Times & Trends Special Report:
Impact of Hurricane Katrina

Report Two: The Week After

IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This special edition of Times & Trends provides an in-depth analysis of consumer purchase behavior in the Gulf Coast in the week following Hurricane Katrina. This report is the second in a four-part series.

 This free summary is also accessible via the GMA Web site  at http://www.gmabrands.com/publications/gmairi.cfm

Introduction

Just three weeks after Hurricane Katrina pounded the Gulf Coast, Hurricane Rita threatened the devastated region. The intensity of this year’s hurricane season illustrates the dire need for effective disaster planning by consumers and government, as well as retailers and manufacturers. This report series is intended to provide the CPG industry with insights into consumer needs across product categories before and after such an event, so that this learning may be incorporated into disaster plans and educational initiatives.

This second report focuses on purchase behavior during the week following the hurricane (August 29 –September 4) within key Gulf Coast markets (New Orleans, La./Mobile, Ala.; Birmingham/Montgomery, Ala; and Mississippi) as well as surrounding regions, where thousands of Gulf Coast refugees are now residing. In addition, this assessment revisits the 2004 hurricane season, which included three back-to-back hurricanes in Florida markets, to gain insight into how long current purchase trends are likely to continue before some element of normalcy takes hold.
Key Findings

  • While Hurricane Katrina drove up CPG industry sales significantly versus the pre-hurricane period, sales were below last year’s major lifts caused by the Florida hurricanes. Grocery channel total CPG dollar sales increased 7.4% (accounting for the effect of pre-Labor Day shopping) during the week following the hurricane versus the pre-hurricane period. Versus prior year, however, total CPG sales declined 6% against an elevated base driven by Florida hurricane-related sales. A review of last year’s hurricane season suggests that direct sales impact should diminish by the end of this month. (Figures 1a-1b; Figure 8)

  • New Orleans/Mobile market grocery sales declined by 46% versus the pre-hurricane period. Mass population exodus and store closings drove huge sales declines. A proportion of sales shifted to surrounding areas, including the Houston market, where sales increased 12% as thousands of New Orleans refugees became temporary (and in many cases permanent) residents. (Figure 1b)

  • Shelf-stable foods and beverages continued strong growth. Heightened demand for shelf-stable foods rich in protein, such as seafood and canned meat, as well as bottled water and other beverages evident in the pre-hurricane stock-up period continued in the hurricane markets and extended into surrounding regions. Easy-to-prepare meals, including soup and shelf-stable dinners, have also increased. (Figures 2a-3b)

  • Dairy and frozen categories continue to be negatively impacted in affected markets. Power outages and lack of refrigeration availability inhibited purchases of dairy and frozen food categories within the hurricane markets; however, sales in Houston were exceptionally strong across many categories and appear to be rebounding in the Birmingham/Montgomery market. (Figures 4a-4b)

  • Sales across key general merchandise categories remain strong. Huge surges in demand among flashlights, batteries and candles continue across most of the affected and surrounding markets. Sales are up markedly even in New Orleans, where total industry sales have been vastly reduced. (Figures 5a-5b)

  • Negative healthcare sales trends during the week prior to the hurricane have moderated. Double-digit sales declines across leading healthcare categories were evident in Gulf Coast markets as consumers focused attention and spending on the most basic necessities. While still negative in many instances, growth rates in affected markets have improved. (Figures 6a-6b)

  • Demand for basic personal care necessities increased substantially. The fundamental need for basic personal care products, such as toothpaste, soap and shampoo, drove sizable increases in unit sales across the country as consumers purchased and donated these essential products. (Figures 7a-7b)

     

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Source: IRI's Times & Trends Reports
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