Health and natural keep US market resilient

By Carina Perkins

- Last updated on GMT

Related tags Food

Health and natural ingredients are driving growth in the US food and drink market, which remains dynamic despite the recession.

According to recent research from Leatherhead Food Research's Global Food Markets​ database, retail sales have slowed across most food categories as a result of the poor economy, but there are still many areas of growth.

“Many of the most successful new products over the last few years have focused on offering some type of health benefit or fortification,”​ said Leatherhead. “The trend toward natural ingredients has also gathered pace and is now the key driver in many categories.”

Health and fortification has been particularly prevalent in categories such as yogurt and chilled desserts, which was worth $6.9bn in 2008, up 4.4 percent on 2007. Even the US savory snack market is embracing health, shifting focus towards addressing obesity concerns as opposed to the development of flavors.

Other areas of growth include ethnic foods, with Mediterranean, Mexican and other Latin American cuisines influencing consumption across a number of categories. “Asian cuisines (such as Thai, Malay and Indian) have also become more popular in the restaurant sector which has filtered down into packaged foods,” ​said Leatherhead, pointing out that Asian meals now hold 25 percent of the ethnic market.

Recession trends

The recession has in itself driven growth in certain markets. The squeeze on disposable incomes has driven increased sales of meals which are eaten in the home such as soups, which achieved retail sales of $5.3bn in 2008, a 4.1 percent growth. “The relatively mature ready meals and pizza segments also both registered 2 percent growth in 2008,” ​Leatherhead said.

Rising commodity prices have pushed up the sales value of a number of basic food categories, such as pasta and edible oils. An escalation in milk prices pushed the value of cheese sales up 7.6 percent to $14.1bn in 2008.

Tighter incomes have also led to growth in private labels, with consumers increasingly downgrading from premium brands in sectors such as cooking oils, breakfast cereal, chilled fruit juice and drinks, bottled water and dry/ambient soups.

Nestlé, PepsiCo and Kraft continue to dominate the packaged grocery sector, but the merger of Mars and Wrigley “has created a more dominant force in confectionery”, ​with a combined 28 percent share in sugar confectionery.

Looking to the future, Leatherhead predicts that growth will be highest in yogurts and chilled desserts and ready-to-drink tea.

“Kitchen cupboard essentials such as soups, coffee, cooking oils and pasta will also see value growth and will benefit from continued economic uncertainty as consumers rein in spending on eating and drinking out,” ​it said.

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