Kids Food and Beverage Market in the U.S.

24-Sep-2011 | News-Press Release

Many of the more than 43 million kids have become quite food savvy as a result of watching TV cooking shows with their foodie parents and being exposed to new foods while traveling and eating out. This has created both opportunities and challenges for developers and marketers, as kids have become more willing to explore new foods, but at the same time more discriminating when it comes to food selection. Marketers’ greatest concern used to was the gatekeeper, who ultimately made the decision to purchase a product. But today, the little foodies of the world expect more from what they are being served … more in terms of presentation, taste, and quality.

Fact is, the kids’ food market is a broad and complex one, spanning numerous categories and product segments. In Kids Food and Beverage Market in the U.S., Packaged Facts qualifies a food as being a kids’ food when it has a taste kids love; nutrition kids need; or entertainment kids crave. Ideally the product possesses all three of these characteristics. This is accomplished through formulation, packaging, and marketing.

There are a number of reasons why food marketers are developing products specifically for the 2- to 12-year-old age group. For starters, this demographic represents about one-seventh of the population. It is also the most influential demographic for marketers. Life-long dietary habits are established during this 10-year age span, and brand loyalty begins. These factors and more are influencing the $10 billion market for children’s food and beverages.

Scope of Report
This report focuses on retail-packaged food and beverage products, or simply foods, targeted to children in the 2- to 12-year-old age group. Packaged Facts divides the kids market into three segments:
• 2- to 5-year-olds, or preschoolers;
• 6- to 9-year-olds, or younger kids; and
• 10- to 12-year-olds, or tweens.

Report Methodology
The information contained in this report was obtained from primary and secondary research. Primary research entailed consultations with food and beverage market sources and on-site examination of retail venues. Secondary research included extensive Internet canvassing and research- and data-gathering from relevant consumer business and trade publications; company reports including annual reports, press releases, and investor conference calls; company profiles in trade and consumer publications; government reports; and other food and beverage market reports by Packaged Facts.

Our consumer demographics analysis draws primarily on data compiled by Experian Simmons, New York. Each year, Experian Simmons surveys a large sample of consumers about their personal and household buying habits. The results cited in this report are based on the Spring 2010 survey (April 2009 to June 2010), and on a sample size of 23,572 adults, which represents approximately 115 million households. Of these households, 22%, or 25,085, have children under the age of 12-years old.

Additionally, data from the National Health and Nutrition Examination Survey (NHANES) provides insight into children and the obesity epidemic. Data on new product introductions are based on Product Launch Analytics, a Datamonitor service. Various sales estimates and data pertaining to marketers of children’s food and beverage products are partially derived from figures based on SymphonyIRI sales tracked through U.S. supermarkets and grocery stores, drugstores, and mass merchandisers (including Target and Kmart, but excluding Walmart) with annual sales of $2 million or more.

Market Insights: A Selection From The Report
Traditional vs. Better-for-You Shares
The $10 billion kids’ market can also be broken down into traditional and better-for-you products. Packaged Facts estimates that in 2010, 40%, or $4 billion of the kids’ food market, could be described as having some better-for-you element. This includes products with claims such as “made with whole wheat” and “lower sugar.” The other 60%, or $6 billion of products, are described as traditional. The primary sub-category that keeps the traditional segment in the lead is ice cream/novelties. Even most fruit chews/gummies now sport a “contains 100% of the Daily Value for vitamin C” claim, while about a half of aseptic
juice/fruit drinks are now described as “lower sugar.” Packaged Facts anticipates that this share of sales will flip-flop by 2015. [Figure 3-3]

“The Power of Protein at the Breakfast Table”
That’s the phrase used to introduce the section of Sara Lee’s 2010 annual report that is devoted to the Jimmy Dean brand, which is named after the country singer and sausage entrepreneur whose business the company acquired in the 1980s. Sara Lee describes the brand as a “protein breakfast platform.”

According to Packaged Facts’ Frozen Foods in the U.S., 3rd Edition (January 2011), Jimmy Dean corners the breakfast hand-held market, with a year-over-year gain of $43 million for the 52 weeks ending October 5, 2010 in channels tracked by SymphonyIRI; a total of $214 million in sales; and a 57% share of the breakfast hand-held category. And Frozen Convenience Foods in the U.S. (Packaged Facts, December 2010) reports that Sara Lee also leads the breakfast entrees category. Together, the Jimmy Dean products grew 5% in the 52 weeks ending July 11, 2010 to reach sales of $133 million. That constituted a 35% share of breakfast entrees. The main difference between Sara Lee’s fortunes in the two categories is that while it leads in frozen breakfast entrees, it completely dominates in frozen breakfast hand-helds.

Where Consumers Buy Kids’ Foods and Beverages
In terms of purchasing kids’ foods, Packaged Facts estimates that the majority of America shops traditional supermarkets (60%) followed by mass merchandisers (25%). However, just as mainstream America shops a variety of retail outlets, so do parents purchasing kids’ foods. In fact, thanks to organic/natural/specialty foods stores’ efforts to appeal to parents with “more-healthful” kids’ products, this outlet is giving more traditional venues some serious competition when it comes to kids’ foods. It controls 10% of the market.

Club stores have a mere 3% share of dollar sales of kids’ foods, as offerings are mostly limited to juice boxes and some snacks. All other channels make up the remaining 2% share.

Kids’ foods, as defined in this report, are often too segmented for many of these other channels to carry many SKUS, if any. [Figure 6-4]

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