Packaged Food in the US

Abstract

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• Get insight into trends in market performance
• Pinpoint growth sectors and identify factors driving change
• Identify market and brand leaders and understand the competitive environment

Product coverage

Baby food; Bakery products; Canned/preserved food; Chilled processed food; Confectionery; Dairy products; Dried processed food; Frozen processed food; Ice cream; Impulse snack products; Meal replacement products; Meal solutions; Noodles; Nutrition/staples; Oils and fats; Pasta; Ready meals; Sauces; dressings and condiments; Snack bars; Soup; Spreads; Sweet and savoury snacks

Executive summary

Packaged foods experiences modest growth in 2007

The US packaged food market experienced slightly higher current value growth in 2007 in comparison to the review period as a whole. This was due to manufacturers raising prices to cover rising commodity costs. Value growth was also aided by consumer demand for premium products such as artisanal cheeses and dark chocolate which are priced higher than standard counterparts. Consumers continued to purchase packaged foods that offered added convenience such as prepared salads and chilled soups, even if they cost more despite a weak housing market and high fuel prices.

Numerous food recalls dampen consumer trust in US food supply

Consumer confidence in the safety of US food supply has been severely shaken in 2007. Americans became nervous following a recall of E coli-contaminated bagged spinach in September 2006. A year later, Dole Fresh Vegetables announced a recall of its Dole Hearts Delight prepared salads, also due to E coli. ConAgra had to shut down production of its Peter Pan and Great Value peanut butter in February 2007 after over 288 people fell ill from salmonella. Frozen products did not prove safer with The Topps Meat Co recalling frozen hamburger patties in September and General Mills Inc recalling its Totino' s and Jeno' s frozen pizzas in November. The numerous food recalls combined with the Menu Foods recall of over 60 million cans and pouches of wet pet food in March 2007 (due to melamine contamination) are leading consumers to question the safety of the US food supply chain.

Nestlé seeks to become nutritional powerhouse

Nestlé SA took steps to increase its presence in adult and child nutritionals through its July 2007 purchase of Novartis Medical Nutrition (including the Boost brand of convalescence products) and its August 2007 addition of the Gerber business from Sandoz Ltd. Though currently only in convalescence products and energy bars (PowerBar), Nestlé' s expansion into slimming products is not out of the question, given the continuing weakness of Slim Fast. By adding Gerber baby foods to its baby formula business, Nestlé now becomes a major player in the US baby food sector.

Supermarkets upgrade décor and offerings to counter competition

Pressure from competing channels forced US grocers to invest in their stores to maintain their strong position in retail food distribution. Instead of competing on price to challenge Wal-Mart which is difficult to do, supermarkets decided to enhance their food selections and improve the ambience of their stores. Many grocers redesigned their stores, expanding their selection of prepared foods, adding sushi and pizza bars, and extending their wine and cheese selections. Safeway supermarket chain has been at the forefront of this trend, rolling out its "ifestyle" format to all new stores and remodels starting in 2005. In its lifestyle store in Livermore, California, Safeway offers a wine department containing over 2,000 varieties of wine and a chocolate fountain used for dipping some of the store' s own gourmet pastries.

Premium and "ealthy" foods to drive sales over the forecast period

The US packaged foods market will continue to grow in the future, particularly in the areas of premium and health-focused products as well as more convenient products. In terms of premium products, this will take the form of manufacturers introducing more restaurant-quality foods in the areas of ready meals and frozen pizzas as well as gourmet varieties of chocolate. Among health-focused products, this will range from functional yoghurt to wholegrain breads as well as reduced-salt products. Convenient products, namely chilled/processed food, meal replacement products and snack bars, among others, will grow as consumers will continue to lead hectic lifestyles and will demand products that are easy to prepare to save them time in the kitchen.