeks
+94%
1.5%
-1.0%
Beverage Winners & Losers – Sales Growth in $ Millions
Growth: $ Mil
Latest 52 Weeks
% Chg
Low Calorie Soft Drinks
$388
Bottled Water
Rfg Orange Juice
10%
Regular Soft Drinks ($329)
11%
18%
$341
($100)
Latest 12 Weeks
% Chg
20%
-4%
-5%
-4%
-4%
Source: InfoScan® Reviews – data through 6/13/04
Low Carb Beers Competitively Priced –
Light Beers’ Sales Growth Versus Year Ago Driving Beer Consumption
Most Low-Carb Brand
Extensions Are Priced
Competitively Within
Their Product Line
Beer
Michelob Ultra accounts for 85% of
the total Carb Branded Beverage
sales activity in the most recent
twelve weeks and 43% of the
light/low-carb beer growth.
$20.50
Michelob Ultra
is line-priced
Michelob Ultra – for example – is
line-priced versus the brand’s
“regular” counterparts.
The “All light beers are naturally low
in carbs – but I’m the lowest”
advertising battle has spurred growth
of light beers – up 6% for the latest
year and 7% in the latest 12 months.
$20.10
Michelob Base
Michelob Ultra
Source: InfoScan Reviews - Total US FDMx; 12 Weeks Ending 12/28/03
Price-per-case shown.
$ Sales
Growth
Latest 52 Weeks
% Chg
Latest 12 Weeks
% Chg
Light Beers 6%
7%
169%
Michelob Ultra
% Share Sales
6.7%
Source: InfoScan® Reviews – data through 6/13/04 versus Year Ago
© Copyright 2004 Information Resources, Inc. All rights reserved.
64%
7.1%
9
August 2004
Dinner Consumption Shifting – But to Where?
CPG frozen dinner products begin to push out low-carb branded and recipe extensions
Carb-counting consumers are
feasting on simple dinner options –
primarily basic items like red meat,
chicken, fish, natural cheese and
salad fixings. The more flavorful
prepared entrees and dinner items
are suffering. But some brands – like
Lean Cuisine – are starting to launch
new low-carb recipes to fill the void
for shoppers who want more
interesting and flavorful carb choices.
Latest Year Ending 6.13.04
vs. Prior Year
Dollar Growth ($ millions)
Latest 52
Weeks
Dinner Solution
Products Naturally
Low in Carbs
$872
Carb Brand Dinner
Solution Activity
All Other Dinner
Solution Types
% Change
$47
($470)
Latest 12
Weeks
5.3%
4.6%
+4622%
+6063%
-1.7%
-3.4%
Dinner Solution Winners & Losers – Sales Growth in $ Millions
Growth: $ Mil
Fresh Cut Salad Kits
Latest 52 Weeks
% Chg
$190
$145
$135
Natural Cheese Chunks
Frozen Chicken
Dry Dinner Mixes
($49)
Spaghetti/Italian Sauces
($60)
10%
8%
7%
8%
7%
7%
-12%
-4%
-6%
Frozen Entrees ($209)
Latest 12 Weeks
% Chg
-7%
-3%
-7%
Source: InfoScan® Reviews – data through 6/13/04
CPG Dinner Product Consumption – Second in Overall Sales – Untapped by Carb Branded Activity
Prepared Low-Carb
Dinners & Entrees On
Their Way
They’re coming! Carb-branded
dinner-focused prepared entrees,
pastas and sauces are being
launched.
While most of the Atkins diet
focus is on do-it-yourself
preparation – having a sizable
impact on fresh meat, poultry and
fish – CPG dinner & entrée
manufacturers have been on the
sidelines. Not for long.
Dreamfields pasta is new in the
marketplace, as is Lifechoice
frozen dinners. Currently,
shoppers’ appetite for flavorful
frozen and shelf-stable prepared
dinner items is underserved by
carb branded activity.
Share of
Consumption –
YR 6.13.04
% CPG Food & % Carb Branded
Beverage Sales Sales Activity
28%
Beverages
20%
Dinner Solutions
Lunch & Snack Meal Solutions
13%
Sweets – Snacks & Desserts
13%
Breakfast Solutions
10%
23%
4%
43%
19%
9%
Prep Ingredients
8%
1%
Salty Snacks
6%
1%
Baby Food
2%
0%
Source: InfoScan® Reviews – data through 6/13/04 - % Share of Total CPG $ Sales
© Copyright 2004 Information Resources, Inc. All rights reserved.
10
August 2004
Bacon & Eggs Revival Paces Breakfast Growth
Carb-crazy consumers load up on high cholesterol products, abandoning fiber
Will it last? Breakfast eaters in the
past year have modified their
feelings toward fresh eggs and
bacon – the two largest breakfast
growth giants – both naturally low
in carbs, accounting for the bulk of
this consumption area’s annual
growth. It appears to be at the
expense of high fiber cereals –
many who have recently launched
either low-carb versions, “carbspecific” package blurbs or
reduced-calorie versions.
The trend in the latest 12 weeks is
directionally the same, but slowing
down.
Latest Year Ending 6.13.04
vs. Prior Year
Latest 52
Weeks
Breakfast Products
Naturally Low in
Carbs
Latest 12
Weeks
14.1%
$835
Carb Branded Activity
All Other Breakfast
Solution Types
% Change
Dollar Growth($ millions)
$102
9.6%
+1327%
($65)
+1920%
-2.0%
-0.4%
Breakfast Solution Winners & Losers – Sales Growth in $ Millions
Growth: $ Mil
Latest 52 Weeks
% Chg
Fresh Eggs
$548
Rfg Bacon
Hot Cereal/Oatmeal
Latest 12 Weeks
% Chg
25%
11%
$199
($50)
-6%
Ready-To-Eat Cereal ($160)
19%
5%
-6%
-3%
-3%
Source: InfoScan® Reviews – data through 6/13/04
Stocking Locations Of Low-Carb Branded Products All Over The Store! Defined “Low-Carb” Location &
Natural/Organic Location Command The Most Number Of Items.
Low-carb Products Are
Primarily Getting
Stocked In Specialty
Locations Within
Supermarkets
Avg # Carb Branded Items Stocked Per Section
55
Defined Low Carb Non-Display Stocking Item
45
Defined Natural/Organic Stocking Location
Atkins & Carb Solution breakfast bars
could be found in 1 of 3 or all 3
locations – the “low-carb” section, the
“organic/natural” section and the
“breakfast bar” section.
36
Dietary Products
25
Energy Bars
20
Breakfast Bars
14
Frozen Food Aisles
12
Ready to Eat Cereal
10
Dessert/Baking Mixes
9
Salted Snacks
Dry Pasta Sides
6
Dry Pasta
5
Shelf Stable Bread/Buns
5
Mosaic InfoForce Low Carb Study, Supermarket Data from Feb 2004
© Copyright 2004 Information Resources, Inc. All rights reserved.
11
August 2004
Low-Carb Meats, Meat Snacks & Cheeses Growing
Portability and perceived healthier snacking driving many “quick-meal” bar choices
With convenience and portability
being key underlying benefits,
naturally low carb products – like
lunch meats and cheese slices –
are soaring. Nutritional snack bars
have the most carb branded names
– Atkins, Balance Carb Well, Carb
Options, Carb Slim, Carb Solutions,
CarboLite, CarboRite, CarbWise,
and EAS Carb Control among them
– and are still growing.
% Change
Latest 52
Latest 12
Weeks
Weeks
Dollar Growth
($ millions)
Latest Year Ending 6.13.04
vs. Prior Year
Snack Meal/Lunch
Solution Products
Naturally Low in
Carbs
$410
3.1%
3.3%
Carb Branded Activity
+155%
$262
All Other Snack
Meal/Lunch Solution
Types
($227)
+118%
-4.0%
-1.5%
Snack Meal/Lunch Solution Winners & Losers – Sales Growth in $ Millions
Growth: $ Mil
Sliced Lunchmeat
Nutritional/Energy/Low Carb Bars
Natural Cheese Slices
Dried Meat Snacks
Latest 52 Weeks
% Chg
Latest 12 Weeks
% Chg
5%
5%
20%
8%
25%
30%
19%
14%
$146
$114
$98
$46
-2%
-4%
-6%
-4%
Fresh Bread ($37)
Canned Condensed Soup ($45)
Diet/Protein Supplements ($59)
Processed Cheese Slices ($61)
-4%
-2%
-7%
0%
Source: InfoScan® Reviews – data through 6/13/04
Most Carb-Branded Activity Commands Premium Pricing –
Long-Term Growth in Question as Consumers Evaluate “Price versus Results” Satisfaction
Snack Bars
Low-Carb Brand
Pricing Apt To Be A
Long Term Consumer
Issue
$18.48
Atkins at a significant
premium
$9.34
$5.54
Atkins – as well as other new lowcarb brands - are typically priced at
a significant premium versus
“regular” brands.
Nature
Valley
The higher priced wellness, energy
& low-carb branded bars segment
of portable snack and meal bars
category has slowed down in
growth.
Wellness/Energy/Low Carb Bars
$4.60
Quaker
Chewy
Power Bar
Atkins
Total US FDMx; 12 Weeks Ending 12/28/03
Price-per-pound shown.
Latest 52 Weeks
% Chg
Breakfast/Cereal/Snack Bars
Granola Bars
Rice Snack Squares -12%
Latest 12 Weeks
% Chg
17%
6%
8%
-2%
8%
6%
-4%
Source: InfoScan® Reviews – data through 6/13/04
© Copyright 2004 Information Resources, Inc. All rights reserved.
12
August 2004
Low-Carb Sweet Snacks & Novelties Gaining
Cookies, desserts, ice creams – providing a perfect arena for low-carb, low-fat & lowcalorie competition
All of the sweet snacking
and dessert manufacturers
seem to be getting into the
low-carb or low-cal
competition. There’s a
frenzy of new items in all of
the key “sugar-sweetened”
consumption areas.
Frozen novelties and diet
candy lead in the latest
year’s sales growth. New
entries – like Ben & Jerry’s
Carb Karma – are heating
up carb-branded
competition.
Latest Year Ending 6.13.04
vs. Prior Year
% Change
Dollar Growth ($ millions)
Latest 52
Weeks
Sweet Snack &
Dessert Products
Naturally Low in Carbs
$174
Carb Branded Activity
25.3%
23.1%
+592%
$197
All Other Sweet
($447)
Snack/Dessert Types
Latest 12
Weeks
-1.6%
+722%
-3.0%
Sweet Snacks & Desserts Winners & Losers – Sales Growth in $ Millions
Growth: $ Mil
Fz Novelties
Diet Candy
Chocolate Candy Box/Bag/Bar=>3.5Oz
Sugarless Gum
Weight Control Candy/Tablets
Ice Cream
Cookies
$138
$104
$87
$68
($49)
($54)
($185)
Latest 52 Weeks
% Chg
7%
74%
7%
13%
-15%
-1%
-5%
Latest 12 Weeks
% Chg
5%
52%
6%
14%
-14%
2%
-6%
Source: InfoScan® Reviews – data through 6/13/04
Competitively Priced Low-Carb Sweets Are Carving Out Decent Share Growth
Carb-Branded Pricing
Will Play A Role In
Sweet Snack & Dessert
Competition
Atkins is priced at a significant
premium versus “regular” brands,
while Breyer’s & Klondike Carb
Smart are line-priced versus their
“regular” counterparts.
$3.55
Ice Cream
Breyer’s Carb Smart line-priced;
Atkins at a premium
$1.49
$1.14
Category
Edy's
$1.27
$1.28
Breyers
Regular
Breyers
CarbSmart
Atkins
Total US FDMx; 12 Weeks Ending 12/28/03
Price-per-pint shown.
Latest 52 Weeks
% Chg
Frozen Novelties $ Sales Growth
Latest 12
Weeks % Chg
7%
Atkins Endulge Share
1.4%
Klondike Carb Smart Share
1.8%
Source: InfoScan® Reviews – data through 6/13/04
© Copyright 2004 Information Resources, Inc. All rights reserved.
5%
1.5%
3.4%
13
August 2004
Low-Carb Brands Benefit From Strong Displays
Low-carb products are getting the best display locations in supermarkets – can this last?
Retailers have keyed in on the lowcarb craze by giving carb-branded
items lots of display presence. A
Mosaic InfoForce low-carb study early
in the carb movement in the grocery
channel revealed that low-carb activity
is securing the best display spots in
the supermarket.
% Display by Location for Low-Carb Branded Products
65%
48%
46%
42%
32%
11%
6%
Lobby
3%
Front End
Cap
Back End
Cap
AO End Cap
Perimeter
In Aisle
Seasonal &
Promotional
Shipper
Mosaic InfoForce Low Carb Study,
Supermarket Data from Feb 2004
Snack Bars And Diet Candy
Have The Most Carb-Branded
UPC’s In Their Displays
With extensive flavor activity and
multiple carb brands entering the fray,
low-carb sweet snacks are commanding
the most number of items per display.
Average # Low-Carb Items Displayed by Category
14
Nutritional Snack Bar/Granola Bar
9
Diet Candy
7
Weight Control/Protein Supplement
Frozen Regular Entrees
6
Cheese Snacks
5
Low Calorie Soft Drinks
4
SS Bread (No Canned Bread)
4
Muffin Mix
4
SS Dry Soups/Soup Mixes
4
Mosaic InfoForce Low Carb Study,
Supermarket Data from Feb 2004
© Copyright 2004 Information Resources, Inc. All rights reserved.
14
August 2004
Healthier Eating Sparks Low-Carb Interest
The low-carb consumer is particularly concerned about nutrition & healthier living
An IRI AttitudeLink™ analysis “2004 Shopper
Satisfaction Survey” revealed that attitudes of
low-carb consumers toward nutritional benefits
and healthier living indexed very high. There’s an
opportunity for manufacturer and retailer
category managers to take advantage of this,
working together to create nutritional information
best practices at store level. Companies with
category shares at stake are communicating
nutritional carb-facts in print and TV ads.
THE LOW-CARB CONSUMER is particularly
concerned about healthier living & nutrition.
Index vs Total Households: Low-Carb Consumer
Often choose snacks
based on their nutritional
value
146
Often read
nutritional labels
139
Exercise 3-4 times
each week
125
Avoid foods high in
saturated fat
111
Source: IRI 2004 Shopper Satisfaction Survey
(based on low-carb breakfast/snack/nutrition bar
shoppers’ responses)
Is Low-Carb Dieting a Fad?
Consumers Say No
Do you think the low-carb trend will last?
51% of Consumers
Surveyed Feel
Low-Carb Dieting
Will Last “Forever”
The strength and length of
interest in carb dieting or making
product selections based on carb
levels will be heavily influenced
by packaging changes – carb
package blurbs – and advertising.
Consumers are discovering from
informational communications
that brands they’ve known for
years (like Planters) are low-carb
foods.
18%
Yes
No
If yes, how long do you think the trend
will last?
51%
% Consumers Believing Low
Carb Dieting will Last…
19%
1%
82%
6 Months
1 Year
Source: Supermarket Guru Survey - 2003
© Copyright 2004 Information Resources, Inc. All rights reserved.
10%
8%
5 Years
10 Years
Forever
15
August 2004
Does Low-Fat History Predict the Future?
Using Low Fat/No Fat Food to predict the future: five years of growth, then declines
Many if not most of the low-carb growth giants are also high in fat. And
recent diet research has concluded that the low-carb diet, while effective in
losing weight early if followed properly, is no more effective than a low-fat
diet after a year’s time in losing weight. So low carb’s future is questionable.
The growth of reduced-fat branded products – launched in the early 90s –
fizzled in five years, and has declined ever since. With low-cal competition
and potentially negative research on the long-term impact of higher
cholesterol consumption, low-carb consumption could be in for a shorter
ride.
Low-fat products
developed a
reputation of lacking
flavor compared to
category
expectations, and not
necessarily all that
low in calories.
Reduced Fat Branded Products Change In Dollar Sales Versus The Prior Year
9%
5%
9%
5%
1%
NA
-5%
-7%
-6%
-6%
-7%
-12% -12%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Sources: IRI’s “How America Avoids Fat” study, 1996; Times&Trends “Light, Lean, Low &
Less-of” reports; based on InfoScan Reviews scanner data – Supermarkets, Drugs, Mass
Merchandiser channels, excluding Wal-Mart after August, 2001.
Weight-Stressed Adults
Turn To Multiple Diets.
40% of concerned
consumers surveyed tried 2
or more diets in the past
year – low-carb has lots of
competition
% of Overweight Adults Who Worry About Their
Weight – And Take Action:
Very concerned about
my weight
60%
Tried 2+ diets in past
year
Low-fat diet
IRI’s unique ability to track consumers with
health issues and link their attitudes with
their shopping behavior provides insights
on the kind of choices weight-challenged
shoppers are making. Clearly, the Atkins
or low-carb diet is not the only game in
town, and shoppers are as much interested
in low-fat and low-cal information as they
are about carbs.
40%
30%
Low-cal diet
20%
Low-carb diet
20%
Low-salt & sugar diet
20%
Source: IRI’s MedProfiler Health & Wellness Survey
Overweight adults defined by both BMI and self reported
perception.
© Copyright 2004 Information Resources, Inc. All rights reserved.
16
August 2004
Implications – Too Early To Predict Low-Carb’s Rise or Demise –
But The Industry Opportunity Is Huge
The battle for dieting and more nutritionally conscious shoppers has just begun
The current evidence is that healthier, nutritional eating and weight-loss
objectives are driving significant shopper shifts and growth. Most natural
low-carb products are growing – not just carb-branded products. Here’s a
summary of the apparent opportunities.
Catering to Healthier Minded Shoppers
All of the consumer mindset evidence from Gallup to IRI’s MedProfiler says that
a major chunk of the overweight population is now interested in attacking the
problem through healthier eating. The overwhelming interest in carb-cutting is
further evidence that shoppers are looking for healthier products.
Providing a Balance of Taste Satisfaction, Price/Value & Dieting Support
A key lesson of the “Low-Fat Era” in the early 90s is that healthier items cannot
fall short in either taste or dieting expectations. When word got out that many
higher priced low-fat, low-cholesterol new items were also high in calories, the
excitement of “low-fat” deflated quickly.
Natural low-carb
products continue
to thrive – but the
early carb brand
leaders share of
growth has
diminished.
Carb Growth Pace Still Strong
% Change in $ Sales
10 Largest Natural
Low-Carb Growth
Categories
10 Largest CarbBranded Products
Latest 52 Latest 12
Weeks
Weeks
9.2%
+223%
8.7%
+180%
Natural Low-Carb Categories Continue to Dominate CPG Growth
% Share of Food&Beverage Growth
Latest 52 Weeks
10 Largest Natural Low-Carb
Growth Categories
Latest 12 Weeks
71%
69%
% Share Carb Branded Activity Growth
Michelob Ultra
Atkins
19%
28%
9%
18%
Providing Nutritional Information, Options & Direction
Manufacturers and retailers have a major opportunity to serve the customer
and support America’s need to curb the obesity crisis. The industry needs to
enhance efforts to provide critical nutritional information, provide healthier
products and support anxious shoppers’ and dieters’ interest in weight loss.
It’s critical that CPG food & beverage companies and retailers work together to
provide shoppers with the information they need to make healthier choices in
advertising, packaging, merchandising and shelf presentation.
Source: CarbTracker’s Top 10 Naturally Low-Carb Categories & Carb Brands in Growth/InfoScan® Reviews –
Supermarkets, Drugs, Mass excluding Wal-Mart combined; data through 6/13/04
© Copyright 2004 Information Resources, Inc. All rights reserved.
17
August 2004
Next Steps: The IRI Solution
CPG manufacturers & retailers need to build effective strategies to appeal to more healthminded consumers. The solution: the right information, content, analytics & software.
Challenge
Solution
Category managers, as well as the broader
CPG industry, must understand the needs of
the growing number of Americans who are
overweight. Obese consumers are increasing
purchases of healthier products at almost
double the rate of the total population and
have substantially increased purchases of
nutritional products.
There’s a huge opportunity to extend
respected brands and brand reputations into
healthier eating and dieting areas.
However, critical to building a strategy will be
the right information and analytical plan.
IRI has two new strategic services that can
deliver ongoing insight into consumer attitudes
and behavior on carb-cutting and health and
wellness issues.
CarbTracker™ is the CPG industry’s most
complete source of sales results for the lowcarb industry. It provides CPG manufacturers
and retailers with quarterly updates on the
status and market trend of carb-branded items
and natural low-carb categories, like fresh eggs
& bacon. This syndicated service is available
now.
HealthTracker is also a new syndicated
service designed to continually monitor and
understand the impact of health and wellness
trends in attitudes and awareness on consumer
behaviors – including obesity and dieting.
Information Resources, Inc. – Positioned to Help Understand & Address
Emerging Consumer Health & Wellness Trends
IRI provides a unique combination of Content, Analytics, and Software
Information Resources, Inc. is a leading global provider of market content,
analytic services and Business Performance Management (BPM) solutions to
the CPG, retail and healthcare industries. IRI's clients include the leading CPG,
retail, and healthcare companies in the world. IRI's market content and analytic
services provide these companies with market and consumer insights. IRI's
BPM solutions uniquely combine its breakthrough enterprise analytics software,
market content and analytic models to provide a total view of the market and to
enable maximum business performance across marketing, sales and
operations. IRI's solutions enable the consumer-driven real-time CPG and retail
enterprise. More information is available at www.infores.com
© Copyright 2004 Information Resources, Inc. All rights reserved.
18
August 2004
Data Sources
InfoScan Reviews
IRI’s InfoScan ® Reviews service is based on point-of-sale scanner data from U.S. supermarkets, drugstores, and mass
merchandisers (excluding Wal-Mart). This combination of outlets is commonly referred to as “FDMx.” Sales from membership only
club stores, convenience stores, dollars stores, limited assortment and specialty stores are not included in the Reviews (although
IRI does track sales in these outlets as part of other IRI services). The Reviews service reports distribution, sales, price and trade
promotion measures; note that dollar sales and price measures reflect Lowest Reported Dollars (capturing only those FSP
discounts advertised in retailer sales fliers or “features”) through CY2001, but reflect Net Dollar Sales (after all advertised and
unadvertised Frequent Shopper Program discounts are deducted) for CY 2002 forward. The Reviews service tracks 572 food &
beverage product types, including standard-weight, bar-coded packaged goods only (excluding sales of random weight meats,
produce, etc.).
Other IRI Data & Insight Sources
The Consumer Network™ Household Panel – which tracks household level purchasing behavior, drawing from purchase and
attitudinal information through 70,000 proprietary hand held barcode scanners, a nationally representative household scan of all
barcoded purchases at home linked to key demographics.
The MedProfiler™ Service – which identifies medical conditions such as diabetes and obesity at an individual level within IRI
panel households, updated annually in the fourth quarter. Consumers identified diets of different kinds that they participated in and
their purchase of different food categories.
The Retailer Satisfaction & Shopping Attitudes Study – a fourth quarter 2003 survey of roughly 5,000 shoppers within the IRI
panel, who rated descriptive statements about their shopping behavior and attitudes toward shopping as well as about their
lifestyles. They went on to rate selected store shopping attributes against specific channels of trade and selected retailers in their
local area.
New! IRI’s CarbTracker™ Service
CarbTracker is designed for clients who are interested in tracking cross-category sales of products specifically targeted at low-carb
dieters. This is a syndicated report delivered in Excel spreadsheet format. This report provides brand-level dollar sales for the past
four calendar years, latest four quarters, and latest 52-week time period, with change versus year ago. All of the major categories
in which low-carb brands compete are represented: beer, bread, sweet baked goods, pasta, salad dressing, sauces and
condiments, ice cream, candy, snack foods, etc. Brands included in this report are selected based on the word "carb" being in the
brand name, augmented with some manually selected brands that are primarily positioned as low-carb (e.g., Atkins, Keto, Michelob
Ultra, Skyy Sport). This report does not include brands who’s primary positioning is low-cal or low-sugar (e.g., diabetic candy, diet
soda, light beer), and it does not include individual UPCs that are labeled as no/low/reduced carb but which are placed under an
existing brand-name whose primary positioning is not low-carb (these are generally inconsequential).
New! HealthTracker™ Service
HealthTracker combines IRI’s industry-leading market content, consumer household panel information, and advanced analytics
capabilities, with advanced attitudinal segmentation tools and proprietary data sources from HealthFocus International, to provide a
unique proactive tool that monitors changes in the health and wellness marketplace. Knowledge generated by the HealthTracker
Service can be used to support multiple business decisions including risk management, public health policy, marketing priorities,
new product development, and brand management directives.
Mosaic InfoForce
Mosaic InfoForce is the leading provider of in-store data collection and retail merchandising services, with over 2,100 permanent
employees located nationwide to collect information on store conditions every week, as well as take action to fix unfavorable
conditions, covering up to 250,000 retail outlets. Mosaic InfoForce provides cost-effective ways for manufacturers to monitor and
defend shelf space, manage retail execution issues in today’s dynamic marketplace and to allocate their field resources effectively,
all while maintaining a competitive edge at retail. Mosaic InfoForce is a joint venture between Mosaic Group, Inc. and Information
Resources, Inc.
© Copyright 2004 Information Resources, Inc. All rights reserved.