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IRI report shows 2007 price increases and wellness benefits were driving force for CPG performance

BY DSN STAFF

CHICAGO The elevated price of retail consumer packaged goods was the industry’s most significant story in 2007, according to a report released today by Information Resources Inc.

Skyrocketing ingredient costs and energy prices pushed CPG prices up by 4.2 percent, with double-digit increases occurring across a variety of categories, including such mainstays as milk, eggs and refrigerated juices. According to the study, the largest price increases in recent memory prompted changed spending patterns, with U.S. consumers turning to supercenters, such as Wal-Mart, and private label products in search of lower prices.

Based on information gathered through IRI’s shopper insights and retail market intelligence platform, supercenters regained momentum after a sluggish 2006, advancing their overall household penetration by 3.5 points and gaining more than a full point in market share—the largest increase in three years.

Manufacturer and retailer innovations in beverages, health and wellness products and frozen food product categories also contributed to a stronger CPG showing in 2007, according to IRI. “With the acceleration of prices across the board, consumers responded by refocusing on supercenters and seeking out lower-cost private label alternatives to name brand items, said Thom Blischok, IRI president of retail solutions. “At the same time, product innovation in several CPG categories played a healthy role in spurring growth that we predict will be a key factor in 2008.”

According to the report, health benefits were winners in 2007, as beverages appealing to personal wellness—from energy-boosting ingredients to antioxidant supplements in ready-to-drink teas, sports drinks and bottled water—tapped into consumer calls for “better-for-you” product innovations. Several categories of snack items, frozen food products and non-food healthcare items also bolstered the strong showing by health-focused products.

The IRI report also identified emerging product trends expected to play significant roles in 2008. Among them were the following:

  • Food as a health solution: An extension of the healthy ingredients trend will continue to attract consumers with the delivery of specific wellness benefits. 
  • Sustainability as a differentiator: Growing consumer awareness of the environmental and social impact of their purchases will drive product innovation and assortment options. 
  • Experiential consumption: Continued creation of products targeted to the consumer’s call for unique ingredients, flavors and aromas. 
  • Natural beauty: Cosmetic and skincare innovations will expand further into natural ingredients, offering non-synthetic alternatives across multiple product lines.

“Last year was a great example of the principle that when one door closes, another one opens,” Blischok said. “Manufacturers and retailers experienced changed purchase behavior in several categories, yet maintained the path of innovation to keep consumers first and sales figures strong.”

Information Resources Inc. is the world’s leading global provider of consumer, shopper and retail market intelligence and insights.

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Rafael Roman appointed New York metro region sales manager of Purple

BY Jenna Duncan

Rafael Roman appointed New York metro region sales manager of Purple The maker of Purple antioxidant energy drink, Purple Beverage Co., this week announced the staff addition of Rafael Roman as New York Metropolitan Area regional sales manager. Roman comes to Purple after spending several years as territory manager with POM Wonderful.

At POM Wonderful, Roman handled numerous accounts, introduced new brands and packaging to accounts and supervised sales personnel.

Prior to serving at POM, Roman was distribution supervisor and business development manager at Odwalla (owned by The Coca Cola Co.).

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Coca-Cola purchases 40 percent stake in Honest Tea

BY Drew Buono

ATLANTA Coca-Cola and Honest Tea have completed an agreement that gives Coca-Cola about a 40 percent interest in Honest Tea, with the potential to buy the remaining shares of the company. The current deal was valued at $43 million with the right to purchase the rest of the company in three years, according to the Wall Street Journal.

Honest Tea has been around for 10 years and has produced organic beverages, which have brought it into being one of the top-ranked tea brands in the natural foods channel, according to SPINscan.

“Honest Tea is on the forefront of the rapidly growing organic beverage business, and [founder and chief executive officer] Seth Goldman and his management team have successfully anticipated and met consumer needs in this expanding category,” said Deryck van Rensburg, president and general manager of venturing and emerging brands at Coca-Cola North America. “This transaction is a superb example of our mission in venturing and emerging brands to seek out and invest in the best beverage entrepreneurs and the highest growth-potential beverages.”

One of the company’s newest products is Honest Kids, a line of low-calorie organic thirst quenchers sold in 6.75-ounce pouches, which was launched last year.

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