Ad-ology Research recently updated their Industry Marketing Insights report for Chocolate Confectionery Producers. The following are the predicted Top 3 Opportunities/Challenges from the report for this industry for the upcoming 12 months:

• The U.S. government recently raised the quota to allow more sugar to be imported into the U.S. This move will alleviate high prices and product shortages. However, candy and chocolate manufacturers are still concerned that supply chain disruptions could occur.
• In 2010, cocoa prices have reached a 33 year-high. The crop from the world’s top producer, The Ivory Coast, has been disappointing, and resurgence in demand from the U.S. is fueling price increases.
• Consumers are expected to continue their demand for value brands in 2010. Dark chocolate sales will see some growth while demand for everyday gourmet chocolate will be flat. Exotic spices such as citrus and fruit will emerge as flavor trends. And will gourmet packaging will be used in an attempt to boost sales.

The Industry Marketing Insights report for Chocolate Confectionery Producers is available on Ad-ology.com (Research Store) for $195 USD with local market data for any U.S. market.

[Source: Ad-ology Research. May 7, 2010]

American consumer awareness of the benefits of reducing salt (sodium chloride) and sodium in their diet has reached a nationwide crescendo, making low-sodium/salt and no sodium/salt foods and beverages a major food trend for 2010, according to Low- and No-Sodium Foods and Beverages in the U.S. by market research publisher Packaged Facts.

Representing 3% of the $600 billion total U.S. market for foods and beverages, Packaged Facts estimates the market for low-sodium/salt and no-sodium/salt products in the U.S. market reached $22 billion in 2009. Low-sodium/salt foods and beverages comprised $17 billion of the total and no-sodium/salt products accounted for the remainder.

As the quality of these products improves, they are gaining in popularity with consumers from a variety of backgrounds beyond the traditional niche consumer demographics (i.e., adults age 55 and over, African Americans, and women) that are typically associated with a predilection towards low- and no-sodium foods and beverages.

“Most consumers recognize the health benefits of foods and beverages beyond basic nutrition. And more importantly, a growing number realize that they can influence their own health by cutting back on processed and packaged foods and by reducing the amount of salt added to foods prepared at home,” says Don Montuori, publisher of Packaged Facts. “And though reducing sodium intake may not always be a consumer’s primary strategy for a healthy diet, if good-tasting, lower-sodium options are available at retail consumers will buy them.”

As part of the reduced sodium trend, some retailers have started “low-sodium” food aisles to assist consumers with locating the options available to them.  Sometimes the lower-sodium foods have two placements in the stores: one in a specialty aisle and the second with the same category of mainstream foods.

Meanwhile, an increasing number of foodservice operators and food manufacturers are making a point of offering low-sodium meals or taking salt out of their products.  Recent examples include an announcement by PepsiCo that it has initiated production of a new version of its Lay’s potato chips that contains a “designer salt” to make the chips healthier, in addition to plans by Kraft Foods to reduce sodium by an average of 10% across its North American portfolio of food products over the next two years. Packaged Facts pegs palatability as the key for consumers and manufacturers to such efforts, emphasizing that one of the most successful strategies for creating low-sodium alternatives is the gradual reduction of the sodium content of foods and beverages over time so the consumer is not abruptly confronted with a product that tastes substantially different than what the buyer is accustomed to.

Low- and No-Sodium Foods and Beverages in the U.S.  Packaged Facts. 12 Apr. 2010.  Web.  26 Apr. 2010.

Sobering news has settled on the carbonated beverage industry. After experiencing a 3% drop in 2008, sales of soda fell another 2.1% in 2009. Some of the drop may be attributable to consumer health concerns as medical reports have linked heavy soda consumption to a number of ills, including diabetes. And the recent recession may also have played a role in causing consumers to reach for tap water instead of a carbonated drink. But major beverage marketers aren’t about to watch sales keep sliding without a fight.

Writing for the Boston Globe, Brian Steinberg recently analyzed the shift in ad strategy being taken by Coke and Pepsi.  Historically these marketers relied on slick TV branding campaigns that promoted “fun times, summer picnics, and refreshment with taglines.” The problem is that more consumers, especially younger consumers, aren’t glued to their TV sets watching commercial after commercial. The beverage marketers face a situation where “brands are getting smaller relative to other choices, and their ability to define themselves is declining”, says David Stone of New England Consulting Group.

To reach more consumers, both large and small beverage manufacturers are moving portions of their ad budgets from TV to other media formats. Specifically, digital and social media are becoming part of the mix.  Tom First, co-founder of Nantucket Nectars notes that he uses social networking and radio ads and echoes what many believe: “ ‘You’d be a fool not to try and work’’ with Twitter, Facebook, and other means of reaching smaller groups of consumers.”

And while beverage manufacturers are exploring the use of new media, they’re also positioning  themselves as socially responsible and encouraging their customers to become involved with causes they support.  Many food manufacturers are exploring these kinds of changes this year but for beverage marketers, Michael Bellas, chief executive of Beverage Marketing Corp., say the new efforts make “the biggest shift in a long while in how beverages are marketed.’’

[Source: Steinberg, Brian. Coke and Pepsi moving beyond the good times. Boston Globe. 20 Apr. 2010. Web 3 May 2010]

Consumers may have  cut back on their food spending in 2009 but not all categories were affected equally. In particular, consumers continued to show interest in the specialty food category which now comprises 13% of all retail food sales.  Overall, consumers spent $63 billion in 2009 on specialty foods and beverages, resulting in an impressive 2.7% growth rate during a difficult year.

Note that the National Association for the Specialty food Trade defines specialty foods as premium-quality foods that are often made by small or local manufacturers or that have exotic or ethnic flavors. Given this definition, it’s easy to see that last year’s growth may have stemmed from consumer desire to eat more locally produced goods. And another factor prompting consumer interest is the exotic or ethnic properties of some food offerings. For example, yogurt and kefir experienced rapid sales growth in 2009. And the ethnic categories of Mediterranean, Latin and Indian foods performed particularly well.

In 2009, the following trends became noticeable and may carry into 2010.

• Percentage of foods produced within 250 miles of retail site where they’re sold: 23.4%
• Percentage of manufacturers now involved in making/selling natural foods: 85%
• Percentage of specialty foods that are sold in traditional supermarkets: 74%

Industry analysts expect marketers to target Gen Y shoppers with specialty food offerings. This generation has grown accustomed to food luxuries and is well-acquainted with the products promoted by celebrity chefs on the Food Network.  In addition, this generation responds positively to items positioned as local, sustainable and eco-friendly. Traditional print advertising may not be effective in luring twenty-something in the specialty food stores. Experts suggest that marketers promote in-store events such as cooking classes which appeal to the desire for experience and experimentation.

[Sources: Bond, Pamela. Specialty food sales swelled in 2009. NaturalFoodsMerchandiser.com. 15 Apr. 2010. Web. 29 Apr. 2010; Specialty Food for the Powerful Twenty-Somethings. SpecialtyFood.com. n.d. Web. 29 Apr. 2010]