The integration of wellness has the food industry searching for new opportunities
ORGANIC INTEGRATION. Suggestions from Oprah. Private-label alternatives. — Can wellness get any more mainstream?
The answer is a resounding “Yes.” As much progress as the industry has made in bringing whole health to the masses, opportunities remain, according to the poll used for this year's WH Asks survey.
The study recommends the industry develop more private-label and prepared-food solutions within the category; offer more locally grown products; bolster health condition marketing; and take additional steps to protect the food supply.
The study defined “healthful foods” as a combination of functional foods (those that address specific needs); lesser-evil foods (those that minimize or eliminate a single ingredient); and organic and natural foods (those without artificial ingredients).
It said 38.5% of respondents go to conventional grocery stores to buy healthful foods, while 24.1% seek them out at mass merchandisers and 10.1% at club stores.
Despite price increases over the last few months, consumers surveyed said purchasing healthful foods remains a priority, “[which means] there are important new opportunities for retailers and manufacturers to build a healthy food business through product development and placement and through effective communications,” said Patrick Rea, editorial director of Nutrition Business Journal, which co-sponsored the poll (see “About this survey,” right).
Consumers indicated they were spending approximately 7.7% more on healthy foods in May than they did in November — $191.45 per household per month, compared to $177.69.
Although they said they had cut back on purchases of healthful foods during that period, consumers said they were still willing to pay the higher premiums. In the organics category — traditionally home to the highest prices in the wellness segment — — there had been a 5.7% price increase on organic milk, 5.2% on organic meat, 2.1% on organic breakfast cereals and 1% on organic produce.
“This appears to be both an acceptance of actual inflation in organic food prices and a deepening desire by many to find alternatives to conventionally produced goods,” the study noted.
Still, a large number of consumers who are interested in trying organics don't purchase them “[because] they see price as the primary barrier,” noted Sherwood Smith, president of Avero Research, the firm that conduced the poll.
His recommendation to the trade: “Remove the barrier.”
According to the survey, 97.7% of respondents spent a portion of their grocery budgets on healthful foods, up from 96.5% in November; it also said 47.6% of households said at least half their purchases consisted of healthful foods.
Consumers rated “eating healthful foods” as the most important of 16 lifestyle priorities, ahead of exercising, taking vitamins or health supplements, and managing weight.
Asked to rate attributes they consider important when they shop, 57% of respondents said they look for products with whole grains; 56.9% said they look for products with reduced trans fats; 56% cited reduced saturated fats; 53.6% mentioned reduced cholesterol; and 51.8% named reduced dietary fiber.
“Consumers judge healthful foods by specific ingredients, so the industry needs to watch for the next ‘everyday superfood’ to parallel whole grains,“ Smith pointed out.
Two healthful food categories open immediately to further innovation are organic private-label products and healthy prepared foods, Smith indicated.
According to the research, 42.2% of retailers surveyed said they already have an organic private-label program, while 57.8% said they do not. Among the most common offerings in private-label organics were cereal (mentioned by 33.3% of retailers surveyed), pasta (30.3%), snacks (30%), dairy products (28.3%), and baked goods and juice drinks (27.3% each).
Asked about pricing on private-label organics, 31% of retailers said these items are priced on a par with national organic brands; 31.1% said they are priced higher than regular national brands but lower than organic national brands; and 26.2% said they are priced higher than regular private-label items but lower than regular national brands.
Consumers said they are interested in buying organics regardless of whether they are organic versions of established brands or specialty brands more focused on organics, Smith indicated. “They don't care which. So if you can establish better price fits, there's a lot of opportunity out there.”
Retailers can also grow their healthful foods business with prepared foods, Smith noted. “Consumers are eating out less but still looking for convenience from their healthful foods, and retailers can establish a winning healthful prepared-food program — as long as they pay attention to merchandising and branding that is consistent with quality and health.”
According to Avero's research, 35.6% of consumers seek out prepared salads or side dishes in a typical month; 33.7% look for main courses and entrees; 28% buy fresh prepared soups; 25.9% seek out coffee or juices; 24.5% look for prepared meals; and 24.2% opt for prepared sandwiches.
Asked what kind of health information they look for on ingredient lists of prepared or takeout foods, 28.9% of consumers said they look for heart-healthy attributes; 23.8% cited natural ingredients; 23.1% mentioned reduced calories; 21.9% said they seek out products with whole grains; and 21.3% mentioned locally produced products.
According to the study, local foods hold tremendous appeal for consumers — and there's plenty of room for growth. Asked what products consumers wish they could purchase at their primary grocery store, 33.4% named “local foods.”
The study also said 66.6% of consumers indicated they were likely to switch stores if another market offered a better selection of local products. However, opinions on what constitutes “local” varied.
Some retailers said they believe anything grown or produced in the United States is local (2.9%), while no consumers surveyed defined “local” that broadly; 9.3% of retailers and 3.8% of consumers said local means regional; 38.5% of retailers and 27.9% of consumers said local means coming from within the same state as the seller; 45.2% of retailers and 42.9% of consumers said local is within 100 miles of the seller; and 4.9% of retailers and 23.1% of consumers said local means coming from within 10 miles of the seller.
“Local is not a question of percentage but of perception,” Smith noted. “What's important is how local products are merchandised and how you communicate the marketing message.”
However, while 32% of consumers said they want to see more local products in the stores where they shop, retailers cited several challenges posed by local sourcing, with 58.6% noting out-of-stock problems; 37.1% citing product quality; 31.4% mentioning spoilage or shrink; 31.4% stating receiving problems; and 28.6% referring to problems with local vendor relationships.
To do a more effective job of communicating store strategies and positioning in the healthy foods arena, 74.2% of retailers said they use shelf tags and other point-of-sale materials to identify organic or healthful foods, with another 11.8% indicating such approaches are in development; 67.4% said they participate in local or regional health events, with another 6.6% indicating they are working to develop such programs; and 42% said they offer magazines covering food and health issues, with 8.5% indicating they have such programs in development.
Asked whether consumers trust retailers, Smith replied, “Other research indicates retailers are more successful at developing trusting relationships with consumers through information — conveying the idea they are looking out for the customers.”
Among retailers surveyed, 35% said healthful food offerings are fully integrated in their stores and identified with special signage; 28.9% said they are merchandised together by category; 16.2% said they are featured in a store-within-a-store format; and 10% said they sell them in separate specialty store formats.
Marketing opportunities can also be found by positioning healthy foods as a way to manage various health conditions, including high cholesterol, digestive issues, blood sugar issues, general allergies and diabetes, the study indicated.
“More than half of consumers are buying grocery items to address one or more specific health problems or concerns,” it noted. “While there have been many products developed to meet this growing ‘food-as-health therapy’ movement, there may be quite a bit more yet to come, and there are important opportunities still to be tapped.”
For example, although 48% of respondents said one or more members of their household suffers from joint pain or injury, only 9.8% said they consume foods and beverages with joint-healthy properties, and while more than one-third of respondents said members of their households experience sleep disorders or insomnia, only 5.2% said they are purchasing products that may address this.
About this survey
This year, SN Whole Health is forgoing its use of online polling and instead is featuring a groundbreaking study as the basis for its annual “WH Asks” overview. The poll comes courtesy of Nutrition Business Journal and Avero Research, Traverse City, Mich. The survey solicited opinions from more than 1,000 consumers in November and again in May; approximately 200 retailers in March and April; and just under 100 manufacturers in March.
The results were first presented to attendees at the inaugural Healthy Foods International Exposition and Conference in Dallas, in June. The HFI event, SN Whole Health and Nutrition Business Journal are all part of Penton Media.
Consumers are more interested than retailers think in products with reduced sugar (more than reduced calories), reduced sodium, antioxidants and bioactive ingredients.
|Bioactive (probiotic, etc.)||12%||22%||10|
|Note: Numbers are rounded; multiple answers allowed.|
For any food to be healthy, it first has to be safe to eat.
Nearly three-quarters of consumers questioned for the poll put a high priority on food safety: 71.4% are concerned with pesticides in fresh produce; 68% with pathogens in produce; and 65.2% with pathogens in meat and dairy products.
When consumers were asked what items they buy less often because of safety concerns, 11.5% named salmon, followed by beef, 10.6%; herbal medicine, 10.4%; spinach, 10.3%; and lettuce, 9.5%.
“Although some of these foods received negative publicity years ago, health scares can have long-lasting fallout,” noted Patrick Rea, publisher and editorial director of Nutrition Business Journal, which co-sponsored the study.
Based on consumer responses, certain patterns emerged concerning large-scale food scares. According to the study, most of the information consumers receive about threats to food safety is secondhand, based on input from friends or relatives “who often reinterpret original information.”
“Bad news travels more quickly than good, and when things are complex, the simplest response is to stop consuming something altogether,” said Sherwood Smith, president of Avero Research, the Traverse City, Mich.-based firm that conducted the study.
“Food trends and scares play out in predictable and highly impactful ways,” he continued. “Be prepared to take advantage when the bad news breaks.”
Sherwood suggested that once the product recall and the crisis communications are over, a company should assess the scope of the scare and identify any problem as a process failure.
“Even individual human action is a process failure if the problem could have been corrected.”
The survey asked retailers and manufacturers to name their favorite trade partners, and why they considered them the best.
- Fantastic service; more flexible with programs; show up on time
The Coca-Cola Co.
- Professional people; premium products
- They offer superior literature, coupons and promotions; they are on-site and available most often
- Superb at merchandising new items; good incentives; aggressiveness
Hain Celestial Group
- One-stop shopping for natural foods; broad selection
- Easy communications and promotions; they have assigned people working relationships with vendor; great shelf execution
- Clear rules, clear expectations; they can execute; willing to try new things
Wegmans Food Markets
- Extremely consumer-focused; do what they say, say what they do
Whole Foods Market
- Support and reinforce overall health
- They “get it”; honest business practices; fairness
- Great execution
SOURCE: “THE CURRENT STATE OF THE HEALTHY FOOD MARKET: CONSUMER, RETAILER AND MANUFACTURER PERSPECTIVES,” 2008, AVERO RESEARCH
Store Strategies and Positioning
Retailers are employing a variety of strategies to establish themselves as trusted sources for healthy foods.
|IN PLACE NOW||IN DEVELOPMENTS||PLANNED FOR THE NEXT 3 YEAR||NO PLAN TO IMPLEMENT|
|Shelf tags or POP signage that identifies organic and/or healthy foods||74%||12%||3%||11%|
|Participation in local/regional health events||67%||7%||7%||19%|
|Customer store magazine covering food/health issues||42%||9%||9%||42%|
|Color-coded shelf rails that identify organic and/or healthy foods||39%||11%||10%||40%|
|“Green” construction technologies||32%||26%||15%||27%|
|Nutrition rating systems||26%||21%||19%||34%|
|Note: Numbers are rounded.|