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AlixPartners survey highlights the potential of health category 'super' consumers

Small group of health category ‘superusers’ spend $161bn per year

By Maggie Hennessy , 10-Jan-2014

Traditional grocery stores capture 43% of health and wellness spending, with just 16% of consumers' health and wellness dollars going to large health food stores like Whole Foods.
Traditional grocery stores capture 43% of health and wellness spending, with just 16% of consumers' health and wellness dollars going to large health food stores like Whole Foods.

Despite that they comprise just 26% of the population, Americans who spend more than 40% of their food and beverage budgets on health and wellness-related products account for 61% of total spending for the sector, or more than $161 billion annually, according to consulting firm AlixPartners. 

And yet, the survey of 2,642 consumers also found that these health and wellness “superusers” vary greatly in their willingness to pay more for some products, are often confused by product claims and labeling, and shop in unexpected channels.

Who are the superusers?

The so-called superusers outspend other consumers on health and wellness by four times ($236 vs. $52) each month, according to the survey. They’re also 19% more likely to be female, 31% more likely to have household incomes exceeding $100,000, and are 57% more likely to have post-graduate degrees. They also are 35% less likely to identify themselves as time-crunched consumers who don’t have time to prepare meals.

On average, they allocate more than four times as much of their monthly health and wellness-related expenditures on fresh fruits and vegetables ($81.93 vs. $19.12), more than three-and-a-half times as much on fresh meat and seafood ($56.01 vs. $15.58) and more than five times as much on dairy products ($31.15 vs. $5.65).

However, superusers also spend nearly seven times as much on prepackaged foods ($18.70 vs. just $2.70); over five times as much on frozen foods ($16.34 vs. $2.90); almost five times as much on non-alcoholic beverages ($12.99 vs. $2.75); almost five times as much on prepared/ready-to-eat foods ($10.50 vs. $2.11) and over five times as much on snack foods ($8.50 vs. $1.61).

Willingness to pay more not in line with desired health attributes

Though they seek out a wide range of health-related food attributes—from trans fat- and gluten-free to locally sourced—when polled on their willingness to pay more for such, the results varied significantly.

For instance, while 17% of superusers in the survey said gluten-free characteristics are “important” or “very important” to them, only 2% say they are willing to pay greater than 10% more for gluten-free products. That compares with 15% of superusers who say they are willing to pay greater than 10% more for locally sourced products (with 65% indicating that locally-sourced products are “important” or “very important” to them).

“Certain product features are critically important in the health and wellness space and can often command a significant price premium, but the trick is knowing which features for which group of consumers,” said David Garfield, managing director at AlixPartners and head of the firm’s Consumer Products Practice. “At the same time, of course, universal attributes such as taste, value and convenience will remain critical–as they are to the vast majority of consumers.”

Almost a third of consumers can’t define ‘GMO’

Although 57% of consumers list the ingredient list as “very influential” or “extremely influential” in their food and beverage purchase decisions—the highest of any option offered—they’re often confused about the meaning of a lot of health and wellness labeling information.

This confusion is especially acute around “organic” and “non-GMO” (genetically-modified-organism) products. For instance, although GMOS have made headlines many times in recent years and 53% of those in the AlixPartners survey said “free of GMO ingredients” fits their definition of a “natural” product, almost a third (31%) were unable to accurately define the meaning of the term “GMO.”

The survey also found that consumers are also confused by scientific names on ingredient lists mandated by government labeling guidelines. For example, almost all (94%) of consumers in the AlixPartners survey say that vitamin B12 is “good for you,” but only 9% think the same of cyanocobalamin, even though they are the same thing.

The AlixPartners survey identified 11 ingredients that consumers feel are bad for them, led by high-fructose corn syrup (85% of those surveyed), trans fats (85%), MSG (85%) and saturated fats (84%). Also high on the list were sugar (75%), salt (75%), aspartame (69%) and sucralose (54%).

Health food stores nab just 16% of consumer health & wellness dollars

Consumers diversify their health and wellness spending across multiple channels—rather than concentrate it at natural food stores. Traditional grocery stores capture 43% of health and wellness spending, followed by mass retailers (17%); large health food stores (16%) and club store chains (12%).

Older consumers in particular tend to buy their health and wellness-related food and beverage products at traditional grocery stores, with shoppers aged 48 to 66 spending 47% of their health and wellness budget in that channel.

By comparison, shoppers aged 18 to 24 buy 31% of their health and wellness products from traditional grocers. The survey also shows that consumers whose households earn more than $250,000 annually tend to shop more heavily in club and large health food stores (14% and 21% of their monthly budgets, respectively). Customers with annual household incomes of less than $29,999 buy their health and wellness-related food and beverage products more heavily from the mass channel (31% of their monthly budgets).

“These trends point to continued pressure on traditional grocers and highlight the channel diversification of health and wellness spending,” said Richard Vitaro, a director in AlixPartners’ Consumer Products Practice. “At the same time, large health food stores are attracting more than their overall market share of superusers as well as Millennials.”

“Consumer products companies in general and food and beverage companies in particular have a game-changing opportunity with today’s growing interest in health and wellness,” Garfield added. “But to take full advantage of it, companies are going to need to be very granular in their understanding of what these consumers really want and are willing to pay for, how to attract their attention and win their trust, and how best to reach them when and where they want to shop.”

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