Understanding Demand Shifts for GrainBased Foods

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Understanding Demand Shifts for Grain-Based
Foods
Presented By Greg Heying, Senior Vice President
- Distribution September 28, 2004
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Current Trend

• The most recent weight-loss trends have included
  high consumption of protein and fat, and a low
  consumption of carbohydrates.
• It is estimated that as many as 25 million
  Americans have tried the Atkins diet alone.
• This fad is having an effect on the way consumers
  are eating and the way marketers are thinking
  about their products.

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Current Trend

• 40 of low-carb dieters say that its hard to
  stay on a low-carb diet for more than a few
  months at a time.
• 42 of those on a low-carb diet say that low carb
  products are worth paying extra for.
• 930 new low-carb products were introduced in the
  last five years, with most of the new growth in
  2003 and 2004.
• Estimates on the number of low-carb dieters
  varies, but ACNielsen research says that about
  17 of U.S. households have someone on a low-carb
  diet.

Source Frozen Food Age July 2004
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Eating Trends
1970 Pounds Consumed per person 1,497
2000 Pounds Consumed per person 1,775
Source USDA/Economic Research Service
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Low-Carb Statistics

• Overall sales of low carb items were 1.4 billion
  in 2003.¹
• Popularity has impacted some category sales.²
• 2003 vs. 2002
• Fresh Meat 18.3
• Bacon 10.8
• Beef Jerky 20.0
• Frozen Meats 16.0 to 49.3

Source ¹ Denver Post ² ACNielsen
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Low-Carb Statistics

• The low carb industry has created a whole new
• specialized retail sector.

Source Drug Store News March 1, 2004
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Branded Low-Carb Trend

• Branded low-carb snack and beverage
• dollar sales increase.

Source Frozen Food Age July 2004
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Branded Low-Carb Trend

• Top low-carb brands and lines.

Source Frozen Food Age July 2004
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Branded Low-Carb Trend

• Volume and sales of low-carb branded items has
  decreased significantly in the last year and has
  remained at a steady level.
• Manufacturers are doing item rationalization
• Eliminating slow moving items
• Creating new items

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Low-Carb Sales Growth

• Sales growth of low-carb supermarket categories
  for 52
• weeks, ending June 13, 2004.

Source Supermarket News August 9, 2004
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High-Carb Sales Decline

• Sales decline of high-carb supermarket categories
  for 52
• weeks, ending June 13, 2004.

Source Supermarket News August 9, 2004
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Atkins Impact

• The low-carb diet is causing companies to shrink
  as well.
• American Italian Pasta Company will eliminate 14
  of its workforce and close a factory in Kenosha,
  WI.
• Krispy Kreme blamed low-carb diets for
  disappointing first-quarter sales and earnings.
• Jays Foods was pushed into bankruptcy as their
  sales have decreased more than 10.
• Kraft says it has lost sales and recently signed
  an agreement to put the South Beach Diet
  trademark on some of its low-carb products which
  will be disclosed later this year.

Source Frozen Food Digest July 2004
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Future High-Carb Strategies

• The U.S. potato board is launching a consumer
  education campaign The Healthy Potato, Naturally
  Nutritious, Always Delicious.
• The American Bakers Association is considering
  launching an aggressive public relations campaign
  to dispel what it considers myths about bread and
  other grain products.
• In April, the Milk Mustache campaign unveiled
  an ad touting milks weight-loss benefits.

Source Starch Makes a Stand USA Today
February 2004
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Future High-Carb Strategies

• Weight Watchers is touting the potatos virtues
  as part of an educational campaign pushing
  produce.
• At a recent conference called Healthy Pasta
  Meals nutritionists and pasta industry
  executives concluded that pasta is a good
  carbohydrate that when eaten in proper portions
  with other foods does not cause weight gain.
• USA Rice, a trade association, is trying to
  figure out ways with its limited budget to save
  rices image.

Source Starch Makes a Stand USA Today
February 2004
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Is This Trend Sustainable?

• Consumers are notoriously fickle!
• In the past decade, more than 2,500 diet books
  have been published.
• Shifts in consumption based on such diets are
  most often short-lived.
• Most nutritionists will continue to recommend a
  balanced diet coupled with moderate exercise and
  overall lower calorie consumption.

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Changes are Already Evident

• Atkins has laid off 20 of its workforce as
  demand for its packaged goods soften.
• Most of the new items introduced by CPG companies
  are generating only modest demand.

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The (so far) Universal Truth

• What consumers say they are doing (diet,
  exercise, low-carb consumption) is seldom matched
  by real consumption trends over
• the long haul.

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What, Then, Is The Next Big Fad Diet?

• Answer that question, and you can be the next
  diet guru.