A household is defined by the U.S. Census Bureau as all the people who occupy a single housing unit, regardless of their relationship to one another.
There were 37 million one-person households in 2021, or 28% of all U.S. households. While 35.03 percent of all households in the United States were two person households. Combined 63.03% of all U.S. households have just one or two people living in them.
More than ever demographics continue to drive change in everything we do. The change in population mix including fewer married couples, more people living alone, smaller household size and multi-generational households each are creating new opportunities for food retailers and packaging companies.
Foodservice Solutions® Grocerant Guru®, Steven Johnson is constantly asked why is the Grocerant niche filled with Ready-2-Eat and Heat-N-Eat fresh food driving change in every aspect of the retail food space? Demographics are changing Gen Z, and Millennials spend more often on food than any other demographic in the U.S.
Packaged Facts in an important report on food and beverage packaging entitled Food and Beverage Packaging Innovation in the U.S.: Consumer Perspectives, published by Packaged Facts outlined five key drives shaping packaging.
The five drivers are:
1. Targeting Millennials: While millennials may seem like a broad and amorphous target, numerous studies show there are some commonalities. Millennials like fresh, less processed foods, as demonstrated by their preference for “fast casual restaurants that offer freshly prepared foods, and shopping the perimeter of grocery stores where fresh and non-packaged foods can be found.”
2. Smaller Packages are a Big Trend in Packaging: With one- or two-person households representing 61 percent of all U.S. households, packages sized to serve one or two people have become a big trend in packaging. Such formats include single-serve packaging, meals for two, multi-packs of individual portions, and resealable packaging. The rise in smaller-footprint stores is also influencing this trend.
3. Packaging for Convenience: Convenience is a major selling point for food and beverage packaging. Features such as ease of opening, re-seal-ability, portability, lighter weight, and no-mess dispensing are packaging benefits that influence consumers’ purchasing decisions positively.
4. See-Thru Packaging Can Boost Sales: More and more marketers are putting their products in packages that are see-thru or have see-thru windows. Transparency in packaging taps into consumer desire for transparency about how food and beverages are produced, both figuratively and literally. Companies that are transparent about their ingredients, sourcing, and business practices are reaping the benefits in consumer goodwill and trust.
5. Eco-Friendly Packaging Growing: In the past few years, single-serve bottled water has come under attack by environmentalists as epitomizing the wasteful nature of modern society. As a result, some marketers of bottled water have stepped up their introductions of more sustainable packaging. Likewise, Packaged Facts believes that improved recyclability and sustainability will become ever more important to the success of the single-cup brew market — if not a cost of entry — as this business matures. In the past two years, several American and Canadian marketers have introduced more environmentally friendly designs for use in K-Cup brewers.
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Success does leave clues and have the right packaging helps drive success. The Grocerant niche filled with Ready-2-Eat and Heat-N-Eat fresh prepared food will continue to drive change in all areas of retail food service. Do you know where most meals are consumed? Where are you selling meals?
Now over the last several months, sales for most food categories have been up due to inflation, but unit sales have been down. That is not the case for in-store bakery. Sales have been inflated and unit sales have either been flat or up slightly. According to the latest International Dairy Deli Bakery Association (IDDBA) research, 2022 showed $3.3 billion in total in-store bakery sales, with $1.9 billion coming from the center store and $1.4 billion coming from the perimeter.
The needs of shoppers are also evolving in this category. Where Baby Boomers are used to going aisle by aisle to find the products they want, Gen Xers and Millennials shop differently, and grocers need to change the way they do things if in-store bakery is going to continue to thrive. The younger consumer is looking for personalized offers via social media. So, if you have a sale on turnovers, you better take to TikTok or Instagram. The new shopper is not going down every aisle. They are coming with an agenda (if they come in person at all) and are approaching the shelves in a targeted fashion.
“That whole under-40 generation is not visiting the in-store bakery as frequently as the Baby Boomer generation did,” said Jonna Parker, principal of fresh foods for Circana (formerly IRI). “So you need to leverage social media and digital advertising to the right audience to make a play there.”
Parker pointed to the overnight success of Costco’s chocolate peanut butter pie. The dessert experienced its moment on social media; and shoppers went nuts.
“If that is not proof perimeter bakery can create a viral adventure, I don’t know what is,” Parker said.
The younger crowd also is not one to overindulge, which means single servings of desserts and other items are now starting to move more rapidly.
“[Gen Zs and Millennials] are not big leftover eaters,” said Rick Stein, vice president of Fresh Foods at the Food Industry Association (FMI). “So, we are seeing that single-serving section really being expanded. We’re seeing our members really start to gravitate to these grab-and-go items.”
Parker said that buying enthusiasm is linked to the emergence of the perimeter of the in-store bakery, where a lot of these single servings are put out on display.
Under-40 buyers also demand freshness, but there’s also a contradiction to that behavior, which is that younger consumers typically have bought food at night when the bakery staff is long gone. The habit is changing, and more buyers are starting to come earlier in the day. Still, it is creating an issue for store managers who are looking to offer the freshest items possible.
This is where baked goods with longer shelf lives are thriving, particularly at the supercenters. Families also appreciate food with a longer sell-by date.
Other emerging bakery trends include variety (taste and size) as well as international flavors.
“That’s a growing part of the business we really have not seen in the last several years,” Whitney Atkins, global marketing vice president at IDDBA, said. “I think [bakers] were very innovative during COVID and they took that time to learn how to really hit the consumers in some different ways.
Atkins said Asian flavors are ranking high among shoppers. Ube, a purple yam with a nutty vanilla flavor, is native to Southeast Asia and predominantly used in Filipino cuisine. Another flavor is Yuzu, a Japanese citrus lemon valued for it’s highly aromatic rind. Blends of spicey-sweet are also hot right now, Atkins said.
Since the COVID-19 pandemic, work from home flexibility has increased for many, and higher prices are impacting the abilities of families to eat out. According to first quarter numbers from IDDBA, 29% of Americans work from home at least twice a week. That number is down compared to 2021 (47%) and 2022 (41%).
Rochester, N.Y.-based Wegmans said it has been affected by an increase in remote work. The company is currently testing a pilot moving towards self-serve coffee stations, citing an increase in work-from-home as a pain point to its full-service coffee options.
Yet other parts of bakery are still rebounding from pandemic-related changes in behavior.
“Some of the issues on donuts probably stem from how it got really hurt during COVID because you could not buy single donuts anymore,” Stein said. “I think as that department has reopened up now and back into full selection consumers can go back to picking.”
Atkins said just the excitement of selecting your own donuts post COVID has helped lead the resurgence.
The pandemic also drove a trend of making dishes from scratch, especially with regard to desserts. However, inflation is now contributing to a perception that buying individual ingredients may be more expensive than grabbing something out of the bakery.
Convenience and time also are king when it comes to households with busy schedules. Stein said more households are bringing premade dinners into the home, and with that comes the sweet after meal.
Gatherings also continue to be on the rise, and many happen at the home. Pool parties, game nights and holiday events also are another way consumers are combating inflation, according to Parker.
The grocers capitalizing on those types of events are the ones leaning into advertising that highlights bakery’s role. For pool parties, it might be an illustration showing kids getting together and offering a food solution like brownies.
Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®. Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869
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