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IRI Study: Consumers Still Like Their ''Enjoyment'' Foods Despite Increasing Focus on Healthier Alternatives

Posted on: Wednesday, 3 August 2005, 18:00 CDT

Opportunities Highlighted for Manufacturers and Retailers Striving to Serve Consumers Balancing Health and Enjoyment in Diets

Despite the influx of health-focused food and beverage products produced each year for retail store shelves, U.S. consumers are still spending one-third of their consumer packaged goods (CPG) food and beverage budget on products consumed for pure enjoyment rather than nutritional value. According to a recent study by Information Resources, Inc. (IRI), a leading provider of enterprise market information solutions for the CPG, retail and healthcare industries, Americans' strong desire for taste, indulgence, and variety has sustained spending and consumption of certain "enjoyment" food and beverage categories.

The report, entitled "The Enjoyment Factor: Consumers' Unwavering Demand for Taste, Indulgence and Variety," delves into the movement of this marketplace, which has seen heightened spending on these categories.

"There are substantial opportunities to grow 'enjoyment category' spending," said Janet Eden-Harris, executive vice president and global chief marketing officer, IRI. "This latest report provides a rich analysis of enjoyment category trends as well as implications for the marketing of healthy/nutritional products. The report empowers manufacturers and retailers with the visibility to see new trends and take immediate action to capitalize on current and emerging opportunities to improve performance."

Consumer Trends

According to the report, 43 percent of consumers place taste above health benefits in the purchase decision process, signaling the requirement that healthy foods must meet or exceed taste expectations in order to increase share of consumer spending and consumption. Additionally, the study revealed growth potential within the enjoyment food and beverage sector as today's consumers are reportedly striving to balance their diets with indulgence of desserts and snacks.

Demographically speaking, households with children spend more on enjoyment products than those without, due to larger household sizes. Moreover, Baby Boomers and older generations allocate much more of their spending on enjoyment categories than Generation Xers and Echo Boom adults, with the disparity in spending driven not by health concerns but by difference in the types of enjoyment products consumed, such as higher-priced wine and spirits for older adults and lower-priced salty snacks and carbonated beverages for the younger generation.

Product Development Potential

Growth of the enjoyment market will remain slightly hampered by healthy eating trends, which IRI predicts will drive a slow, gradual increase in allocation of spending to products with nutritional value. However, there are still considerable opportunities for manufacturers and retailers to increase their stake in these categories through the introduction of new product offerings and properly aligned distribution strategies.

For example, manufacturers should examine the potential for "light" versions of food categories. These versions have excelled in beer and carbonated beverages, but products in the ice cream, salty snacks and chocolate candy categories have not made major inroads over the years. The report suggests that manufacturers strive to enhance the taste of these types of food products and consider creating initiatives that reach consumers suffering from chronic health conditions. Additionally, premium products have the potential to provide a good niche for manufacturers across mass market channels. These items, which offer greater tastes in exchange for higher calories and higher costs, have seen relatively strong growth during the past year. Variety in products, flavors and forms might also drive manufacturers' success in the enjoyment marketplace.

Channel Opportunity

In terms of channel selection, drug stores and mass merchandisers, which hold an above-average share of the enjoyment marketplace versus total food and beverage, represent a sizable competitive threat to grocers across these categories and a potential upside for enjoyment product manufacturers. The report also encourages retailers to make certain that their enjoyment category product mix is in alignment with their core consumers' preferences, as there appears to be major generational differences in the channels consumers choose to purchase their enjoyment foods and beverages.

The complete report can be found on the News & Events section of IRI's Web site (www.infores.com) in the Thought Leadership section.

About the Report

Findings presented in Times & Trends: "The Enjoyment Factor: Consumers' Unwavering Demand for Taste, Indulgence and Variety," are based upon an extensive analysis of consumer data from the IRI Consumer Network(R) Household Panel and scanner-based sales tracking data across Food, Drug, Mass channels (excluding Wal-Mart) from IRI Infoscan(R) Reviews.

About Information Resources, Inc.

Information Resources, Inc. (IRI) is the leading global provider of enterprise market information solutions for the CPG, Retail, and Healthcare industries. IRI is the first company to leverage the power of real-time market information, advanced analytic insights, and enterprise performance management technology to improve the profitability and operational effectiveness of the world's leading CPG, Retail, and Healthcare companies. The Company uniquely provides a total view of the market, enabling maximum business performance throughout the enterprise. IRI's solutions make the consumer-driven, real-time enterprise possible. More information is available at www.infores.com.

Source: Business Wire

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