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United States packaged food market reported slightly higher value growth in 2013 than in 2012
Packaged Food in the US - a new market research report on 2014-04-25 01:50:02
The US packaged food industry saw slightly higher current value growth in 2013 than in 2012 due to an increase in prices of dairy-based and wheat-based products. Pricing for milk was projected to increase in 2013 as prices of hay and soybean oil meal, used to feed cows, remained high early in the year. The average unit price of baked goods increased by 2% in 2013 due to the continued commodity cost increases that are common year-on-year. Demand for health and wellness offerings such as gluten-free products, which typically cost more than standard items, also helped to drive unit prices upward in 2013.

Americans have embraced gluten-free foods as they have become familiar with coeliac intolerance. While the number of consumers diagnosed with coeliac disease is low, many shoppers have shunned wheat products and turned to gluten-free foods. By consuming gluten-free foods, consumers hope to feel better, lose weight, have more energy, or help alleviate symptoms of attention deficit disorder though a gluten-free diet, although this has not been scientifically proven. Numerous improvements made in the taste and texture of gluten-free products as well as their expanded availability in mainstream retailers also led to increased sales.

The US packaged foods market saw numerous mergers and acquisitions in 2013, including the US$28.8 billion purchase of HJ Heinz by investment firms Berkshire Hathaway and 3 G Capital. The investors took Heinz private in a bid to increase revenue and reduce expenses through plant closures and reduction of inefficiencies. Smithfield Foods, the third-largest manufacturer of chilled processed meat in the US, was purchased by China-based meat processing company Shuanghui International in September 2013. This acquisition helps address Chinese consumers´ interest in eating more meat. Another large acquisition was ConAgra´s January 2013 purchase of private label giant Ralcorp in January of that year. Finally, following the bankruptcy of Hostess in November 2012, the company´s assets were sold to various companies the following year, with the core Hostess snack cake brand being acquired jointly by Apollo Global Management and C. Dean Metropoulos and Company.

While supermarkets hold a smaller value share of packaged food sales than a decade ago, they continue to be the main retail channel for buying packaged food. More retailers now sell packaged food, including drugstores and dollar stores, but supermarkets remain popular because they are usually conveniently located, offer a large product selection, and operate long hours. Discounters ALDI and Save-A-Lot have increased their number of locations, and dollar store chains Dollar General and Family Dollar have expanded their food selections to increase store visits among lower-income consumers. Mass merchandiser Target has been rolling out its PFresh format, featuring fresh produce, frozen food, dairy products and dry groceries, to increase grocery sales among its middle-class base. To retain consumers, supermarkets have also been remodelling and increasing amenities. Supervalu´s Jewel Osco chain has added juicing stations, lobster tanks and salad bars in select stores to provide convenience and a gourmet touch.

The US packaged food market is expected to see lower retail volume growth over 2013-2018 than over the 2008-2013 period. As the US economy continues to recover, the middle-class and upper-income consumers will be able to dine out more often, reducing demand in retail. At the same time, Americans are becoming more health conscious, and items that offer freshness, health benefits, and/or convenience, such as chilled soup, fresh cut fruit, and nuts, will see good growth.

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