There is an increasing demand for healthy options on our supermarket shelves, and, according to research by Nielsen, that demand is set to continue, creating numerous business opportunities for retailers and FMCG companies. Aidan O’Sullivan reports.
Nielsen hosted its Importance of Healthier Options event in the Green Isle Hotel in Dublin in June, when it revealed the findings of its most recent research on the healthy-eating sector.
In Ireland, the healthy category was worth approximately €2.5 billion in value, claiming 19% of grocery market share in the year ending 21 April 2019, with a monthly average total growth of 5.3%, compared to just 3.5% growth in the rest of the FMCG industry (food, drink and tobacco only).
Defeat The Sweet
Nielsen’s data shows that reducing sugar consumption has been top of the list in Ireland for at least eight years, and it is a subject that is equally important across both genders, as well as being a concern that becomes more pressing with age.
Interestingly enough, however, is the fact that limiting salt is the number-one concern among men.
The implementation of the sugar tax in May of last year saw a tariff applied to non-alcoholic water- and juice-based drinks with five or more grams of added sugar (per 100ml).
As a result, consumers have drifted more towards no-added-sugar carbonates (NASCs), mineral water, rice cakes and granola bars, rather than more traditional snacks, such as chocolate bars or soft drinks. It is worth noting, too, however, that despite major product reformulation from a number of drink- and snack-makers, these products are still experiencing slower growth than that of products perceived to be a more natural option.
Nielsen asked consumers who drank sugary soft drinks (SSDs) at the start of the tax if they would stop/reduce or continue to drink them. Some 47% said that they would stop or reduce their SSD intake, while 46% said that they would continue to drink them. However, in February of this year, when Nielsen asked them again, 55% of people said that they had stopped or reduced their intake, and only 37% reported that they were still drinking SSDs.
While the increase in the number of people moving away from SSDs has been quite large since the implementation of the sugar tax, it is a trend that was in the making long before the tax was implemented.
According to the data, volume sales for soft drinks, in general, plummeted at the start of 2018, and, as the tax kicked in, it accelerated the growth of soft drinks with no added sugar, as SSDs struggled with a relatively flat performance.
The tax has been so successful that over one half (55%) of Irish consumers are in favour of expanding it, with sweets (64%), chocolates (55%) and biscuits (50%) being the most popular targets. However, despite all of this, at least half of Irish consumers admit to eating chocolate and biscuits more than once a week.
Healthy consumer behaviour
Much of the action that Irish consumers are taking to reduce their sugar intake revolves around selecting the nearest ‘healthier alternative’, e.g. choosing dark chocolate over milk or white chocolate.
This is mainly because many consumers feel that they have been priced out of eating most healthy foods. Nielsen reports that this has paved the way for retailers to make more guilt-free snacking options available to these consumers, either at a reasonable price or through a promotion.
As Nielsen explained at the start of the event, consumers consider three main factors when making a purchase: value for money (which is where the healthy category often falls short, particularly among men), whether or not the product comes from a well-known brand, and whether or not the product is healthy and if there is a healthier option.
Nielsen reports that the latter factor was of particular importance, as Irish consumers have traditionally been very loyal to big-name brands. In addition, Irish consumers have also been noticing and responding to brands that act with social responsibility in mind, championing strategies that help both the consumer and the planet.
Discounters set the pace
When it comes to healthy snacking, all channels are making a solid effort, but discounters are setting the pace in terms of growth. Retail chains such as Aldi and Lidl have been extremely active in ensuring that their healthy ranges are front of mind with consumers, which has led to an impressive performance within the health category.
Despite this, Nielsen suggests that there are a lot of opportunities for convenience retailers in the health segment. They have the advantage of their individual names, and they have a strong presence throughout town centres and urban and rural areas, and they are strongly positioned to cater to the needs of consumers, especially during periods of warm weather.
Hot and cold
The study revealed that seasonal and weather effects have a big influence on our consumption habits, especially when it comes to making healthy-eating choices. As has been continuously reported, our snacking habits tend to rise and fall at different stages of the year. Nielsen reports a high volume of sales in traditional snacks during the winter period and a brief spike before the run-in to summer, but Irish consumers try to eat healthily at the start of a calendar year and as the summer approaches.
In terms of weather effects, the main impact is on healthy drinks. This trend has benefitted the convenience channel greatly, and Nielsen reports that this points to a cash-rich but time-poor consumer who is enjoying the sun and looking for a quick and easy meal, or a healthy on-the-go option that will keep him/her cool during the hot weather.
It is not just the weather that has an effect on consumer behaviour – different seasons also have an impact. Over half (51%) of Irish consumers say that they are determined to eat healthily all year round, however, Nielsen’s data reveals an initial spike in consumers’ desire to eat healthily at the beginning of any given year, as we write up our new year’s resolutions.
This desire has waned by Valentine’s Day and Easter, when indulgent goods are often shared among friends and family.
The same can be said for Halloween and Christmas, when people also tend to pay less attention to what they are eating, with the aim of returning to a healthy and active diet once the calendar year rolls over.
It is always in the aftermath of Christmas that people are much more health conscious than they were beforehand. Despite the major drop in the share of healthy products at Christmas time, Christmas Week remains one of the biggest sales weeks of the year for the category.
Act smart
Nielsen identifies the three main healthy times of the year in Ireland: the new year, with its attendant resolutions, the summer build-up, and back-to-school. At the start of the year, the purchasing of healthy food increases, with consumers prioritising discounters for their value and avoiding big chains and heavy snacks.
The interest in healthy eating then tends to fade as the year progresses, only for people to remember their new-year resolutions as the dreaded swimsuit season approaches. Driven by this sudden sense of urgency, consumers prioritise easily accessible healthy drinks in convenience stores while desperately cutting back on heavy snacks and large meals (the lack of interest in mealtimes could also be driven by the warm weather in this period).
Finally, during the back-to-school stage of the year, parents are focused on buying quality healthy and nutritious food that is also good value for money, so they tend to gravitate towards discounters for this mission. Healthy drinks and loose fruit and vegetables thrive during this period.
Nielsen called on retailers to observe these trends and ask themselves: why are consumers looking for healthy options, where are they going to source them, when are they going, and what do their purchasing habits tell us? In addition, the heavy influence of seasonal factors should make it relatively easy for retailers to plan innovative launches and promotions to drive growth in the category.
© 2019 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click sign-up to subscribe to Checkout.
