Sales Trends

AMERICA’S ETHNIC FOODS MARKET
Preparedfoods.com

A Prepared Foods article reports that a study from Iowa State University (ISU) found that ethnic foods account for $1 out of every $7 being spent on groceries. Mintel estimates ethnic food sales in the U.S. exceeded $2.2 billion in 2009 and predicts the trend will increase sales by 20 percent into 2014.

According to the article, the largest segment of the ethnic foods market, Mexican/Hispanic foods, is responsible for 62 percent of sales. While Hispanics are by no means the sole purchasers of these foods, it should be noted the buying power of the Hispanic demographic is growing at a steady clip: the Selig Center for Economic Growth at the University of Georgia estimates the group’s buying power stood at $978 billion in 2009 and projects it to rise to $1.3 trillion by 2014.

In fact, according to Latinum Network, the Hispanic population in the U.S. accounted for more than 50 percent of real growth between 2005-2008; that group’s $52 billion of new inflation-adjusted spending far outpaced the new spending of non-Hispanics. Primarily due to an increase in the number of Hispanic households in the U.S., the growth also stemmed from increased spending among U.S. Hispanics, so much that it offset most (84 percent) of the real decline in demand across the $1 trillion food, beverage and restaurant sector.

Latinum found Hispanics created over $9 billion of new value in such “otherwise dormant” categories as fish and seafood, fresh fruit juice and dairy products. It further noted, “In particular, Hispanics are increasingly likely to eat out during the work day, driving new sales in fast-food breakfasts and full-service lunches.”

Out of One, Many
That said, the source of the growth of Hispanic flavors in the U.S. cannot be solely attributed to that demographic. Indeed, the overall U.S. food market has undergone a “Hispanic-ization,” notes Juan Tornoe, founder of HispanicTrending.org, to the point that salsa outsells ketchup, and tortillas outsell white bread. According to the article, a rise in international travel and a desire to replicate those flavor experiences at home has led to a burgeoning popularity of flavorful dishes, both in the home and in restaurants. This is reflected somewhat in the unique items found on experimental menus in major U.S. population centers. New York Magazine has cited the popularity of cuitlacoche (a purplish fungus that grows on corn and is widely referred to as “corn smut”), parboiled grasshoppers and jumiles (beetles) commonly served with guacamole. However, the most telling sign of the popularity of Hispanic cuisine may simply be the fact that it is popular across the country, from major urban centers to small towns, thanks in no small part to the emergence of quick-service restaurants with Mexican fare as a focus, a trend which shows no signs of stopping--or even slowing.

The ethnic foods market in the U.S. does have a variety of offerings, and Mintel finds the popularity of ethnic foods is being driven by the Asian and Indian food segments, growing 11 and 35 percent, respectively. Similar to the market for Mexican foods, the former segment has benefited strongly from a surge in quick-service options, though retail options for Asian foods have also propelled some of the growth.

ANALYSIS SHOWS IMPACT OF HISPANIC GROWTH
(Marketing Daily)

According to Marketing Daily, statistics confirming the overall growth of Hispanics within the U.S. population and their spending power are readily available and frequently cited, but quantifying the Hispanic market's impact on specific consumer goods categories and industries can prove more elusive.

A new analysis of Census Bureau and Bureau of Labor Statistics Consumer Expenditure Survey data for 2005 to 2008 by Latinum Network sheds light on the true monetary impact of the Hispanic market on the food and beverage and restaurant industries.

Some of the findings:

• Between 2005 and 2008, new Hispanic spending offset 84% of the decline in real demand across the entire food, beverage, and restaurant industries. Total U.S. food sales grew by $15 billion (to $469 billion), beverage sales grew by $1 billion (to $114 billion), and restaurant sales declined by $19 billion (to $325 billion), for a combined loss of $2.9 billion (-0.003%). Within that total, sales generated by non-Hispanic consumers declined by $17.7 billion, or 2.4%, while Hispanic consumer sales rose by $14.8 billion, or 18.

• Hispanics represent the sole growth market within many key food, beverage and restaurant categories, and the primary demographic growth opportunity for a $566.7 billion majority of the restaurant and F&B industries.

Specifically, Hispanics represent 85% to 100% of real-growth opportunity for the restaurant industry (which had $325.4 billion in total sales in '08), as well as for at least 20 declining or stagnant F&B categories (which had combined sales of $241.3 billion in '08). Hispanics generated $4.9 billion in new sales for the restaurant industry, and $4.3 billion in new sales for the declining/stagnant F&B categories between 2005 and 2008.

Among the stagnant F&B categories, compound annual sales growth among non-Hispanics ranged from zero to -2.9%, while compound annual growth rate (CAGR) among Hispanics ranged from 3% to 12%. For example, cracker sales declined by 0.1% among non-Hispanics, but rose 12% among Hispanics; fish/seafood declined 1.3% among non-Hispanics, but rose 10.2% among Hispanics; and candy/gum declined by 1.7% among non-Hispanics, but rose 8.2% among Hispanics. Health/ wellness concerns drove beef sales down (-1.2%) among non-Hispanics, but ethnic preferences produced a category gain of 3% among Hispanics.

In addition, Hispanics represent 20% to 85% of real-demand growth opportunities among growing F&B categories that represented another $245 billion in sales in 2008. For these categories, Hispanics generated $5.9 billion in new market value, or about 20% of growth, between 2005 and 2008. For example, frozen meals are the highest-growth food category among Hispanics (30% CAGR, representing $645 million in sales between '05 and '08, versus 18% growth among non-Hispanics). Within the growth categories, Hispanics also generated particularly significant dollar sales gains within poultry, pork, tea, fats/oils, fresh vegetables, ham, miscellaneous prepared foods and noncarbonated fruit drinks, among other categories.

Among Hispanics, price-adjusted CAGR grew in every category between '05 and '08, including breakfast/fast food (8.1%), breakfast/full service (1.8%), lunch/fast food (3.3%), lunch/full service (8%), dinner/fast food (3.1%) and dinner/full service (2.3%). In particular, Hispanics are increasingly likely to eat out during the work day. In contrast, among non-Hispanics, CAGR declined in every category but breakfast/fast food, which was up a mere 0.4%.

The article indicates that to win Hispanics' loyalty, brands must make authentic appeals to their unique behaviors and tastes through distinct products, channels, messaging and marketing strategies.

ETHNIC FOODS TO GROW 20% BY 2014
(Marketing Daily)

Mintel predicts ethnic food sales will reach a record $2.2 billion this year, and advance by another 20% between 2010 and 2014, according to a Marketing Daily article.

Population growth has driven steady growth for ethnic foods since 2004, the global research supplier reports. More than 1 million foreigners have become permanent legal U.S. residents each year since 2005.

The article states Mexican/Hispanic foods dominate, holding a 62% of ethnic foods' share. In fact, with nearly six in 10 consumers in Mintel's surveys now reporting that they cooked Mexican food within the past month, Hispanic foods are so mainstream that they are hardly considered ethnic anymore. But the category's real growth-drivers are Asian and Indian foods, which showed 11% and 35% growth, respectively, between 2006 and 2008.

IN-STORE SAMPLING BOOSTS REPEAT PURCHASES
(Brandweek.com)

New research suggests that free giveaways can help drive long-term sales and increase purchases of other items from the product line.

According to the research, whether via a new product launch, line extension or established brand, sampling programs drove a 475 % sales lift the day of the event compared to non-sampled households. Research was conducted by Knowledge Networks-PDI on behalf of the marketing services company PromoWorks.

Research findings:

• Those who sampled an item were 11 % more likely to purchase it again during the 20-week period that followed.
• They were also 6 % more likely to buy another item from the brand franchise.
• Participants were 9 times more likely to purchase a line extension on the day of the sampling event.

COOKING SAUCES & MARINADES
(Prepared Foods)

Cooking sauces and marinades stand to gain from the current economic slump, as they not only make up for cooking skills many of us truly do not possess, but they are generally inexpensive substitutes for exotic ingredients. According to Prepared Foods, price and variety have contributed to increased sales over the past six years and will continue to support growth.

As of 2007, the cooking sauce/marinade market accounted for $3.3 billion in sales, according to the recent “Cooking Sauces & Marinades – U.S, April 2008” report, published by Mintel International. The market is positioned to achieve some $4.3 billion in sales by 2012. Contributing to this growth is its generally inexpensive price. Coupled with the rising cost of dining out, consumers are eager to expand their at-home cooking options. Another factor contributing to a boost in this category popularity is the ease of purchase at grocery, club and specialty stores, as well as online.

Sauced Up
Total U.S. Sales and Forecast of Cooking Sauces and Marinades, at Current Prices, 2002-2012

Source: Mintel estimates based on Information Resources Inc., InfoScan Reviews Information/Bureau of Labor Statistics, Consumer Expenditure Surveys.

Sauce Claims
Top 15 Cooking Sauce New Product Launches, by Claim, U.S., 2002-2007

Source: Mintel estimates based on Information Resources Inc., InfoScan Reviews Information/Bureau of Labor Statistics, Consumer Expenditure Surveys.