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Payroll tax increase hits consumables spending, SymphonyIRI report finds

BY Alaric DeArment

CHICAGO — A mere 2% increase in the payroll tax could represent $800 in reduced spending power per year for a person with a household income of $40,000, according to a new study by SymphonyIRI.

Symphony Consulting, a division of the Chicago-based market research firm, analyzed shopper behavior since the payroll tax increased on Jan. 1, focusing on the effect of the payroll tax on food and beverage consumption, including its effect on such dimensions as stores shopped, brands purchased and the effect on various segments and categories.

"To date, shifts in shopper behavior are subtle, but patterns are emerging that deserve close and ongoing scrutiny," Symphony Consulting managing director Krishnakumar Davey said. "Our initial analysis offers highly current data on shopper behavior that will form the basis for ongoing research into the impact of the payroll tax increase."

In comparing recent growth compared with the same period a year ago, the study found that some evidence of softness in food and beverage consumption had emerged enough though growth had held steady. Sales growth remained constant at 2.1%, and food inflation decreased from 1.4% to 1%, but discretionary categories across all outlets experienced some softness. Private-label dollar sales increased slightly in the first four weeks of 2013 over the last four weeks of 2012, from 1% to 2%.

At the same time, while dollar sales growth for all channels held steady at 2.1% in the last four weeks of 2012 and the first four weeks of 2013, growth at mass merchandisers decreased from 5.3% to 3.3%, while sales at club retailers declined as well; now, it appears that dollar stores have picked up some business from mass merchandisers.

The growth rate among middle-income shoppers decreased by 40 basis points, while there was no significant change among high-income shoppers, but dollar sales among low-income shoppers increased by 50 basis points, which the report attributed to a possible increase in eating at home versus eating out.

Sales of snacks were down by 230 basis points, while coffee and tea were down by 2-110 basis points, while cooking ingredients and beverages like juices and drinks grew. At the same time, discretionary categories lagged total food and beverage in the last week of January 2013, with dollar sales growth of 1.9%, compared with 2.5% for the category as a whole in the same period. This, the report said, could be due to the end-of-the-month effect when households optimized their grocery spending as a result of shrinking wallets.

"We expect payroll tax increases will impact non-[consumer packaged goods] spending — such as gas, clothes and entertainment — potentially more than CPG spending," Davey said. "However, out-of-home consumption will likely drop, and specifically out-of-home breakfast categories will be negatively impacted. Consumers usually eliminate the out-of-home breakfast meal first when they cut spending. Economic growth is expected to be stagnant due to tax increases and continued high unemployment. Moreover, the recent significant spike in gas prices is going to further squeeze the consumer’s wallet."

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NYC mayor: Progress in initiative to reduce salt

BY Jason Owen

NEW YORK — New York City mayor Michael Bloomberg announced on Monday 21 companies have hit their targets in a city-led effort to curb salt. Restaurants, as well as food manufacturers, were named as some of the companies to achieve their goals.

Amaericans, on average, eat about twice as much salt as the suggested daily allowance. Too much salt can cause high blood pressure and lead to other health-related problems.

The improved products range from Butterball cold cuts to Heinz ketchup to some Starbucks breakfast sandwiches. Other participants included FreshDirect, the online-order grocery and prepared food maker, and Kraft Foods, maker of Oscar Mayer hot dogs, Planters peanuts and Velveeta cheese.

"These companies have demonstrated their commitment to removing excess sodium from their products and to working with public health authorities toward a shared goal — helping their customers lead longer, healthier lives," Bloomberg said.

The reductions included cutting salt in breakfast cereals and flavored snack chips by 40%, and trimming 25% of the salt in cold cuts, processed cheese and salsa. The goal was to cut salt levels in food by a quarter overall by 2014.

"Consumers can always add salt to food, but they can’t take it out," added New York City Health Commissioner Dr. Thomas Farley.


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Mountain Dew launches Kickstart breakfast drink with real fruit juice

BY Jason Owen

PURCHASE, N.Y. — Mountain Dew, a product of PepsiCo, announced today the release of Kickstart, a breakfast drink combining Mountain Dew with real fruit juice.

"Our consumers told us they are looking for an alternative to traditional morning beverages — one that tastes great, includes real fruit juice and has just the right amount of kick to help them start their days," said Greg Lyons, VP marketing for Mountain Dew. "We heard them loud and clear and created a completely new offering with Kickstart to give them exactly what they asked for."

Available in two flavors, Orange Citrus and Fruit Punch, and with only 80 calories per 16-oz. can, Kickstart presents a fresh alternative to the age-old morning question of "coffee or juice." It combines the taste of Mountain Dew with 5% real fruit juice and a lower amount of caffeine than a cup of coffee.

Kickstart by Mountain Dew will be available in retail stores nationwide beginning Feb. 25. But to be one of the first to taste Kickstart before it hits shelves, consumers can visit KickStartfirstTaste.com to request a can. With the can in hand, fans are encouraged to submit a photo of themselves getting into their morning groove with Kickstart for a chance to be included in a "Chasing Sunrise" anthem video.

 


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