Economy driving more shoppers to plan home meals
U.S. consumers are experiencing a shock to their wallets, and retailers are scrambling to adapt to the new marketplace. A recent report from Information Resources Inc., “Competing in a Transforming Economy,” showed that consumers have shifted their spending priorities. They are eating out less and cooking at home more. They are increasing purchases of basic ingredients and meal components and are decreasing purchases of “non-essentials.”
As consumers tighten their belts, restaurant meals are frequently the first convenience to go. “One study we saw showed that 59 percent of Americans plan to eat out less,” said Ramin Ganeshram, director and consumer strategist for Food and Beverage at Iconoculture.
Research also shows a shift in the way consumers are shopping for ingredients to make meals at home. IRI’s study reveals that basic ingredients are outpacing ultra-convenient frozen and refrigerated meals, marking a turning point in the convenience trend.
“Sales of frozen pizzas are down at most channels, except Wal-Mart. That shows us that consumers can’t afford those conveniences, but they would like to have them in their basket,” said Sheila McCusker, editor of IRI’s Times and Trends reports. The report also showed sales of cookie and ice cream sliding as consumers forego indulgent treats.
Most striking about the change in consumer behavior is how rapidly it happened. “Most consumer behavior is gradual, but this change occurred with remarkable speed over the last year. It’s a profound shift in the way consumers are behaving, and a testament to the severity of the economic hardship many consumers are facing,” McCusker said.
Consumers are on the hunt for affordable options, and while many consumers are stockpiling at club stores, they are likely to make food purchases anywhere they find good deals.
Experts said that drug retailers looking to make a grab for more pantry sales have an opportunity as long as pantry items are priced right. One drug chain recently ran a five-for-$5 promotion on Betty Crocker Bowl Appetit pasta products. “Rite Aid recently ran a two Planters nut products for $5 or two Nabisco cookie or cracker products for $5,” Ganeshram said.
An “always on sale” strategy can train consumers to always check out their drug chain’s pantry aisle. “There’s a tradition of serious value around certain product categories, and I could see that creep into grocery,” Ganeshram said. “Bundling has always worked well for the channel when it comes to shampoo and conditioner, nail polish and lipstick. Why not for some food categories?”
Products that have a natural pairing are pasta and sauce, ketchup and mustard, soda and chips.
The bundling approach becomes even more important as sizes shrink to keep prices steady. “Kellogg has said that to keep prices stable they are going to decrease package sizes,” Ganeshram said. “That’s where a two-for idea really helps balance our consumers’ feelings that they are getting less for their money.”
Other sharp-price point basket-building opportunities for drug chains include:
Basics like flour, oil, spices and seasonings. With more people cooking at home, and many trading down to less expensive cuts of meat, McCusker said spices are poised for growth.
Products that can serve as a side or main dish, such as soups, pastas and boxed macaroni and cheese.
Red Bull adds hybrid delivery trucks to fleet
WARRENVILLE, Ill. Red Bull has announced the addition of four hybrid delivery trucks to its U.S. fleet. Brand-new Navistar International DuraStar hybrid trucks were delivered this week to the Red Bull Southern Nevada Distribution Center, to be driven for deliveries in and around the Las Vegas metropolitan area.
Jim Williams, director of sales and distribution of new products at Navistar, the company that builds the hybrid delivery trucks said, “We’re proud that Red Bull recognizes the importance of green transportation for the environment. We need more companies like this to take a stance and add hybrid vehicles to their fleets.”
The hybrid diesel-electric trucks are capable of getting 30 percent to 40 percent better fuel efficiency. In addition, they release about 35 percent less nitrogen oxide and 33 percent less hydrocarbon emissions than regular diesel trucks.
Each truck will save Red Bull around $4,000 a year on fuel costs, the companies said.
General Mills to sell Pop Secret to Diamond Foods
GOLDEN VALLEY, Minn. General Mills today announced details of an agreement to sell its Pop Secret microwave popcorn business to Stockton, Calif.-based Diamond Foods for around $190 million. None of General Mills’ employees or plants will be affected by the sale because Pop Secret is manufactured at an outside facility, a company spokesperson said.
According to spokesperson Heidi Geller, the sale is part of a move by General Mills to reevaluate its priorities. Additionally, General Mills is also looking to sell its Nature Valley granola bar line and other grain-based snacks.
Diamond Foods, the creator of Diamond brand almonds and other snack nuts has said that it is very excited to add Pop Secret to its portfolio. The added brand will broaden Diamond’s presence in the snack aisle and the company expects to generate $85 million to $90 million per year from the sale of Pop Secret products.
General Mills is looking at a one-time $160 million profit gain, not including costs related to the costs.