August 28th, 2007
Obesity, organics among biggest trends this year: the food industry is being expected to take on more responsibility—and packaging is one way to do that
The food industry has taken on some heavy responsibility this year. Literally. Obesity has become a hot topic in the United States, with many consumer activists and others pointing at the food industry and demanding action. Food companies have responded in different ways, some of which involve packaging.
Several companies are using packaging to promote portion control, which has become one of the great bugaboos in the obesity debate. Kraft Foods, General Mills and the Frito-Lay unit of PepsiCo have all come out with package sizes designed to deliver an acceptable amount of calories. Kraft products along those lines include several Nabisco offerings, like Ritz crackers, in packages of exactly 100 calories. Frito-Lay has 75-calorie packs for Lay’s and Doritos chips, while General Mills rolled out Pop-Secret 100 Calorie Pop Premium Microwave Popcorn.
“We’re finding more and more that consumers want it to be easy to know the calorie content, so they don’t have to search for it on the package,” Kathy Parker, a senior business director at Kraft who oversees marketing for the 100-calorie packs, told The New York Tunes.
General Mills also is trying to tout the health benefits of its flagship line of cereals. The company is continuing to promote the presence of whole grain in its cereals–several of which were reformulated to include more whole grain, allowing a prominent nutrition claim on the label.
Health concerns also boosted the growth of diet candy, with sales more than quadrupling between 2000 and 2004, according to research firm Packaged Facts. The total of $495 million is a fraction of the sales for regular candy, but it’s the only segment in the category that’s showing growth.
A few other trends of note in the food industry, some of which carry over from previous years:
* There continues to be a struggle over proper standards for the term “organic.” A federal court in Maine got into the act this summer when it ruled that dairy farmers can’t call their products organic unless they furnish their cows 100% organic feed.
* Sales of food marketed especially to women grew at a compound annual rate of 80% between 2000 and 2004. Packaged Facts predicts that sales of foods and beverages marketed to women will reach $58.7 billion by 2009.
* Hispanics continue their ascendancy as the leading U.S. minority. Hispanics accounted for 50% of the nation’s population growth of 2.9 million in a one-year period, according to a demographics study by the Food Institute. Perhaps more important, the greatest source of Hispanic growth is now births and not immigration.
Here are looks at packaging among major food segments:
Dairy
Milk and other dairy products were whipsawed by a variety of consumer and market forces in 2004.
The price of fluid milk jumped from a 23-year low in early 2003 to a new high in early 2004. Contributing factors included high feed prices and strong cattle prices, spurred in part by the popularity of low-carb diets. A surge in alternative beverages, such as water, tea, soy milk and isotonic drinks, also cut into fluid milk’s share, according to dairy segment observers.
The result was a depression in sales for fluid milk in 2004. Dollar sales for whole milk in most retail venues rose 2.1%, but unit sales fell 3.9%. Sales of skim/lowfat milk were up 1.4% in dollars but down 4.4% in units.
Milk is still mostly sold in gallon and half-gallon containers. An ongoing trend has been the marketing of fluid milk in single-serve containers. According to Kevin Burkum, senior vice president for retail marketing at Dairy Management Inc., single-serve packaging is “allowing us to take milk to places it hasn’t been before,” such as vending machines and convenience stores.
Quick-service restaurants are another venue where single-serve is helping milk penetrate. Both McDonald’s and Wendy’s started selling single-serve milk last year in attractive plastic bottles, as opposed to the gabletop cartons McDonald’s had been using. The program, developed by the restaurant chains in cooperation with the Milk Processor Education Program (MilkPEP), resulted in greatly increased milk sales.
Cheese is a segment that got a big boost from the anti-carb movement. Total sales were up 5.6% from the previous year, reaching $1.85 billion. The sales spike came in spite of an increase in the price of block cheese, which forced converters like Sargento Foods to raise prices in 2004.
Sargento has focused its R&D efforts on snacking and entertaining, using reclosable packaging to make its Sargento SunBursts and Stars and Moons snacks more convenient for snacks. It has also used packaging to assemble an entire snacking occasion: Sargento Cheese Dips! Rolled out late last year, Cheese Dips! are packaged in a dual-compartment tray: one for the cheese sauce, one for a dippable snack (tortilla chips, pretzel twists or bagel chips).
For ice cream, premium and indulgent offerings continue to drive the category, working either within or outside the low-carb fad. The overall category was down 1.8% last year, but premium brands like General Mills’ Haagen-Dazs edged upward.