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 issue provides insights into the influence of sustainability factors on consumer shopping and purchase behavior. This free summary is also accessible via the GMA/FPA Web site at  http://www.gmabrands.com/publications/gmairi.cfm

INTRODUCTION

2007 may best be remembered as the year in which value shopping made its resurgence.

Supercenters gained more than a full share point this year, after two years of modest gains. Private label share was up a half point in the fourth quarter, following five years of relatively flat share overall. The primary driver? Price.

Average CPG prices increased 4.2% last year, with double-digit increases across several key categories, including milk, eggs and refrigerated juices. These increases would be difficult for many consumers to absorb at any time, but an extremely weak housing market and skyrocketing energy costs plagued consumers simultaneously. Slow economic growth hindered CPG demand growth.
The year also delivered exciting new retail formats, health and wellness products, convenience products and sustainability initiatives. These efforts yielded store, category and brand growth as well as consumer benefits and will drive solid momentum as we move through 2008.
This report explores industry performance in 2007, drivers of performance, and what to expect in the coming year.


KEY FINDINGS

• Industry growth reached 3.3% last year, with price the primary driver. The CPG industry grew 3.3% in 2007 as massive price increases took hold across categories. Demand, however, was relatively flat as slow economic growth exerted a downward pull. Despite these challenges, the drug store channel fared well as store count growth and innovative healthcare and beauty care marketing initiatives bolstered performance.

• Price increases are driving changes in shopping and purchase behavior. Facing average price increases of 4.2% on CPG products, with double-digit price increases on staples, including milk, eggs and juice, consumers are turning to supercenters for low prices. Supercenters secured the largest share gain in three years in 2007. Private label is benefiting, too, with a half point share gain in the fourth quarter following five years of flat share.
   
• Innovative solutions drove real demand growth across numerous categories. Despite slow demand growth overall, a number of major CPG categories experienced real growth in 2007 as consumers embraced innovative solutions to health & wellness and convenience needs. Refrigerated teas, bottled water, snack/granola bars and frozen pizza all experienced solid growth and show strong momentum for the coming year.
   
• A significant CPG market downturn is not likely in 2008. Forecasts for economic growth in 2008 – albeit modest – suggest that a significant CPG market downturn is unlikely, as consumer spending patterns in CPG track closely with GDP growth. Inflation is also expected to subside somewhat, easing some of the current strain on consumers’ budgets.
   
• Emerging consumer trends offer new growth potential. The report highlights eight emerging consumer trends that will deliver new growth opportunities for CPG manufacturers and retailers in 2008 and beyond, including the search for multi-tasking products, the rise of informed purchasing, experiential consumption, and sustainability-driven consumers.
   

Source: IRI's Times & Trends Reports
Information Resources, Inc. (IRI) is the world’s leading provider of enterprise market information solutions and services to the consumer packaged goods (CPG), retail, and healthcare industries.