Industry News

Packaged Facts Reveals Food, Beverage & Snack Insights

July 1, 2011

Far outpacing growth in conventional groceries, U.S. retail sales of natural and organic foods and beverages rose to nearly $39 billion in 2010, an increase of 9% over the previous year, and 63% higher than sales five years earlier, according to “Natural and Organic Foods and Beverages in the U.S., 3rd Edition” by market research publisher Packaged Facts.

The next several years are forecast to experience even greater growth. Packaged Facts projects 2011 will serve as a jump-start for the market as sales ultimately increase by a dramatic 45% by the end of the year. Overall projections are that the market will grow by 103% between 2010 and 2015, with total annual sales exceeding $78 billion in 2015.

Helping to fuel growth are recent moves by major marketers and manufacturers seeking to capitalize on consumer demand for these products. At the beginning of 2011, Frito-Lay North America, the $13 billion snack food division of PepsiCo, announced that by the end of the year, approximately half of its product portfolio would be made with all-natural ingredients. The change will affect three of Frito-Lay’s biggest brands: Lay’s potato chips, Tostitos tortilla chips and SunChips multigrain snacks.

“The Frito-Lay products will in themselves have an enormous impact on the natural foods marketplace, and Frito-Lay’s move will spur other manufacturers to invest more heavily in producing natural and organic products,” said David Sprinkle, research director and publisher of Packaged Facts. “Since Frito-Lay’s announcement, Kraft Foods and Coca-Cola have made strategic moves to better position themselves in the market.”

A February 2011 Packaged Facts consumer survey found that 38% of the U.S. adults who are grocery shoppers buy organic groceries, and 58% buy packaged food products marketed as “all-natural” (but not organic). Furthermore, the Packaged Facts survey found that 37% of all respondents “strongly” (12%) or “somewhat” (25%) agree that they seek out natural and organic foods and beverages.

In other developments, Packaged Facts has released a new report on snack foods. Despite the lingering effects of the global recession, American consumers are snacking more than ever, thanks to less frequent restaurant dining, frenzied lifestyles that encourage on-the-go eating, a growing tendency to replace meals with several smaller snacks, and marketer efforts to combat the obesity epidemic by developing healthier snack foods that still taste appealing.

In “Snack Foods in the U.S., 4th Edition,” Packaged Facts reports that U.S. retail sales of packaged snacks reached $64 billion in 2010, up from $56 billion in 2006, for a compound annual growth rate (CAGR) of 3%.

Health continues to be a strong motivator for food and beverage purchases among U.S. consumers, and Packaged Facts forecasts that it will remain so for the foreseeable future. As consumers seek ways to achieve a healthier lifestyle, snack foods that are marketed as “better for you” will remain popular. “Companies are realizing they must highlight attributes such as vitamins, minerals, fiber content and lower sodium to both educate consumers and take advantage of demand for such products,” Packaged Facts explained.

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