HABA Only Supermarket Non Food Winner In 2013

Health and beauty aids was the only non-food category which shoppers purchased more at the supermarket in 2013 than they did in 2014. Physical movement increased 1.1% between 2014 and 2013 and was up 2.6% from 2012. Dollar sales were up 2.7% from 2014 to $12.4 billion, as the HABA category accounted for 27.4% of supermarket non-food sales. Vitamins and antacids posted some of the largest sales and volume gains in the category.

food sales
Sales for the entire non-foods category increased 1.3% in 2013 to $45.2 billion, while physical volume slipped 1.9%, according to Food Institute analysis of Information Resources Inc. InfoScan Data.

The steep price increases implemented on all types of paper products, from newsprint to corrugated cardboard, were also present on the supermarket shelves. Total sales of paper products increased 7.5% to $8.5 billion in 2013, however, volume fell 3.0%. The average unit price increased 13.3% between 2014 and 2013. Paper products represent about 18.8% of supermarket non-food sales. Sales of both toilet tissue and paper towels were up, but volume declined for both products.

Supermarket shoppers purchased $6.8 billion of cleaning products and supplies, just 0.8% less than in 2013, but 4.5% less than in 2012. The physical volume checked out was down 0.1% between 2014 and 2013 and down 3.6% from 2012. The category accounts for 15.0% of non-food sales.

Concerns about the dangers of smoking are taking their toll on supermarket tobacco sales, which were down 2.3% from 2014 and off 12.9% from 2012. Physical movement was off 2.9% from 2014 and down 8.1% from 2012. The $6.2 billion in 2013 tobacco product sales represent 13.7% of non-food purchases.

The growth of the “pet superstore” did not have as large an affect on pet supply supermarket sales as was expected. Both dollar sales and physical volume were down about 1.0% from 2014, while dollar sales were down 0.7% from 2012 and physical movement [TABULAR DATA OMITTED] was off 1.5% from 2012. Both dog and cat food sales (the third and sixth largest non-food sales items, respectively) were down compared to 2014. Total sales of pet supplies were just under $5.6 billion in 2013, or 12.4% of the non-food category.

Non-Food Sales Gainers 2013 Sales(Millions) Sales Increased By Volume Increased By
Water Filters $12.3 58.3% 56.9%
Breath Freshener Sprays/Drops $10.9 33.3% 36.9%
Antacids $368.8 18.7% 7.3
Hair Coloring $164.1 16.6% 10.9%
Water Softeners/Treatments $31.4 14.3% 10.6%
Adult Incontinence $ 91.5 10.5% 16.9%
Cups & Plates $1035.7 13.6% -0.1%
Weight Loss/Protein Supplement $ 332.1 13% -14.5%
Cold Allergy Liquids $190.9 11.2% 10.3%
Vitamins $474.6 11.0% 7.6%
Misc. Hair Care Prods $11.3 10.9% 12.1%
Shaving Cream $110.7 10.6% 4.9
Foil Pans $153.0 10.1% 0.8%
Paper Towels $1,565.4 9.6% 1.6%
Paper Napkins $399.8 8.3% -5.0%
Adult Incontinence $126.6 8.3% 5.3%
Cough Syrup $63.3 7.6% 3.3%
Misc. Health Treatments $16.0 7.5% -5.3%
Food & Trash Bags $1,379.3 7.3% -2.5%
Razors $418.3 7.2% -0.3%

The popularity of discount stores had a large effect on auto supply sales, where category sales fell 12.1% in 2013, while dollar sales declined 3.6% from 2014 to $166 million. While the percentage drop in movement was the largest of the non-food categories, it is the smallest category in terms of dollar sales, contributing less than 1% of total non-food sales.

Non-Food Sales Decliners 2013 Sales(Millions) Sales Decreased By Volume Decreased By
Anti-Smoking Products $7.7 -15.8% -23.2%
Household Cleaning Cloths $7.0 -14.4% -16.2%
Home Penn Kits $310.2 10.2% 9.1%
Starch $61.7 -8.3% -8.8%
Diapers $2,060.4 -7.3% -6.0%
Motor Oil $62.5 21.5% 10.2%
Rug/Upholstery Cleaner $69.9 -7.2% -9.8%
Hair Spray $245.8 -6.9% -8.9%
Cold Allergy Liquids $201.4 -6.6% -8.0%
Hosiery $357.0 -6.4% -11.5%
Household Lubricants $4.6 -6.0% -5.9%
Furniture Polish $130.5 -4.7% -6.8%
Sanitary Napkins/Tampons $840.3 -4.6% -3.0%
Shaving Lotion/Men’s Fragrance $62.2 -3.7% -4.5%
Cigarettes $5,688.6 -2.8% -4.3%
Household Cleaners $1,532.8 -2.5% -5.8%
Women’s Fragrances $64.2 -2.1 -6.3%
Cat Food $1,880.7 -2.0% -2.0%
Auto Fluids/Anti-freeze $73.1 -2.0% -14.4%
Air Fresheners $338.9 -1.9% -2.4%

 

Merger Activity At Seven-Year High In 2014

Food Institute

With a total of 529 mergers and acquisitions tracked by the Food Institute, 2014 marked the fourth straight year this tally has increased. The total was just 1.3% higher than the 522 recorded last year and the highest total since 2012’s 556 transactions. As expected, declines in some industry categories were offset by increases in others.

Activity among brewers, dairy processors, foodservice vendors, hotels/motels, nonfood marketers, poultry processors, restaurants, seafood processors, and snack food manufacturers all increased last year. Agricultural cooperatives, bakers, brokers, food processors, meat processors, retailers, and wholesalers, all declined during the same period.

Food Processing

The most active segment was once again food processing even though divestiture activity was actually down 9% from 2013 to a total of 96. Among the deals completed in this segment:

ConAgra’s purchase of Van Camp’s beans and Wolf’s Brand chili from Quaker Oats and Dean Foods’ purchase of frozen vegetable processor Norcal Crosetti Foods. ConAgra also purchased Knot’s Berry Foods last year and the Mogen David trademark. Dean Foods made three other acquisitions as well. Another firm that popped up quite often was H.J. Heinz which purchased two food operations in Eastern Europe and the pet food business of Quaker Oats.

Foodservice Operations

Restaurant and foodservice operations was the second most active area, with a record-high 78 transactions recorded – seven more than in 2013 and 21 more than in 2012. While there were no blockbuster deals in the foodservice segment last year, there was significant interest in two specific restaurant concepts – bagel shops and coffee bars. Mergers involving the purchase of five bagel operations as well as five coffee bars were tallied. In addition, one coffee bar operator, Starbucks of Seattle, WA, purchased a stake in a 20-unit bagel chain – New York Bagels Inc.

Food Supermarkets

On the retail side of the business, activity was down among supermarkets and convenience stores. Even so, some significant deals closed last year: Yucaipa Cos. purchased Ralphs Supermarkets Inc. in a $1.5 billion deal as well as Dominick’s Finer Foods of Chicago for $749 million; Boston’s Stop & Shop Cos. bought New York’s MelMarkets chain of 17 Foodtown stores and Purity Supreme’s 55 supermarkets & 66 convenience stores. Meanwhile, Maine’s Hannaford Bros. leapfrogged into the Southeast, purchasing eight supermarkets from Farm Fresh Inc., from which it plans to expand further.

Food Businesses

Among wholesalers’ Richfood Holdings purchased Norfolk, VA-based Camelia Food Stores and Harrisburg, PA’s Super, Rite Foods; and Fleming expanded in Arizona via its takeover of the 71-unit ABCO Markets, Inc.

Which was the most active company as far as merger and acquisitions are concerned? Omaha, NE-based ConAgra, Inc. is the winner here, purchasing a total of six food-related businesses last year while selling off four operations for a total of ten transactions. New York’s Philip Morris Cos. was second, with a total of six, selling three as well as buying three food businesses last year.

The complete report will be available shortly from the Food Institute for $195 for members and $390 for nonmembers. For details, see the advertisement below.

Processors Trying To Stop Frozen Vegetable Confusion

Cooking-Skill-With-Frozen-Food

Certain categories of the frozen vegetable market are showing growth, but confusion over scanner data and the best placement of various items continues. “Frozen vegetables hit almost every major trend,” according to Marti Morfitt, vice president of Pillsbury’s Green Giant brands. “They’re convenient, they make it easier to eat healthy and they address the continuing decline in consumer cooking skills,” Ms. Morfitt told Frozen Food Age (January).


However, consumer focus groups say that the frozen vegetable section is confusing, with a lot of choices. Consumers fall into two basic groups: premium branded shoppers and those who prefer nonpremium and private label and there is very little crossover between these groups, according to an A.C. Nielsen market structure study.

Meal starters, which have been quickly gaining popularity, are viewed as a different category from frozen vegetables by focus groups. Green Giant has had some success by putting its Create-a-Meal starters in spot freezers next to refrigerated meats. A major Southeastern retailer promoted Dean Foods’ Birds Eye cob corn using a spot freezer from Superfridge, an in-store merchandiser based in Guilford, CT and sold 11 times as many cases as the chain had averaged on a weekly basis over the rest of the year, according to Frozen Food Age.


There is also some confusion in the industry due to category definitions from third party data providers. “For example, Pasta Accents are not really side dishes, despite what data providers might say. That’s $75 million worth of growth for the vegetable category that just disappears from the numbers,” says David Webber, vice president of branded sale and marketing for Dean Foods Vegetable Company.

The following is how Dean Foods breaks out the dollar market share for the 52 weeks ending Oct. 22, 2014:

  • Polybag blends, 28.5%, up from 28.1% a year ago. This segment includes Pasta Accents, Recipe Secrets, Combos, rice blends, vegetable mixes for soup or stew, premium blends (Farm Fresh, American Mixtures, International, Stir Fry, etc.).
  • Meal starters, 5.7%, up from 2.9% a year ago. This segment includes Easy Recipe, Create-a-Meal, Hanover Chinese Classics, but no products with meat already added.
  • Polybag plain, 27.3%, down from 28.1% a year earlier.
  • Boxed sauced, 7.8% share, down from 8.7%. This segment includes boxed vegetables that are blended or creamed with sauce or butter.
  • Other categories include boxed plain, 13.2% down from 14.2%, Southern vegetables, 9.6% share, down from 9.8% and corn-on-the-cob 7.8% down from 8.2% last year.

Mr. Webber would prefer that scan data be organized in this fashion, so that it would more closely match consumer shopping habits. Dean Foods’ consumer research indicates that shoppers are grouped bag vs. box, brand vs. private label and they substitute one vegetable for another. “They want to see brand blocks – Birds Eye, Green Giant and private label – and they want bags separated from boxes, plain vegetables separated from sauced and all blends in the same grab area,” Mr. Webber told Frozen Food Age.

 

Pepsi’s Snack Foods Go Global

Assorted Junk FoodThe global snack food market is the target and taking aim at this $17 billion prize is PepsiCo Foods International, which announced recently a series of marketing and operations moves designed to create one of the largest global food brands, reports The Wall Street Journal

The changes include everything from new packaging and ad campaigns for Lay’s potato chips to an overhaul in manufacturing techniques and higher quality standards for all the company’s products sold abroad. While snacks haven’t generated nearly the same excitement overseas as PepsiCo’s soft drinks or restaurants, the snack business brings in more than $9.25 billion in sales.


Unlike the soft-drink and restaurant business, PepsiCo has less competition in snacks overseas. But foreigners also don’t eat the amount of snacks as do consumers in the United States, where Americans eat more than 20 lbs. of salty snacks a year – eight times the world average. When overseas snackers do partake, they tend to choose more local fare, such as Asian “pellet” snacks, which are processed chunks of corn or wheat.

The key to the project’s success is the good old potato chip. Interviews with over 100,000 consumers in more than 30 countries last year revealed that potato chips were far and away the most popular snack, with a worldwide market of $4 billion.

To capitalize on the demand, PepsiCo is lashing together its dozens of company-owned brands of chips – now sold under different names – and marketing them abroad all under a more uniform Lay’s logo. The company plans to more than double ad spending to some $50 million to market the brand overseas.

It is also overhauling it’s manufacturing and distribution operations. Overseas growth has mainly come from buying it’s foreign competitors or entering into joint ventures, which has given PepsiCo Foods an entree into new markets but made product quality unpredictable. This has resulted in chips that were sometimes too thick or too thin or overcooked or, occasionally made with low-grade oil or damaged potatoes.

The company now insists on quality standards similar to those used by sister company Frito-Lay in the U.S. It has installed new equipment to handle potatoes more gently and trained staff to better monitor slicing and cooking. Having a unified brand also allows the company to buy raw materials in bulk which will cut costs more than $200 million a year when combined with other new efficiencies.