consumer trends 2013
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American Sugar Alliance 30th International Sweetener Symposium
Ron Sterk, Senior Editor, MarketsSosland Publishing CompanyKansas City, MO
Milling & Baking News, Food Business NewsSosland SweetenerReport
Consumer Trends 2013
2
Sosland Publishing Companywww.sosland.com
News, data, market insight and resources for domestic and global baking, food processing, grain milling and related industries.
Real-time websitesDaily and weekly market updates/newslettersWeekly and monthly magazines (print & digital)Directories, resource booksSosland Purchasing Seminar
Consumer Trends 2013
3Consumer Trends 2013
Disclaimer
We are reporters, editors and commodity journalists at Sosland, not analysts or economists.
These are my observations, comments and conclusions; I am not speaking for Sosland Publishing.
We have no trading position in the markets and do not stand to gain or lose financially from our comments, news stories or published prices.
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My priorities for 2013
#3 - Speaking at the American Sugar Alliance 30th Annual International Sweetener Symposium
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My priorities for 2013
#2 - The return of Hostess Twinkies on July 15, 2013
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My priorities for 2013#1 - First Grand Baby born July 16, 2013
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Info bombardment: Fructooliogosaccharides (scFOS) Robots - labor GMOs Obesity/diabetes Hunger Economy Energy Obamacare
8Consumer Trends 2013
Info bombardment: Large sugary drinks Global warming Food safety Food waste Food Security Crime Immigration Terrorism
9Consumer Trends 2013
Info bombardment: Social media – tweets, posts, etc. Internet Smart phones Smart cars Television & Radio Snail mail & email Magazines – print and online Newspapers – print and online
10Consumer Trends 2013
Info bombardment: How do you know what the consumer
wants, or is it what someone or some group says the consumer wants?
“Everybody but consumers seem to be focused on calories. It’s time to rethink how we talk about calories.”
- Lynn Dornblaster, Mintel International
11Consumer Trends 2013
What are real trends? Defined
Prevailing inclination A general direction or movement Veer in a new direction
Global Domestic Sweetener Industry
12Consumer Trends 2013
Some global trends Many factors affect consumer trends
Economic & political uncertainty Income growth & increased food demand in
developing countries Population growth & food production capacity Increasing adoption of GMO crops
13Consumer Trends 2013
Some global trends Economic & political uncertainty
Less disposable income currently Unrest in Middle East & other areas Terrorism – domestic Consumers remain cautious with
discretionary income
14Consumer Trends 2013
Some global trends Income growth & increased food demand
in developing countries Population/income growth in China & India Enough food not as much an issue as what
kind of food Increased demand for protein & sweeteners
15Consumer Trends 2013
Some global trends Population growth vs food production
Loooong-term: population increasing 1% annually; 9 billion by 2050
Need to increase crop output 50% by 2050 Issue may be more about infrastructure than
amount of land or crop yields Reduce food waste (30% wasted now) Gains from GMOs critical
16Consumer Trends 2013
Some global trends Increasing adoption of GMO crops
About 90% of corn and cotton, 93% of soybeans and 95% of sugar beets in the U.S. are of bioengineered varieties.
Some estimate as much as 70% of processed food in U.S. contains ingredients from bioengineered crops.
Would labeling really have an impact? Do consumers care?
17Consumer Trends 2013
Some domestic trends Increased control on businesses via
regulation, third party agendas and lawsuits
Increased numbers on entitlement roles Sustainability Aging and more diverse population
18Consumer Trends 2013
Some domestic trends Increased control on businesses via
regulation, third party agendas and lawsuits Goal is to affect what consumers buy Increased role of courts to set policy “Consumer” class action lawsuits Assault on GMOs, fat, salt, sugar, etc.
19Consumer Trends 2013
Some domestic trends Sustainability
While not necessarily a consumer trend, many are aware of it. How much they care is another question.
Producers have led the way without calling it sustainability
Proactive efforts by food processors score benefits internally & externally
Retailers (Walmart) will force the issue
20Consumer Trends 2013
Some domestic trends Aging and more diverse population
Two largest “groups” – Boomers (about 75 million) and Millennials (about 80 million) make up about half of U.S. population.
Different needs, wants, lifestyles Boomers still have greatest buying power Boomers want products that have health
benefits with focus on cholesterol & heart Boomers want added nutritional value
21Consumer Trends 2013
Some domestic trends Aging and more diverse population
Millennials establishing themselves as household leaders with financial pressures
Millennials seek value/price in box stores Millennials also seek convenience Millennials want natural & maybe organic Millennials tend to buy prepared food and
take it home Millennials tend not to eat 3 “set” meals
22Consumer Trends 2013
Some domestic trends Aging and more diverse population
Campbell plans 200 new products, with focus on millennials - headline in GMA Brief
Millennials are more tech savvy “Our fans, namely millennial consumers,
have high food IQs and high expectations.” - Nestle Prepared Foods Co. comment in re-launch of Hot Pockets
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Some domestic trends Aging and more diverse population
White alone Black alone Asian alone Two or more & other Non-Hispanic White Hispanic (any race)0%
10%
20%
30%
40%
50%
60%
70%
80%
2012 2060
13% 15%
69%
5%
8%4%
8%
63%
43%
17%
31%
About 1 in 5 Americans will be Hispanic by 2018 and 1 in 3 by 2060. U.S. Census Bureau
78%
% of total population
24Consumer Trends 2013
Trends directly affecting food Lawsuits, ballot initiatives & regulations Pressure on “BIG THREE” Weight management Healthy and authentic replace natural Distinction between sugar & HFCS Non-caloric sweeteners & mid-cal drinks Lack of personal responsibility Regulate the industry, not the person Obesity classified as a disease by AMA
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Trends directly affecting food Lawsuits, ballot initiatives & regulations
New York Mayor Bloomberg’s attempt to ban “large sugary drinks”
GMO labeling initiatives in about 25 states Proposition 37 – defeated for now Revisions to school lunch, SNAP, WIC related
to nutrition density Etc., etc., etc. – Not consumer led
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Trends directly affecting food Pressure on “BIG THREE”
Fat – Focus fading; consumer confusion Salt – Battle raging Sweeteners – Assault just beginning Many companies are taking initiative to
reduce all of these – Will it be enough?
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Trends directly affecting food “Weight management”
Retail sales expected at $38 billion in 2013 and forecast at $41 billion by 2016
Dairy (skim/low-fat milk) largest category Low or no calorie carbonated beverages
Soda sales (regular & diet) at Coca-Cola, PepsiCo and Dr. Pepper Snapple all down so far this year
Commercial weight loss/management programs
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Trends directly affecting food Healthy and authentic replace natural
Lack of definition for natural from FDA Natural didn’t resonate with consumers Organic seen as “healthier” but expensive But outside groups will continue use
“natural” in seeking legislation or taking court action to control food processors
Rise of gluten free – it’s perceived as healthy
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Trends directly affecting food Distinction between sugar & HFCS
Numerous studies indicate consumers are concerned about overall calories, not whether they come from sugar or HFCS
“Consumers aren’t responding to product formulation or menu item adjustments based on specific sweetening ingredients.”
- Sara Martens, Mintel Research Consultancy
30Consumer Trends 2013
What’s on the horizon? Per capita sweetener deliveries (U.S.D.A.)
1971 1982 1992 2002 20120
10
20
30
40
50
60
70
80
90
100
110Sugar HFCS Total CS Honey/Syrup
Sugar mostly flat since mid-1980s.
HFCS declining since late-1990s but signs of leveling.
Pounds per person before spoilage & waste
31Consumer Trends 2013
Trends directly affecting food Non-caloric sweeteners & mid-calorie
beverages Will this affect corn sweeteners more than sugar
in United States? Stevia continues to make gains, but . . .
Global stevia consumption estimated at 1,278 tonnes Global sugar consumption near 170 million tonnes
Lawsuit against Cargill for calling Truvia “natural”
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Trends directly affecting food Lack of personal responsibility
“It seems like with the medical advantages that have taken place, this generation would have more of an opportunity to be healthier with what we have learned about cholesterol, diet and so forth. What I think, instead, is that the study appears to sow that they are relying on modern medicine as a rescue strategy.”
- Dr. Dana King, Chair of W.V. Dept. of Family Medicine, lead authorof study showing boomers are in worse health than their parents
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Trends directly affecting food Lack of personal responsibility
“While one in six boomers are willing to make changes to stay active, nearly 25% of respondents said they were unwilling to make lifestyle changes for health benefits.”
- Fonterra U.S.A. study of “healthy” boomers
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Trends directly affecting food Regulate the industry, not the person
Mayor Bloomberg’s attempt to ban “large sugary drinks”
Regulators can’t realistically control what people eat – but they can control (or try) what food processors produce
Political aspect Will obesity as a disease have an effect?
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Trends directly affecting food Obesity classified as a disease
May lead to more personal responsibility if it means higher insurance rates based on weight
Too early to know ramifications Certainly lead to more lawsuits
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What consumers say they want Food value Food that tastes good Food that is safe Food that is easy Food that is healthy
37Consumer Trends 2013
What consumers say they want Food value (SympohonyIRI report)
“While an increasing number of positive signs are emerging, shoppers will remain intensely focused on value.”
“Shoppers (will) limit spending to channels that are perceived as offering the best value.”
“Negative news about the federal budget deficit and costs of the new health care law . . . will reinforce shoppers’ frugal behaviors.”
38Consumer Trends 2013
The consumer conundrum Taste/comfort vs healthy/fresh Active lifestyle vs gamer/couch potato Headlines:
A generation after Dietary Guidelines introduced eating habits are not improving
Boomers looking for products for an active, healthy life What consumers crave – Krispy Kreme donuts and Olive
Garden breadsticks are named among top palate pleasers in Technomic survey
Health authenticity drive latest food trends
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What’s on the horizon? Per capita sweetener consumption has peaked
1971 1982 1992 2002 201290
100
110
120
130
140
150U.S.D.A.
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What’s on the horizon? Focus on baby boomers & millennials Less sugar, just like less salt & less fat Competition from non-calorie sweeteners Increased efforts by governments and special
interest groups to restrict sugar consumption Lack of personal responsibility What people say they want and what they do
often are not the same
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Opportunities Promote sustainability – “sells” well and
saves money if done right Take initiative rather than react Industry needs to take lead in healthy
alternatives that mean reduced sugar, such as eating in moderation, portion control, mid-calorie food and beverages
42Consumer Trends 2013
Conclusions It’s going to get harder as anti-sugar battle
grows, regulations focus on food processors Consumers will continue to be bombarded by
negative messages about caloric sweeteners “telling them” what is best for them
More sugar, less demand? People like sweets 25% of consumers across all age groups eat
indulgent snacks daily SymphonyIRI Group
43Consumer Trends 2013
Thanks
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