Report: Baking Ingredients to Heat Up in 2009

National brands will offer innovative packaging, unique flavors and additional health and wellness benefits as a way to win back consumers who switched to private labels in 2008 to save money.

“From sustainable manufacturing techniques to innovative national brand offerings, the products and services likely to succeed in 2009 will be those that appeal to the sensible consumer looking for a rational benefit,” Tom Pirovano, Nielsen's industry insights director, wrote in the report.

The growth of organics will slow dramatically.

For each of the past five years, products labeled “organic” have showed year-on-year growth of greater than 20%. However, in recent weeks the growth rate has slowed to as low as 4% vs. a year ago.

“Unless organic marketers can do a more effective job of demonstrating better taste or concrete health benefits, expect the growth of UPC-coded organics to decline to less than 10%” growth, according to Pirovano.

Despite declining commodity prices, grocery prices are not likely to drop.

“As the prices of fuel and food ingredients decline, don't look for retail price decreases anytime soon,” according to Pirovano.

Coupon redemptions will rise.

Thanks to email, mobile phones and in-store methods, couponing will be a lot easier for consumers next year, according the report.

Families on a tighter budget will be less likely to pay a premium for environmentally sustainable “green” products.

In response to rising fees from credit card companies, retailers will offer more discounts for shoppers paying cash. Convenience stores may take the lead this year, but other retailers will follow suit.

Fewer premium-priced new products will be introduced to the market in 2009.

As more retailers look for ways to cut costs, retailers will rely less on meat cut in the store, and more on UPC-coded meat packaged centrally and sold on the shelf.

“For the past few years, we've seen the transition from random weight to pre-packaged, UPC-coded meat,” according to Pirovano.

Vitamin sales will show steady growth in 2009. For most of 2008, the vitamin category was the only HBC category to grow unit sales by more than 2%. Vitamins will continue to grow unit volume as the U.S. population looks to maintain good health.