Salad Bowl Branding

Cutting Back On Dining Out, Consumers Seek New Source Of Variety In Home-Based Food Preparation

With the current market conditions placing the economy on a roller coaster and leaving consumers concerned over their jobs, eating out is increasingly becoming perceived as a luxury item.

In an article covering the decreased traffic at restaurants, The LA Times cited data from NPD Group's newest "Eating Patterns in America" report detailing how restaurant meals now cost on average about three times what it takes to make a similar meal at home... and that when people do eat out, they are frequenting quick-serve and fast food restaurants more often than pricier ones.

Said another way, consumers don't stop eating during a downturn--but they do adjust where they have their meals.

What does this mean for food retailers?  Home-based dining (and food preparation) are poised for an upswing. Amid price hikes in retail foods, the grocery store is still less expensive than the restaurant. A recent Wall Street Journal article tied this trend to increased demand for recipes and advice by way of food magazines. 

The data found that Everyday Food's newsstand sales rose 8.9% in the first half of the year while Everyday with Rachael Ray gained 6.2% and Gourmet increased 3.5%--compared with overall sales for consumer magazines falling by 6.3% (all figures according to the Audit Bureau of Circulations).

So, what does this mean for the specialty foods sector? Eating in saves money but lacks variety since consumers have been used to special dishes at specialty restaurants...thus, consumers will be seeking variety from ethnic and artisan foods that they can prepare at home.

 According to a recent article tracking Goya Foods' booming growth, a representative explained, "Many consumers have shifted away from food service and restaurants and are back to the supermarket and preparing their own meals. In many cases they're searching for something a little different. They're looking to indulge themselves, they're looking for new flavors and new items that bring some excitement to the dinner table since they're eating out less. That's where specialty and ethnic foods can do really well."

The BIG takeaway? In the short term, look for a more loyal audience at the local grocery store (vs. local restaurants) and for a slow economy to spur growth of specialty foods. After all, consumers who are tired of the same thing, may just be the bolstering force of your new (and next) brands. And in the longer term, many foods that are currently considered "niche" will likely get exalted to mainstream status once the market strengthens. In the meantime, we'll keep tracking this trend.

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Amid Market Concerns, Marketing Trends Tell A Larger Story

While news of the economic downturn is blazing the nation’s headlines the fact is, it’s only part of the current story. After all, the economy is not the only entity in America experiencing dramatic shifts.

With one-third of the U.S. population currently of minority status—a figure forecast to soar to half the population by 2050—a far larger story of change is occurring. And with sales of specialty foods rising 17 percent over the last two years (compared to only 4 percent of overall food growth), these long-term marketplace changes hold near-term implications for the specialty foods and beverages industry.

A look at many of the current trends tells the broader story—which includes opportunity, not just economic challenge:

• Purchasing power increases. Minority market segments are not only growing in size but in spending power—and that power is pegged to fervently rise by 30 percent, to $1.9 trillion, within only three years. These markets are essential to the overall economy, and a key driver within our own sector.

• The new “tastemakers” wield wide-ranging influence. With sales of specialty foods slated to grow by an astonishing 50 percent over the next decade, the real phenomenon is that 75% of sales generated for specialty foods are from mainstream customers, not the niche cultural segments originating the foods. Indeed, American palates are now influenced by an entirely new set of tastemakers.

• Home-based dining poised for growth. Consumers don’t stop eating during a downturn, but they do adjust where they have their meals. This is good news for food producers as home-based food preparation is undoubtedly poised for an upswing. Moreover, consumers will seek more variety in their home-based diets since they will not be frequenting specialty and ethnic restaurants at the rates of the past few years.

A Look Back Gives Future Insight

As history has proven time and again, the economy will turn back around--just as the stock market took some steps toward recovery this week. But as history has also taught us, the chance to gain a strong foothold into emerging markets is time-sensitive, too.

Opportunities with new markets of this magnitude—that are influencing the purchasing decisions of much larger markets—come and go quickly…which begs the ultimate question: In this economy, is your company’s growth strategy reactionary or truly visionary?

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