The U.S. Market for Whole Grain and High Fiber Foods

SUMMARY

The Centers for Disease Control and Prevention have warned in recent years that obesity will soon become the leading cause of death in the United States, and millions of Americans have responded by rushing to embrace a variety of diet trends, including Atkins and other low-carb plans. Yet growth in the market for products serving these dieters appears to have peaked, as consumers begin to seek out products that actually add healthy ingredients, rather than merely reducing the "bad carb" content. In early 2005, the U.S. government plans to release a new food pyramid that stresses higher consumption of whole grains and high fiber foods, which have been shown to confer a wide range of health benefits--from lowering blood pressure and cholesterol to preventing heart disease, diabetes, cancer, and of course, obesity. Lawsuits against leading restaurant chains and food manufacturers have also led to changes throughout the industry, as Wall Street grows wary of companies that purvey what are perceived to be "obesity foods." Cereal giants General Mills and Kellogg have already made a market-altering commitment to reformulate dozens of major brands to contain more whole grains, and marketers of all sizes are rushing to follow suit. In 2004, as many as 90% of Americans didn't consume the recommended daily allowance of whole grains--but the coming flood of new and reformulated products high in whole grain and fiber content should change that figure dramatically.

This all-new Packaged Facts report delves into the state of the American diet, the history and science of whole grain and high fiber foods, and government and industry approaches to this growing market. The report analyzes sales and growth potential for food products marketed as containing whole grains or high fiber, with a focus on cereals, baked goods, pasta, flour, grains and beans, snack foods, and beverages (not including fiber-based supplements or laxatives). The report also surveys trends in sales of natural fiber sources such as fruit and vegetables, as well as frozen entrees and other categories where whole grains and added fiber may begin to make a surprising appearance. In addition, it examines in detail the trends affecting market size and growth and offers sales projections through 2009. Marketing, retail, and new product trends are covered in each segment and major competitors are profiled, including cereal giants General Mills and Kellogg, baked goods specialist Pepperidge Farm, flour leader Hodgson Mill, and many others.

TABLE OF CONTENTS

Chapter 1: Executive Summary

Scope and Methodology

• Scope of Report
• Report Methodology

Introduction

• The Next Big Thing, Again
• Definition of Terms
• Whole Grain
• High Fiber
• 90% of Americans Don't Get Fiber RDA
• 3% of Calories Consumed in U.S. from Whole Grains

The Market

• Sales to Near $7.5 Billion in 2009
• Market Share by Product Category
• Figure 1-1: Share of U.S. Retail Sales of Whole Grain and High Fiber Foods by Product Category, 2000 vs. 2004 (percent)
• Market Share by Retail Channel
• Government, Major Marketers Commit to Whole Grains
• Whole Grains in the Post-Low-Carb Landscape

The Marketers

• Conglomerates Dominate Market
• Lesser-Known Players Also Compete
• Leading Players by Market Share
• George Weston Is Top Sales Gainer
• Key Considerations: Supply and Formulation Issues
• Line Extensions and Brand Leverage

Marketing and New Product Trends

• Preventive Health, Weight Loss Are Most Important Angles
• Education Is Key to New Campaigns
• Revamping Grain/Fiber Packaging, Tag Lines
• Familiar Brands, New Formulations
• Raw Ingredients Aiming to Improve Whole Grain Taste Profile

The Consumer

• 62% of Adults Are Fiber-Conscious
• 49% Choose High Fiber Cold Cereals

Looking Ahead

• Trends & Opportunities

Chapter 2: Introduction

Market Definition

• Scope of Report
• Seven Product Categories
• Cereals
• Snacks
• Baked Goods
• Grains & Beans
• Beverages
• Pasta
• Flour

The Science of Whole Grains and High Fiber

• The Next Big Thing, Again
• Definition of Terms
• Whole Grain
• High Fiber
• Natural Sources vs. Supplements
• Whole Grains and Fiber Prevent Variety of Illnesses

Whole Grains, High Fiber, and the American Diet

• 90% of Americans Don't Get Fiber RDA
• 3% of Calories Consumed in U.S. from Whole Grains
• Obesity Among Leading Causes of Death in 2005
• The Atkins Effect: Per Capita Flour Consumption in Decline
• "Matriarch" Sets Household Health
• Meals On the Run, Outside the Home Growing Trends

Government, Industry, and Foodservice Responses

• New Food Guidelines, Revised Pyramid in 2005
• Possible Changes to Food Labeling
• Whole Grains Council Seeks New Approach
• Who's Responsible for "Obesity Foods"?
• "Healthy" Vending Machines and Advertising Changes
• Restaurants, Incorporating More Whole Grain, Healthful Options

Chapter 3: The Market

Market Size and Growth

• Methodology for Estimates
• U.S. Retail Sales Approach $4.8 Billion
• Figure 3-1: U.S. Retail Sales of Whole Grain and High Fiber Foods, 2000-2004 (in millions of dollars)
• Cereals Decline Along with Wider Market
• Snacks on the Rise, Buoyed by Snack & Sports Bar Trends
• Whole Grain Baked Goods Outpace Refined Market
• Grains and Beans Are Slow But Steady Performers
• Fiber-Boosted Beverages a Surprising Performer
• Pasta Bounces Back from Downward Trend
• Flour Manages Slight Growth in Weak Market
• Market Share by Product Category
• Figure 3-2: Share of U.S. Retail Sales of Whole Grain and High Fiber Foods by Product Category, 2000 vs. 2004 (percent)
• Market Share by Retail Channel
• Figure 3-3: Share of U.S. Whole Grain and High Fiber Food Sales by Retail Outlet Type, 2004 (percent)
• Table 3-1: U.S. Retail Sales of Whole Grain and High Fiber Foods, 2000-2004 (in millions of dollars)
• Table 3-2: U.S. Retail Sales of Whole Grain and High Fiber Cereal, 2000-2004 (in millions of dollars)
• Table 3-3: U.S. Retail Sales of Whole Grain and High Fiber Snacks, 2000-2004 (in millions of dollars)
• Table 3-4: U.S. Retail Sales of Whole Grain and High Fiber Baked Goods, 2000-2004 (in millions of dollars)
• Table 3-5: U.S. Retail Sales of Whole Grain and High Fiber Grains and Beans, 2000-2004 (in millions of dollars)
• Table 3-6: U.S. Retail Sales of Whole Grain and High Fiber Beverages, 2000-2004 (in millions of dollars)
• Table 3-7: U.S. Retail Sales of Whole Grain and High Fiber Pasta, 2000-2004 (in millions of dollars)
• Table 3-8: U.S. Retail Sales of Whole Grain and High Fiber Flour, 2000-2004 (in millions of dollars)

Factors to Market Growth

• Government, Major Marketers Commit to Whole Grains
• Whole Grains in the Post-Low-Carb Landscape
• Leading Low-Carb Plans Change Their Tune
• Low-Carb Benefits Without the Low-Carb Label
• Shift Away from "Obesity Foods" Driven by Bottom Line, Wall Street Anxiety
• Mainstream America Wakes Up to Natural and Organic Foods
• Whole Grains Add Value to Convenience Foods
• More Demand for Value-Added Foods, High Quality Ingredients
• High-Tech Ingredient Development Merges Taste and Good Health

Projected Market Growth

• Sales to Near $7.5 Billion in 2009
• Table 3-9: U.S. Retail Sales of Whole Grain and High Fiber Foods, 2004-2009 (in millions of dollars)
• Early Spike in Cereals from Whole Grain Conversion
• Table 3-10: U.S. Retail Sales of Whole Grain and High Fiber Cereal, 2004-2009 (in millions of dollars)
• Snacks Off to a Slower Start
• Table 3-11: U.S. Retail Sales of Whole Grain and High Fiber Snacks, 2004-2009 (in millions of dollars)
• Increasing Growth in Baked Goods
• Table 3-12: U.S. Retail Sales of Whole Grain and High Fiber Baked Goods, 2004-2009 (in millions of dollars)
• Brown Rice Sales to Drive Grains/Beans Category
• Table 3-13: U.S. Retail Sales of Whole Grain and High Fiber Grains/Beans, 2004-2009 (in millions of dollars)
• Slowing Growth in Beverages
• Table 3-14: U.S. Retail Sales of Whole Grain and High Fiber Beverages, 2004-2009 (in millions of dollars)
• Whole Grain/High Fiber Pasta a Hard Sell
• Table 3-15: U.S. Retail Sales of Whole Grain and High Fiber Pasta, 2004-2009 (in millions of dollars)
• Whole Grain a Bright Spot in Sagging Flour Market
• Table 3-16: U.S. Retail Sales of Whole Grain and High Fiber Flour, 2004-2009 (in millions of dollars)

Chapter 4: The Marketers

Overview

• Conglomerates Dominate Market
• Lesser-Known Players Also Compete
• Table 4-1: U.S. Market for Whole Grain and High Fiber Foods: Selected Marketers and Leading Brands, 2004

Marketer and Brand Shares

• Methodology for Estimates
• Leading Whole Grain Players by Market Share
• Figure 4-1: Top Marketers of Whole Grain and High Fiber Foods, 2004 (percent)
• George Weston Is Top Sales Gainer
• Leading Marketers of Whole Grain and High Fiber Cereals
• Leading Whole Grain and High Fiber Snack Marketers
• Leading Marketers of Whole Grain and High Fiber Baked Goods
• Top Marketers of Whole Grain Beans and Grains
• Top Whole Grain and High Fiber Beverage Marketers
• Market Leaders in Whole Grain and High Fiber Pasta
• Leading Marketers of Whole Grain and High Fiber Flour
• Table 4-2: Top Marketers of Whole Grain and High Fiber Foods by IRI-Tracked Sales and Market Share: 2000 vs. 2004 (in millions of dollars)
• Table 4-3: Top Marketers of Whole Grain and High Fiber Foods by Net Sales Gains, 2000-2004 (in millions of dollars)
• Table 4-4: Top Marketers and Brands of Whole Grain and High Fiber Cereal by IRI-Tracked Sales and Market Share: 2000 vs. 2004 (in millions of dollars)
• Table 4-5: Top Marketers of Whole Grain and High Fiber Cereal by Compound Annual Growth Rate, 2000-2004 (percent)
• Table 4-6: Top Marketers and Brands of Whole Grain and High Fiber Snacks by Market Share: 2000 vs. 2004 (in millions of dollars)
• Table 4-7: Top Marketers and Brands of Whole Grain and High Fiber Baked Goods by IRI-Tracked Sales and Market Share: 2000 vs. 2004 (in millions of dollars)
• Table 4-8: Top Marketers of Whole Grain and High Fiber Baked Goods by Compound Annual Growth Rate, 2000-2004 (percent)
• Table 4-9: Top Marketers and Brands of Whole Grain and High Fiber Grains and Beans by Market Share: 2000 vs. 2004 (in millions of dollars)
• Table 4-10: Top Marketers and Brands of High Fiber Beverages by Market Share: 2000 vs. 2004 (in millions of dollars)
• Table 4-11: Top Marketers and Brands of Whole Grain and High Fiber Pasta by IRI-Tracked Sales and Market Share: 2000 vs. 2004 (in millions of dollars)
• Table 4-12: Top Marketers of Whole Grain and High Fiber Pasta by Compound Annual Growth Rate, 2000-2004 (percent)
• Table 4-13: IRI-Tracked Sales of New World Pasta's Healthy Harvest Brands, 2001-2004 (in dollars)
• Table 4-14: Top Marketers and Brands of Whole Grain and High Fiber Flour by Market Share: 2000 vs. 2004 (in millions of dollars)
• Table 4-15: Top Marketers of Whole Grain and High Fiber Flour by Compound Annual Growth Rate, 2000-2004 (percent)

The Competitive Situation

• Key Considerations: Supply and Formulation Issues
• Line Extensions and Brand Leverage
• Alliances with Health and Diet Gurus
• Consumer Perceptions of Market Giants vs. Specialists
• Losing Out to Private Label

Chapter 5: Competitor Profiles

Competitor Profile: General Mills, Inc.

• Corporate Overview
• Leader in Whole Grain and High Fiber Foods
• Weight Loss and Whole Grains
• Shortcomings and Challenges Ahead

Competitor Profile: George Weston Bakeries, Inc.

• Corporate Overview
• Strong Growth in Brands with Whole Grain Options

Competitor Profile: Hodgson Mill, Inc.

• Corporate Overview
• Wide Variety of Whole Grain/High Fiber Products
• "David and Goliath"

Competitor Profile: Kellogg Company

• Corporate Overview
• Number-One In Cereal, Trailing in Whole Grains
• More "Healthy Beginnings"
• More Surprises in Fortification to Come

Competitor Profile: Kraft Foods North America

• Corporate Overview
• "Fat" Foods Under Fire
• Limited Whole Grain/High Fiber Marketing
• Opportunities and Limitations for Whole Grain Growth

Competitor Profile: New World Pasta Company

• Corporate Overview
• Limited, But Innovative Whole Grain/High Fiber Products
• Fighting Off American Italian Pasta Co.

Competitor Profile: Quaker (PepsiCo Beverages & Foods)

• Corporate Overview
• Leader in Whole Grain Oats
• More of the Same?

Competitor Profile: Sara Lee Bakery Group

• Corporate Overview
• Riding Out Low-Carb, Embracing Whole Grain

Chapter 6: Marketing, New Product, and Retail Trends

Marketing Trends

• Preventive Health, Weight Loss Are Most Important Angles
• Education Is Key to New Campaigns
• Revamping Grain/Fiber Packaging, Tag Lines
• Reaching Out to Parents

New Product Trends

• Familiar Brands, New Formulations
• Raw Ingredients Aiming to Improve Whole Grain Taste Profile
• In the Morning and On the Go
• Fortified Foods: Bulking Up Whole Grain's Benefits
• Targeted Products
• Other Food Categories Following Whole Grain
• Figure 6-1: Number of New Foods and Beverages with "High Fiber" Package Tags, 1999-2004 (number)
• Table 6-1: Marketers and Brands of Whole Grain and High Fiber Foods: Selected New Product Introductions, 2004-2005

Advertising and Promotion

• Consumer Advertising Overview
• Whole Grain Advertising Positioning
• Playing on Fiber/Grain Preconceptions
• Potato Board Campaign a Model for Other "Low-Carb Casualties"

Retail Trends

• Whole Grain and High Fiber Retail Overview
• Figure 6-2: Share of U.S. Whole Grain and High Fiber Food Sales by Retail Outlet Type, 2004 (percent)
• In-Store Bakeries Gaining Market Share
• Lessons Learned from Low-Carb
• "Bulking Up" With Health and Natural Food Stores

Chapter 7: The Consumer

• Consumer Overview
  • Note on Simmons Market Research Bureau Consumer Data
• 62% of Adults Are Fiber-Conscious
• 49% Choose High Fiber Cold Cereals
• Figure 7-1: Percent of Adults Who Most Often Use Selected Fiber Products by Type, 2004 (U.S. adults)
• Fiber vs. Fun Cereals
• Granola vs. Energy Bars
• Brownberry and Earth Grains Have Strongest Fiber Draw
• Upscale and Urban Skew for Grain Crackers
• Distinct Demographics for Whole Wheat Flour
• Blacks at Index of 132 for Brown Rice
• Table 7-1: Demographics for Adults Who Agree with Statement: I Try To Get Plenty of Fiber in My Diet, 2004 (U.S. adults)
• Table 7-2: Demographics for Adults Who Strongly Agree with Statement: I Try To Get Plenty of Fiber in My Diet, 2004 (U.S. adults)
• Table 7-3: Demographics for Adults Who Most Often Use Fiber Products by Type: Cold Breakfast Cereal, 2004 (U.S. adults)
• Table 7-4: Demographics for Adults Who Most Often Use Fiber Products by Type: Hot Breakfast Cereal, 2004 (U.S. adults)
• Table 7-5: Usage Indices by Breakfast Cereal Brand Among Adults Who Strongly Agree with Statement: I Try To Get Plenty of Fiber in My Diet, 2004 (U.S. adults)
• Table 7-6: Demographic Indexes by Type of Breakfast Cereal Used Most Often: Cold and Hot Fiber Cereal vs. Treat Cereal, 2004 (U.S. adults)
• Table 7-7: Demographics for Adults Who Most Often Use Quaker Oats Fruit & Oatmeal or Nature Valley Granola Bars, 2004 (U.S. adults)
• Table 7-8: Usage Indices by Granola Bar Brand Among Adults Who Strongly Agree with Statement: I Try To Get Plenty of Fiber in My Diet, 2004 (U.S. adults)
• Table 7-9: Demographics for Adults Who Use Energy Bars, 2004 (U.S. adults)
• Table 7-10: Usage Indices by Energy Bar Brand Among Adults Who Strongly Agree with Statement: I Try To Get Plenty of Fiber in My Diet, 2004 (U.S. adults)
• Table 7-11: Demographics for Adults Who Most Often Use Fiber Products by Type: Grain Bread, 2004 (U.S. adults)
• Table 7-12: Usage Indices Among Strongly Fiber-Conscious Consumers by Bread Brand and Preferred Product Type: Grain, Bran, Multi-Grain, Oat, and Whole Wheat, 2004 (U.S. adults)
• Table 7-13: Demographic Indexes by Type of Bread Used Most Often: Grain vs. White, 2004 (U.S. adults)
• Table 7-14: Demographics for Adults Who Most Often Use Fiber Products by Type: Grain Crackers, 2004 (U.S. adults)
• Table 7-15: Demographic Indexes by Type of Snack Cracker Used Most Often: Grain vs. Butter-Flavored, 2004 (U.S. adults)
• Table 7-16: Demographics for Adults Who Most Often Use Fiber Products by Type: Whole Wheat Flour, 2004 (U.S. adults)
• Table 7-17: Demographic Indexes by Type of Flour Used Most Often: Whole Wheat vs. All-Purpose/White, 2004 (U.S. adults)
• Table 7-18: Demographics for Adults Who Most Often Use Fiber Products by Type: Brown Rice, 2004 (U.S. adults)
• Table 7-19: Demographic Indexes by Type of Rice Used Most Often: Brown vs. White, 2004 (U.S. adults)

Chapter 8: Looking Ahead

• Trends and Opportunities
• New Labeling Standards Needed
• Proprietary Symbols Headed for Trouble
• Opportunities in Product Formulation
• Honing In On Specific Health Benefits
• Playing the Weight Card
• More "Grab and Go" and Convenience Foods
• Trends in Product Fortification
• Snack Nuts and Baking Nuts to Reap New Benefits
• Table 8-1: IRI-Tracked Sales of Snack Nuts and Baking Nuts, 2000-2004 (in millions of dollars)
• Snack Nuts Get New Focus on Nutrition
• Table 8-2: Top 10 Marketers of Snack Nuts by IRI-Tracked Net Sales Increase, 2000-2004 (in millions of dollars)
• Table 8-3: Top 10 Marketers of Cooking/Baking Nuts by IRI-Tracked Net Sales Increase, 2000-2004 (in millions of dollars)
• Branching Out in Additional Categories

Appendix: Addresses of Selected Marketers