Retailers Royal Ahold and Delhaize to merge 6/24/2015 - by Keith Nunes

Royal Ahold has entered into an agreement to acquire the Delhaize Group, Brussels, Belgium, for approximately $29 billion.

ZAANDAM, THE NETHERLANDS – Royal Ahold has entered into an agreement to acquire the Delhaize Group, Brussels, Belgium, for approximately $29 billion. In the United States, Royal Ahold is the owner of such banners as Stop & Shop, Giant, Martin’s and Peapod. Delhaize operates the Food Lion and Hannaford banners in the United States.

The merger is subject to regulatory approvals, but if completed it will create a business with global net sales of approximately $61 billion. At completion, Delhaize shareholders will receive 4.75 Ahold shares for each Delhaize share they own. Ahold shareholders will own 61% of the combined company’s equity, and Delhaize shareholders will own 39%.

“The proposed merger with Delhaize is an exciting opportunity to create an even stronger and more innovative retail leader for our customers, associates and shareholders worldwide,” said Dick Boer, chief executive officer of Ahold. “With extraordinary reach, diverse products and formats, and great people, we are bringing together two world-class organizations to deliver even more for the communities we serve.

“Our companies share common values, proud histories rooted in family entrepreneurship and businesses that complement each other well. We look forward to working together to reach new levels of service and success.”

Frans Muller, c.e.o. of Delhaize, added, “We believe that the proposed merger of Ahold and Delhaize will create significant value for all our stakeholders. Supported by our talented and committed associates, Ahold Delhaize aims to increase relevance in its local communities by improving the value proposition for its customers through assortment innovation and merchandising, a better shopping experience both in stores and on-line, investments in value, and new store growth. We look forward to working closely with the Ahold team to implement a smooth integration process and realize the targeted synergies.”

The transaction is expected to be completed by the middle of 2016.

Sales of lower-calorie products grow at supermarkets 6/9/2015 - by Jeff Gelski

Cereals with 150 calories or less and beverages with 50 calories or less qualified as lower-calorie products.

PRINCETON, N.J. – Lower-calorie products are taking up a majority of sales and sales growth in the nation’s supermarkets, according to a study released June 9 by the Hudson Institute. The study also found more growth could come from lower-calorie products in categories that contribute the most calories to children’s diets.

Researchers analyzed Nielsen Scantrack data from 2009 and 2013 for three retail ownership groups that account for about 45% of the U.S. supermarket industry. The study found lower-calorie product sales accounted for 58.6% of total sales and 58% of sales growth when compared to higher-calorie products. Sales growth from 2009 to 2013 was 18.1% for lower-calorie products and 17.3% for higher-calorie products.

To determine whether a product was lower calorie or higher calorie, researchers set dividing lines for each of the 202 food and beverage categories. For example, cereals with 150 calories or less and beverages with 50 calories or less qualified as lower-calorie products.

The Hudson Institute also broke out the results into three subsets: product categories that contribute the most calories to children’s diets (which does not mean products only designed for and marketed to children); supermarkets found in “food deserts;” and private label.

Such categories as grain-based desserts, caloric beverages, pastas and pizzas contribute the most calories to children’s diets, according to the study. Lower-calorie product sales in those categories increased 5.4% from 2009 to 2013 while higher-calorie product sales in those categories increased 12.7%.

Such categories as caloric beverages and pizzas contribute the most calories to children’s diets, according to the study.

“Supermarket chains have every reason to continue to increase their sales of lower-calorie items because it’s good for their bottom line,” said Victoria Brown, senior program officer at the Robert Wood Johnson Foundation, which funded the study. “They also need to make more progress to promote and sell foods and beverages popular with kids that are not just lower in calories but truly healthy, too.”

In supermarkets in “food deserts,” lower-calorie products accounted for 57.1% of total sales. Sales growth from 2009 to 2013 was 16.6% for lower-calorie products in supermarkets in “food desserts,” which compared to 16.2% of sales growth for higher-calorie products. The U.S. Department of Agriculture defines food deserts as a census tract with a substantial share of residents who live in low-income areas that have low levels of access to a grocery store or a healthy, affordable food retail outlet.

In private label, lower-calorie product sales accounted for 56.4% of sales in 2013, which was up from 54.5% in 2009. 

Supermarket chains could grow their sales of lower-calorie items by giving them more prominent shelf placement, highlighting them on in-store ads and displays, and selling more of them in check-out lanes, said Hank Cardello, lead author of the report and a senior fellow at the Hudson Institute.

The Hudson Institute previously has done studies on lower-calorie product sales at restaurants and lower-calorie consumer product goods sales. Lower-calorie sales grew at faster rates for those two categories when compared to the supermarket study.

“Customers are looking for lower-calorie choices wherever they are,” Mr. Cardello said. “The good news is, supermarkets’ growth is being driven by these products, but compared to other sectors they’re still leaving money on the table. There is a tremendous opportunity to drive even more sales by focusing more on lower-calorie options.”

Breaking egg prices ease, but supply remains critical 6/15/2015 - by Ron Sterk

Prices for Grade A large eggs at retail topped $3 a dozen in several markets.

KANSAS CITY — The spread of H5N5 highly pathogenic avian influenza in the United States appeared to be slowing as temperatures increased in mid-June, but the impact on egg and egg product markets still was increasing.

Prices for Grade A large eggs at retail topped $3 a dozen in several markets, including Iowa, which has lost more than 29 million chickens, equal to about half of its laying flock, which is the nation’s largest. Prices for wholesale graded eggs averaged $2.44½ a dozen in the Midwest on June 12, up 3c from a week earlier, up 140% from early May and nearly double the year-ago value, the U.S. Department of Agriculture said.

Prices for breaking stock eggs, those used by processors for liquid, frozen and dried egg products, fell in the past week but remained at historical levels. Sosland Publishing’s Food Business News quoted nest run eggs at $1.97 to $2.07 a dozen on June 12, down 38c from a record high $2.35 to $2.40 a dozen a week earlier and still three times prices in mid-April.

Posted at a fast-food restaurant in Texas.

Prices for egg products continued to rise to new record highs in the latest week, according to quotes in Food Business Newsaggregated from egg processors and public and private reporting services, including the U.S.D.A. and Urner Barry. Dried whole eggs were quoted at $9 to $10 a lb, up 50c from a week earlier, three times early-May values and more than double the year-ago price. Frozen whole eggs were quoted at $2.15 to $2.35 a lb, up 10c from a week earlier, nearly three times the early-May price and up 84% from last year. Liquid whole eggs were quoted at $2 to $2.25 a lb, up 15c from a week earlier, nearly four times the early-May price and more than double a year ago.

But supply is the real issue facing food manufacturers as well as restaurants that have made eggs a key breakfast feature. The nation’s largest egg processor earlier declared force majeure on contracts after losing about 35% of its egg supply. Other egg processors are serving long-standing customers with reduced shipments, but most are unable to provide supply to new customers. Some eggs intended for hatching have been diverted to processors or retail, but the supply situation remains critical as of mid-June.

The U.S.D.A. reported as of June 9, more than 47 million birds, including more than 39 million chickens, mostly laying hens, died or were euthanized because of avian influenza. Although the spread of the virus appeared to be slowing, there was no firm estimate of when it would be under control. Trade sources said it would be several months, if not more than a year, to fully rebuild flocks, assuming there are no further outbreaks.

Costco’s organic food sales approach $3 billion 4/29/2015 - by Eric Schroeder

ISSAQUAH, WASH. — Wal-Mart and Kroger, the nation’s two largest retailers, and Target, the fourth-largest retailer, have made significant strides in the organic food category over the past year, so it’s only fitting that Costco — the No. 3 chain — is getting in on the action.

Each of the retailers has taken a different approach in how it addresses the organic food market, which has seen sales in the United States increase 11% to reach $35.9 billion in 2014, according to a survey released April 15 by the Organic Trade Association. Organic food sales accounted for close to 5% of total U.S. food sales, according to the O.T.A.

Kroger introduced its own line of products under the Simple Truth Organic brand in 2012, while Target partnered with other companies to offer a Made to Matter collection of better-for-you products in 2013, and Wal-Mart teamed up with Wild Oats last year to offer organic food items that are at least 25% less expensive than the national organic brands it carries.

Costco is taking a more steady approach to its organic food program. Like Kroger, Costco offers organic products under its own label, Kirkland. A few years ago, Costco, in an effort to offer its customers more organic snacks, partnered with PepsiCo, Inc. to provide organic versions of Ruffles and Stacy’s Pita Chips. The products are exclusive to Costco members. More recently, Costco in early April signed a deal with Amira Nature Foods Ltd. under which Amira would provide Costco with organic products, including 20-lb bags of Amira Organic Sona Massori Rice.

“We are very proud to announce the launch of Amira Organics in Costco stores,” said Karan A. Chanana, chairman of Amira Nature Foods. “We understand the U.S. consumer demand for organic products, and we have worked diligently to create the highest quality organic rice products. It is exciting to see the product on the shelves following its initial launch with a strong retailer like Costco.”

The organic rice falls into a broader category that Richard Galanti, chief financial officer of Costco, earlier this year called a “small percentage of Costco,” but it remains a segment ripe for growth.

“(Organics) is a fast-growing area, as it is with a lot of other retailers as well,” Mr. Galanti said during a March 5 conference call to discuss second-quarter results. “You’re going to see more and more of it. Part of that is availability. We and everybody else could sell a lot more if there was more out there. I think we’re doing a pretty good job of lining up our sourcing.”

Mr. Galanti said organic sales approached $3 billion for Costco in 2014, which was up more than twice what it was two years earlier.

“It’s growing fast,” he said. “I don’t know if it’s 50% a year, but it’s certainly growing at a high — at a low-mid or mid-double digit number. And it’s great for us, because we show even a better value on that stuff than some of the things that it replaces.”

H.J. Heinz, Kraft Foods Merge To Form The Kraft Heinz Co. March 25, 2015, 10:00 am

In a transaction that the "Oracle of Omaha," Warren Buffett, chairman and CEO of Berkshire Hathaway, declared to be "my kind of transaction," two of the most iconic names in the food industry – H.J. Heinz Co. and Kraft Foods Group – announced a definitive merger agreement to create The Kraft Heinz Co.

The combined companies, whose new moniker is The Kraft Heinz Co., will be co-headquartered in Pittsburgh and the Chicago area, and will create the third largest food and beverage company in North America and the fifth largest such organization in the world, bringing together an unparalleled portfolio of iconic brands – eight of which are valued at $1 billion-plus each and another five sister brands valued between $500 million and $1 billion – under the same corporate roof.

Terms of the deal, which have been approved by the boards of directors of both CPG giants, will find Kraft shareholders owning a 49 percent stake in the combined company, and Heinz shareholders own 51 percent on a fully diluted basis. Kraft shareholders will receive stock in the combined company and a special cash dividend of $16.50 per share. The aggregate special dividend payment of approximately $10 billion is being fully funded by an equity contribution by Berkshire Hathaway and 3G Capital.

Upon the deal's completion, Heinz CEO Bernardo Hees will take the reins of The Kraft Heinz Co. as CEO. 

Additionally, Alex Behring, chairman of Heinz and managing partner at 3G Capital, will become chairman of the merged companies. Kraft Chairman/CEO John Cahill will be named vice chairman and chair of a newly formed operations and strategy committee of the board of directors. The board will consist of five members appointed by the current Kraft board, as well as the current Heinz board, including three members from Berkshire Hathaway and three members from 3G Capital.

"Together, Heinz and Kraft will be able to achieve rapid expansion while delivering the quality, brands and products that our consumers love," said Hees. "Over the past two years, we have transformed Heinz into one of the most efficient and profitable food companies in the world while reinvesting behind our key brands and continuing our relentless commitment to quality and innovation."

Added Cahill, "This combination offers significant cash value to our shareholders and the opportunity to be investors in a company very well positioned for growth, especially outside the United States."

According to the companies, the merger will bring synergies of an estimated $1.5 billion in annual cost savings, to be realized by the end of 2017, driven by the increased scale of the new organization, as well as sharing best practices and cost reductions.

The merger is expected to close in the second half of 2015, pending approval by Kraft shareholders, regulatory approvals and customary closing conditions. 

- See more at: http://www.progressivegrocer.com/industry-news-trends/cpgs-trading-partners/hj-heinz-kraft-foods-merge-form-kraft-heinz-co#sthash.9l8S7Y5t.dpuf

Krispy Kreme details four keys for growth 3/12/2015 - by Monica Watrous

Menu innovation is a priority for Krispy Kreme in the year ahead.

WINSTON-SALEM, N.C. — Traffic fell at Krispy Kreme Doughnuts during the company’s fourth quarter, as the donut chain tweaked its promotional and incentive strategies to improve operating margins.

Net income for the fourth quarter ended Feb. 1 tumbled to $6,546,000, or 10c per share, compared with $14,760,000, or 21c per share, reflecting unusual tax credits in the prior year. Excluding special items, earnings per share increased to 17c from 12c.

Revenues increased 11% to $125,367,000 from $112,746,000 in the year-ago period.

For the year, net income declined to $30,060,000, equal to 44c per share on the common stock, which compared with $34,256,000, or 48c per share. 

Revenues increased 6.5% to $490,334,000 from $460,331,000.

System-wide domestic same-store sales rose 3.6% for the quarter and 3.1% for the year on higher prices and average check. System-wide store count rose 19% to 987 company and franchise shops worldwide for the year.

Looking ahead, management is focused on four key strategies, which include accelerating global growth, leveraging technology, enhancing the core menu and maximizing brand awareness.

This year, Krispy Kreme executives project shop openings in at least six new countries, mostly in the Asia-Pacific region, where the chain already has a strong presence, and in Latin America, where it is establishing a foothold.

“We are evaluating a list of additional countries to build on our strong, global brand,” said Tony Thompson, president and chief executive officer, during a March 11 earnings call with analysts. “We believe that we can continue global system-wide unit growth at a double-digit rate for years to come.”

On the technology front, Krispy Kreme began testing a mobile platform late last year, which included the introduction of a loyalty and rewards program. A national roll-out is planned for later this year.

“The mobile app engages our guests through its Hot Light feature that notifies them when the Hot Light is on at their favorite Krispy Kreme shop, and it allows us to reward our guests with points that can be redeemed on future visits,” Mr. Thompson said. “The app also offers stored value, which can be securely loaded, and allows our guests to easily pay and go.”

Krispy Kreme’s third strategic focus is enhancing the core menu, particularly in beverages and limited-time donut varieties. Within the coming months, the chain plans to promote frozen lattes.

“Donuts will always be center of plate for us, and an important complement to our donuts is the significant opportunity to increase our in-store beverage attachment rate,” Mr. Thompson said. “We have devoted additional leadership resources to beverage, and currently are revamping our long-term beverage strategy, as well as working on short-term opportunities, both inside and outside of our shops.”

The final piece of the company’s plan is maximizing brand awareness through multiple channel opportunities, including wholesale donuts and snacks, licensing and a fundraising program.

“Wholesale, or consumer packaged goods, represent about half of the company’s shop revenues, and we believe the channel has significant growth opportunities over the long term,” Mr. Thompson said. “We have been adding new, longer shelf life products such as marble cake and fruit danishes, which have received positive feedback from consumers.”

The company announced a coffee licensing program last year that now includes packaged ground coffee, ready-to-drink coffee and K-Cup packs. Recently, Krispy Kreme announced a multi-year licensing agreement with Massimo Zanetti Beverage USA to roast and distribute 12-oz bags of Krispy Kreme ground coffee for grocery stores, mass merchants, club stores and on-line.

“Fundraising is a unique element in our effort to maximize brand awareness,” Mr. Thompson said. “Krispy Kreme’s fundraising program has assisted local charities for over 60 years, and we believe we can grow distribution through this channel. We are working on adding fundraising capability to our mobile guest engagement platform.”

The company has reaffirmed its outlook for adjusted net income for fiscal 2016 of $55,000,000 and $59,000,000, up 14% to 22% from adjusted net income of $48,300,000 in fiscal 2015.

After the earnings were reported, Krispy Kreme’s shares were trading mid-morning March 12 on Nasdaq at $19.07, down $1.28, or 6%, from the previous close of $20.35.

Welcome to Cuba 1/7/2015 - by JaySjerven

Value of 2013 U.S. agricultural exports to Cuba

President Barack Obama’s Dec. 17 announcement that the United States will begin the process of normalizing diplomatic relations with Cuba was hailed by U.S. agricultural groups eager to increase sales to the island nation. President Obama said the United States will reestablish an embassy in Havana, probably at the site of the current U.S. Interest Section there. He also said certain trade restrictions that placed U.S. food exporters at a disadvantage vis-à-vis those of other exporting nations would be lifted.

The president did not remove the half-century-old embargo on trade with Cuba and does not have the authority to do so without congressional approval and action. But sales of U.S. food and medical products were exempted from the embargo when Congress passed and President Bill Clinton signed the Trade Sanction Reform and Export Enhancement Act of 2000.

After the act took effect, the United States became a major supplier of food to Cuba, which must import about three-fourths of its food requirements (estimates range from 65% to 80%).

The value of U.S. agricultural exports to Cuba peaked in 2008 at $710.1 million, according to the U.S.-Cuba Trade and Economic Council. But in most recent years, U.S. agricultural exports to Cuba declined as onerous terms applying to financing purchases of U.S. products encouraged Cuba to turn to other suppliers. This was especially the case for wheat and rice.

The U.S. Department of Agriculture indicated the United States sold 500,000 tonnes of wheat to Cuba in 2007-08, but the United States has sold no wheat to that nation since 2010-11. The European Union and Canada now control the wheat market in Cuba. The United States sold 186,000 tonnes of rice to Cuba in 2005-06 but has sold no rice to that nation for the last six years as Vietnam and Thailand became the principal rice suppliers.

U.S. grain trade groups pointed to unilateral restrictions on financial transactions for food products as a principal cause for losing market share in Cuba. Currently, U.S. agricultural exporters wishing to do business with Cuba may receive money upfront from the Cuban government buying agency before they may ship the product. Additionally, the money exchange must be handled by a third-party institution (a non-U.S. bank). The red tape, time delays and transaction costs effectively raise the price of U.S. wheat and rice exports above those of foreign competitors.

President Obama said U.S. banks and financial institutions now will be permitted to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions. Also, the regulatory definition of the statutory term “cash in advance” will be revised to specify that it means “cash before transfer of title,” not before shipment. The administration said these measures will improve the speed, efficiency and oversight of authorized payments between the United States and Cuba.

At the same time, improvement may come more slowly than many wish, as some analysts noted Cuban financial institutions themselves would have to make significant changes to comply with post 9/11 banking laws aimed at preventing money laundering and support for terrorism.

The National Association of Wheat Growers (NAWG) and U.S. Wheat Associates (U.S.W.) applauded President Obama’s announcement.

“If Cuba resumes purchases of U.S. wheat, we believe our market share there could grow from its current level of zero to around 80% to 90%, as it is in other Caribbean nations,” said Alan Tracy, U.S.W. president.

“The changes to banking are very important because they will significantly reduce red tape and costs associated with doing business with Cuba,” said Betsy Ward, president and chief executive officer of the USA Rice Federation. Ms. Ward said her organization long has maintained that the “embargo was not on Cuba, as they could source rice and other products from around the world, but rather on the rice growers in the United States, whose own government cut them out of one of the world’s top markets, just 90 miles from our shores.”

In five of the past six years, frozen chicken has held the top spot for U.S. food exports to Cuba. The value of U.S. frozen chicken exports to Cuba was $144.4 million in 2013, accounting for 41% of the value of all U.S. food exports to Cuba in that year. In 2012, the value of frozen chicken to Cuba reached its peak at $154.9 million.

“The National Chicken Council and our members support the concept of free and fair trade,” the council said in a statement issued after the president’s address. “If the updated policy has the effect of boosting Cuba’s private sector, and therefore the wealth of its citizens, high-quality protein is usually the first to increase in demand. Because of our proximity, we would welcome the opportunity to provide more of our safe, wholesome and high-quality poultry to the Cuban people.”

Walmart adds exclusive wild-caught Alaskan seafood January 29, 2015, 02:37 pm By Store Brands

Bentonville, Ark.-based Walmart said it partnered with Trident Seafoods Corp., Seattle, to offer more wild-caught Alaskan seafood to its customers in select stores in Alaska and Washington. "The Alaskan" brand is a new seafood brand created by a Trident Seafoods and launching exclusively at Walmart. With the addition of this brand, Walmart will add 14 new items to its broad seafood offering, including Alaskan cod, salmon, rockfish, sole and crab.

Each of the new items is harvested only in Alaska and processed locally in Alaska or in the Pacific Northwest. The items are on shelves at each supercenter in Alaska and in 20 additional stores in Washington.

Walmart said it has proudly sourced seafood from the state of Alaska for many years and continues to work with the state, the Alaska Seafood Marketing Institute (ASMI), suppliers and others to provide customers with quality products at affordable prices.

The new items are also labeled as "Made in the USA." In 2013 Walmart committed to American renewal by announcing its intent to help boost job creation and U.S. manufacturing through buying an additional $250 billion in products that support American jobs by 2023, the retailer said. Trident Seafoods, a family owned business founded in 1973, operates more than a dozen fish processing facilities in Alaska coastal communities and is fully committed to maintaining abundant, sustainably managed fisheries. 

“Our customers shop with an eye for quality and value," said Scott Patton, market manager, Walmart U.S. "Like us, they’re also passionate about supporting local products. Some of the best catches in the world are found right here in Alaska, and we’re proud to add these items to our seafood assortment.” 

- See more at: http://www.storebrands.info/walmart-adds-exclusive-wild-caught-alaskan-seafood?utm_source=MV_SB+Frozen%2fRefrigerated&utm_medium=email&utm_content=HTMLLinkID%3a+9&utm_campaign=Supervalu+refreshes+Wild+Harvest+brand%3b+Publix+adds+yogurt%2c+dessert+cakes%2c+other+refrigerated+store+brand+offerings#sthash.zVWcr4vO.dpuf

Slideshow: What’s for dessert 2/10/2015 - by Monica Watrous

CHICAGO — Americans are sweet on nostalgic treats and snackable indulgences, according to a new dessert report from Datassential, a Chicago-based food industry research firm. For restaurant operators and manufacturers, this may mean the next cupcake or Cronut is a hand pie.

“Nostalgic favorites are appealing to that younger millennial consumer, (who is interested in) more classic styles of desserts,” said Jennifer Aranas, project director at Datassential. “Translating that nostalgia of pie into a more snackable option presents an opportunity.”

Consumers are cuckoo for cookies, said Datassential, which revealed more than three-fourths of survey respondents ate one in the past week.

“For consumers, cookies, brownies and bars are very much an afternoon snack item or a mid-morning snack or late-night snack,” Ms. Aranas said. “So, it’s not only the most often reached for, but it’s also the most recently reached for, versus cheesecake, which is not eaten nearly as often.”

Of consumers who reported eating a cookie within the past two weeks, 43% chose chocolate chip, followed by Oreo (21%), oatmeal (14%), peanut butter (12%) and chocolate (8%). On restaurant menus, classic varieties continue to dominate — led by chocolate chip, oatmeal, peanut butter and sugar cookies — but the fastest-growing flavors are toffee, double chocolate, macaron and rugelach, according to Datassential. Also hot are cookies baked and served in cast-iron skillets, which grew 251% on menus over the past year.

Click to enlarge.

The top trending flavors for brownies served in restaurants are cheesecake, white chocolate, nut and hot fudge. For dessert bars, marshmallow, pumpkin, lemon, dark chocolate and crispy rice varieties are rolling out on more menus.

“When we looked at top trending flavors for cakes, the faster trending flavors are spice cake and dark chocolate, which is particularly important in things like Mexican chocolate or items with more premium ingredients,” Ms. Aranas said.

Italian crème cake, bundt cakes and flourless chocolate cakes also are on the rise in restaurants. The most menued varieties, however, are chocolate, carrot cake, lava cake and lemon cake.

“On the cheesecake side, red velvet, crème brulee, berry, key lime are very rapidly trending,” Ms. Aranas said. “In pies and tarts, Oreo, interestingly, and Boston cream were highly trending. And then pumpkin, which is interesting because we actually fielded this before coming into holiday season.

“French silk and chocolate also are rapidly trending on the pie end.”

Buttermilk, too, is a growing descriptor on pie menus — up 96% in the past year — appearing in such options as buttermilk custard, buttermilk chess pie or a la mode with buttermilk ice cream. But the most common pies on menus remain the traditional favorites, led by apple, key lime, pecan and lemon.

“Things like seasonal specials are always really popular all the time, and not necessarily just in the season that they’re in,” Ms. Aranas said. “I think that’s one of those platforms that can really appeal to manufacturers and chains all year round — to offer items that people really love and look forward to during those holiday seasons but more frequently throughout the year.”

Seasonal desserts such as Starbucks' peppermint brownie cake pops are a hit with consumers.

Such limited-time items as the strawberry shortcake at California Pizza Kitchen, the pumpkin spice lava cake at LongHorn Steakhouse, and the peppermint brownie cake pop at Starbucks draw diners with seasonal appeal.

Retro flavors, such as s’mores and red velvet, also resonate with consumers. The classic campfire treat has grown on dessert menus by 133% since 2010, featured most often in a traditional format, as well as the flavor for dessert pizzas, cakes and pies.

Healthier options are of growing interest to consumers, too.

“Healthy and better-for-you is highly interesting to consumers, although when we’ve gotten their feedback, it’s primarily been, ‘When we order dessert, we want decadence and indulgence and we really don’t want anything that’s good for you,’” Ms. Aranas said. “They want it to be better for you, but they know it’s not going to be, and when they’re out there spending their money, they really want to spend it on something that’s worthwhile.”

Still, small portions and treats made with ingredients perceived as natural may appeal to the more than half of consumers who indicated a preference for sinless sweets.

“So, it’s not necessarily taking out sugar or fat, but it’s including those things but maybe with a cleaner label or not a lot of artificial ingredients,” Ms. Aranas said. “It still has sugar, but maybe now instead of processed sugar, it might be cane sugar or agave nectar.

“Or smaller portions… Just a small something that makes you feel good about it, but you still get sweet tooth enjoyment.”

The future of shopper marketing 2/4/2015 - by Keith Nunes

CHICAGO — As the president and chief executive officer of the market research company Information Resources, Inc. (I.R.I.), Andrew Appel is surrounded by data — Lots of data. That information, which in many ways is the lifeblood of his company, is collected, segregated and then distributed to a variety of people, products and applications that analyze the information and then develop insights that are distributed to the company’s clientele. In the end, the goal is to help I.R.I.’s customers stay ahead of the trends that are shaping and, in many cases, reshaping the market for consumer packaged goods.

In an interview with Food Business News, Mr. Appel, discussed many of the trends in C.P.G., but also looked ahead to the future of shopper marketing. He argued that in the not-so-distant future the speed with which companies act on insights will become as important as the insights themselves.

“Speed is probably one of the three or four most important needs of the industry,” Mr. Appel said. “I would assert it’s two or three, but it depends on a company’s needs. In the end a lot of this is going to be automated decision making; it will be driven by automated parameters, because you can’t make decisions that quickly.”

As an illustration, Mr. Appel points to the weather.

“Let’s say we know it’s going to be zero degrees in Chicago next week,” he said. “If you are a retailer, what do you do about it? You can’t move fast enough to make assortment decisions. You need algorithms to automate it.

“You know there is a segment of the population that will do a stock-up trip with an adverse weather forecast. What do you do with that information? The firms that are able to pull these data sets together at the geographic, brand and consumer levels are going to benefit.”

In 2013, companies defined as small and extra-small by I.R.I. grew by 4.3%, according to the company’s Growth Leaders Report. Large companies experienced 0.5% growth. Mr. Appel attributed part of the difference to speed and agility.

“Small manufacturers are outgrowing big ones,” he said. “How you solve that issue comes back to the consumer. What do consumers want and how do I find the ones that want a specific product? That’s the confluence of information.

“That’s what small companies do. They find niche trends and they move, because they are nimble. They don’t have annual planning cycles, because they don’t need them. Yet they increasingly have access to the same tools as larger companies.

“Understanding the increasing uniqueness of consumers and what they want is critical. If you can master those two things at a micro-segment, or ultimately, the consumer level there are benefits. How local can you get? It’s all about capturing the individual.”

Retailers are adopting smaller store formats and new product assortments in an effort to better reach smaller, more local groups of customers.

Local customization

Local is a theme Mr. Appel returned to frequently. He pointed to efforts by such retailers as Wal-Mart Stores, Inc., Dollar General and Walgreens to grow their store count by opening smaller, more local store formats and offering product assortments that are targeted at the local population.

“We definitely see what we call a fragmentation or an increase in the number of places that people buy stuff, in general,” Mr. Appel said. “So, I think what we are seeing is the localization of retail. Over time that means more and smaller outlets, a more tailored assortment and different consumer segments. In addition we see more purchasing with e-commerce, which will further fragment the retail environment.

“That shows up in the changing demographics of our country. The population is aging and that brings a certain type of retail format around the age group. Hispanics will be near 50% of population over the next 10 years. Then you have the millennials (who are) starting to move into the purchase period. Those three consumer trends are all leading to retailers being more customized.”

By local, Mr. Appel also means shopper marketing efforts are going to become more personal.

“I think we are at the beginning of how digital advertising, digital access and, in the end, how consumers are getting their buying behavior influenced by a significant number of sources,” he said. “We are still at the beginning of that trend. The implication of it is how marketing will evolve in this industry — It will be very different. Messaging is going to be much more local; a more personal experience.”

Today, consumers are actively seeking information rather than passively receiving it.

Access to information prompts change

Consumer technologies, most notably smartphones and tablets, are changing the dynamics of marketing. Today, consumers are actively seeking information rather than passively receiving it. It’s an evolution that Mr. Appel said is just starting in the United States and expanding around the world. Yet C.P.G. companies are seeing the results of some of this change as consumers alter their purchasing patterns toward products that are more fresh and natural. For example, the supermarket perimeter accounts for 34% of C.P.G. sales, and perimeter sales have climbed 5% in the past year while center store sales grew 1%, Mr. Appel said.

“It’s about the trends we have been talking about; it’s about eating healthier, freshness and convenience,” he said. “Those are the three trends that I think are driving the perimeter formats and the traditional categories. Center store categories are the ones that have to reinvent themselves.”

In his opinion, Mr. Appel said digital media exposure gives C.P.G. manufacturers an opportunity with shopper marketing to reinvent themselves.

“It’s a huge, untapped opportunity for retailers and manufacturers to get to the segment-of-one marketing,” he said. “We’re beginning to see the dramatic effectiveness of digital marketing.”

He said companies now have the ability to identify the ads consumers watch and then follow their purchases during the next 12 months.

“From there you can tailor advertising to shows and web sites — To the people who actually buy your products,” Mr. Appel said. “This is basically the next generation of shopper marketing. At some point the day will come when we can effectively touch each individual consumer and track their sub-segment; how their exposures impacts what products they purchase. If you are a manufacturer and you are trying grow your business in a relatively flat market this is a big opportunity to differentiate.”