Euromonitor on US retail sales of packaged food in 2017: ‘Growth has been pretty anemic’

By Elaine Watson

- Last updated on GMT

Picture: istockphoto-Traitov
Picture: istockphoto-Traitov

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US retail sales* of packaged foods are estimated to increase by an “anemic” 1.2% in 2017, predict analysts at market research provider, Euromonitor International. FoodNavigator-USA caught up with Jared Koerten, lead analyst, and Dewey Warner, research analyst, to delve into a few key categories.

How should we interpret the overall growth figure of 1.2%? Is that low, or what you might expect from a mature market?

Dollar sales growth of 1.2% is pretty anemic if you think about growth in previous years and improving economic conditions, rising employment and so on. Average growth in packaged foods over the past five years has been closer to 1.7% and before the recession it was over 3%, so 1.2% is a bit anemic.

Where is the money being spent instead?

Some of the money is being spent on eating outside the home, some of it is shifting to fresh food categories within the store – deli foods and so on, and some is going to meal kits. Most of these companies didn’t even exist in 2014, and three years later we’re already got a $3-5-billion-dollar industry that is taking business away from packaged foods sold in grocery stores.

What’s happening in snacks?

We’re estimating that sales of savory snacks will be up 2.1% in 2017. Savory snacks have been one of the strongest growth areas in packaged foods for several years in a row, particularly meat snacks, driven in part by higher end premium brands.

But we’re also seeing growth in ready-to-eat popcorn, alternatives to traditional potato chips, vegetable chips, bean-based chips, and tortilla chips, particularly products with hot and spicy chipotle flavors, which are resonating with younger consumers.

What trends are you seeing in confectionery?

We’re estimating confectionery sales will be up 1.7% this year. Chocolate confectionery dollar sales are up 2.6% driven by continued premiumization and higher-end brands. Sugar confectionery is up around 2%, and one area that’s been very strong is the chewy candy segment, which is up almost 5%.

Spicy is a also a big flavor this year, you see lots of brands bringing out new sweet heat flavors, hot spicy candies, which is the next trend after sour.

Gum sales are down almost 4%, however, which is not new. Gum has been cratering for many years now, with mints gaining some market share.

What’s happening in the dairy aisle?

Dairy is predicted to be up 0.5% this year, which is slow, but better than last year. The segment has been struggling for the last couple of years, milk consumption is falling although full-fat milk is up a bit; yogurt has been declining, although there is growth from brands like noosa, the Icelandic brands and yogurt drinks, which were up 12% in 2016 and we are predicting will be up 17% in 2017.Plant-based brands are very small but they are growing strongly.

There is also growth in butter and cheese, where people are moving away from processed cheese to natural cheese, hard cheeses like cheddar and high end specialty cheeses.

What caught your eye in the baked goods category?

Baked goods sales are predicted to be up 1.6% in 2017. Packaged slice bread is flat and people are still concerned about carbs, but there is strong growth in flatbreads, primarily tortillas but also things such as pita bread. Flatbread sales grew almost 5% in 2016 and are projected to grow by almost 4% in 2017.

The most surprising thing in the category is probably the resurgence in packaged cakes, which is maybe driven in part by nostalgia, as it doesn’t reflect the health and wellness and clean label trends we’re seeing in the food industry generally. In 2016 we saw 5% growth in that category and in 2017 we’re predicting 2% growth, which is a bit of a fall off but still notable. We’re also seeing pretty strong growth for packaged pastries: 4% growth in 2016 and were predicting 3% in 2017.

2017 dollar sales growth estimates, US retail, Euromonitor International

  • Packaged food: +1.2%
  • Rice pasta and noodles: +1.1%
  • Processed meat and seafood: -0.5%
  • Dairy: +0.5%
  • Confectionery: +1.7%
  • Baked goods: +1.6%
  • Savory snacks: +2.1%

* Euromonitor’s research is recorded up to October 2017 and forecasted for the rest of the year. The data covers “modern grocery retailers such as convenience stores and discounters, traditional grocery retailers such as food specialists and independent small grocers, non-grocery specialists such as health and beauty specialists, and non-store retailing such as internet retailing.”

INFLATION/DEFLATION:​ According to USDA’s economic research service​:  “In 2017, supermarket prices are expected to change between -0.25% and 0.75%... Due to deflation in 2016 and for over half of 2017, expected price increases would still leave overall price levels in 2018 lower than in 2015​.”

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