Value, premium card segments open to growth
The pervasiveness of Facebook and Twitter has not killed the greeting card and gift wrap category. "Managers are telling us that the category continues to hold its own and, in some cases, is growing nicely," said Mark Deuschle, VP business development and chief marketing officer at the Global Marketing Development Center. "Greeting cards remain not only a top trip driver, but also one of the most profitable categories in the drug store environment," said Sabrina Wiewel, VP of Hallmark’s chain drug team. "Once a shopper is in our department, she leaves with a card 8-out-of-10 times."
A tight economy has shifted some market share in the category to the dollar channel, but more consumer interest in the value segment isn’t necessarily bad news for drug retailers. "Our data suggests that card sending seems to be a healthy trend with unit sales trending up, but there has been a shift to less expensive cards," Deuschle said. "At the same time, we’re also seeing growth in the premium segment."
Steven Gimbelman, president of Designer Greeting said that greeting cards are one of the most profitable categories in drug stores — third only after candy and gum, and prescriptions. In a tight economy, more focus on value greeting card programs can benefit the channel, according to Gimbelman. "These programs have resuscitated many drug stores that had been losing greeting card sales due to full price programs and limited title selection," he said. "We create high-turning planograms based on a retailer’s market demographics. We expertly tailor our controls to succeed for our accounts."
In the premium segment, innovation continues to drive category sales. Cards with sound, motion and even LCD screens give consumers a reason to shop the category. "Special treatments, such as foil stamping, faux gems, die-cutting, glitter and attachments, are more popular than ever," said Kathy Krassner, a spokeswoman for the Greeting Card Association.
Krassner said she sees a trend toward cards with a handcrafted feel, many of which use premium papers and rich textures. Cards with embellishments and attachments that can be removed and reused have done well for Hallmark. Designer Greetings is bringing embellishment to the value tier with the Designer Boutique upscale, handmade line that includes ribbon, gems and tip-ons, but it is still offered at value pricing.
The gift bag segment also has continued to grow at the expense of traditional wrap. "The real growth in wrap is in bags in new designs and materials," Deuschle said. "Consumers love the convenience of bags." Hallmark’s top-selling format in drug stores is a gift-bag-to-go concept, a gift bag that is already prefilled with tissue and has a gift tag attached. Solid-colored gift bags that are easy to coordinate with any gift and for any occasion also are seeing strong sales.
Retailers who adjust their mix to reflect the changes in the market have shown the best performance overall. Manufacturers are offering retailers more flexible fixtures to display the best mix of cards in departments that are easy to navigate and can integrate cards with other products.
Niche fans create following for local, smaller brewers
Craft beer is still the engine driving the beer category. Craft beer dollar sales grew 17%, while volume surged 15% in 2012, according to the Brewers Institute. Craft beer dollar share has jumped to 10.2% of overall beer category sales. Mintel forecasts that the segment will grow to $18 billion by 2017 — a result that will see the segment tripling from 2007 and 2017.
While sales of big brand brews, such as Budweiser and Michelob, continue to dip, sales of pricier smaller brands are wooing consumers with new flavors and styles. Mintel beverage analyst Jennifer Zegler said: "Unlike its domestic and imported beer counterparts, craft beer has been able to defy overall beer market trends and continue expansion during the economic downturn and subsequent slow recovery."
"Brewers big and small are delivering innovations both for premium beer drinkers, and for drinkers looking for something more upscale,"said Joe McClain, president of the Beer Institute.
Craft brewers have created a food culture niche for their products by stressing that, like wine, these beers can be paired with foods and consumers should choose different brews for different occasions.
"One of the things driving craft is its diversity. There are a huge number of styles and flavors to choose from," said Bart Watson, staff economist at the Brewers Association. "Ales, particularly IPAs, have been at the forefront of growth. Seasonal beers are another important category for craft, though they haven’t seen the same growth as IPAs over the past year." Ciders and flavored malt beverages also have seen significant growth.
Small, local brands have been a huge driver of craft growth. In fact, 78% of market share growth from 2011 to 2012 was driven by brands outside the top 10 craft producers, according to Watson. "Consumers are excited about local products, allowing craft brewers opportunities in local markets," he said. "Local growth has offered regional opportunities for many craft brewers."
Mintel research found that 50% of overall craft beer drinkers express interest in locally made beer, suggesting that retailers could benefit from including more local varieties in their mix.
Craft beers have wide appeal among younger consumers. Mintel’s recent study found that 49% of millennials and 40% of Gen Xers said they drink craft beers. "These consumers are constantly looking for new flavors and experiences," Watson said. "And current flavors may just be the tip of the iceberg, as craft brewers tend to love experimentation and innovation."
Organic, healthy foods go mainstream
Natural and organic snacks are no longer on the periphery. The products have moved front and center as consumers look for healthier, more satiating options when they snack.
"Consumers, particularly millennials, are looking for higher-quality snacks and are renewing their interest in natural foods," said Shelley Balanko, an analyst at Hartman Group. Natural, she said, means fresh, less-processed foods with a recognized ingredient list. "Consumers want more from their snacks. They want nutritionally-dense foods that are satiating," she said.
Sales of natural and organic snacks are outpacing the industry average. "Overall in 2012, the snack industry grew 4.4% in dollar sales," said Sue Viamari, editor of IRI’s Times and Trends report. "Organic food dollar sales increased 7.9%, and natural food sales were up 9%.
"Viamari said 22% of customers said they are looking to increase their consumption of natural and organic foods, and 26% said they are actively seeking natural and organic solutions. That percentage skewed even higher among millennials.
"Our studies show that millennials, who are struggling the most financially, are still looking for natural and organic solutions, which are often more expensive," she said. "That says something about how much they value natural and organic attributes."
Younger consumers also have global tastes and are willing to experiment. Balanko said consumers are open to such legume and alternative, grain-based snacks as baked chick pea and baked lentil chips or falafel chips, as well as such veggie-flavored snacks as kale chips and brussels sprout chips that pack a nutritional punch.
Since satiation is such a huge trend, nut snacks have grown in popularity, and more manufacturers are introducing nut clusters and bars. IRI recently named Kind bars as one of its Product Pacesetters.
Greek yogurt continues to be embraced by consumers as an anytime snack. Sales of natural/organic hand-held sandwiches and snacks are also up, representing another opportunity for retailers. "We’re also seeing consumers turning to nontraditional categories for snacking, such as Starbucks bento-box snacks that include a hard-boiled egg, cheeses and fruits," Balanko said.
Retailers still should be grouping natural snacks in one section, according to Viamari. "Consumers definitely want to see the products in one section, since they are looking for retailers to help them make choices and make it easier for them to find what they are looking for," she said.