According to a Recent Study/Survey … Mid-February 2017 Edition
29 Min Read By MRM Staff
As part of our mission to be the go-to resource for on-the-go restaurant industry professionals, Modern Restaurant Management (MRM) magazine offers highlights of recent research. This mid-February 2017 edition features Valentine’s Day research from our friends at CAKE, some uplifting restaurant statistics and a plethora of beverage data.
Valentine’s Day Impact
Valentine’s Day was the other day and couples around the country spent a romantic night out at their favorite restaurants. It’s no surprise—restaurants benefit greatly from Cupid’s holiday, seeing and uptick of 67 percent revenue compared to an average day.
How can restaurants be sure they are maximizing their potential for profit on this busy day? CAKE found that adopting integrated technology can help restaurants streamline their operations on busy holidays, like Valentine’s day, and make the most of their potential revenue.
CAKE took a look at how Valentine’s Day impacts the restaurant business and found:
- Quick service restaurants don’t fare as well as full service restaurants, seeing an average drop in number of transactions of 17 percent on Valentine’s Day compared to a 67 percent increase for FSRs.
- For FSRs, technology can help them make the most of the busy holiday
- Full service restaurants with two or more OrderPads installed saw a 74 percent increase in average transactions compared to just 19 percent for all FSR, and a similar difference in average revenue change (92 percent for FSRs with 2+ OrderPads compared to only 67 percent for all FSRs)
- Full service restaurants with Guest Manager installed saw similar benefits: a 39 percent rise in transactions over an average day compared to a 19 percent lift for all FSR, and a 82 percent revenue lift compared to 67.05 percent for all FSRs.
- For QSRs, technology adoption can help them weather the drop on Valentine’s Day
- QSRs overall saw 17 percent less transactions on Valentine’s Day than an average day in February, but QSRs with two or more OrderPads saw 67.03 percent more transactions on Valentine’s day than their average day. QSRs with Guest Manager installed also saw an increase instead of a decrease, with an average jump of 20 percent in transactions on Valentine’s Day.
It’s OK to Cheat
Americans are more likely to bend the rules on dieting, spending and dating on the most romantic day of the year, but stand firm on romance deal breakers including mobile phone use, political talk and exes, according to an OpenTable’s Valentine’s Day survey conducted online by Harris Poll in December 2016 among over 2,000 U.S. adults.
According to the survey, 71 percent of Americans planned to dine out in celebration of the romantic holiday this year; and many indicated a desire to throw caution to the wind and break their diets, budgets, as well as the traditional rules of dating. Even with New Year’s resolutions still fresh on everyone’s mind, it appears they will not impede Americans from embracing Valentine’s Day as a 24-hour hall pass. Despite a more carefree attitude, there are still some social graces that likely won’t be met with a blind eye once at the table, including mobile phone use, political talk or mention of an ex.
“In spite of the rules and resolutions we often set for ourselves, especially at the start of a new year, we found that many Americans would be willing to give themselves license to let go and enjoy the holiday without restraint,” said Caroline Potter, Chief Dining Officer at OpenTable. “More than a celebration of love, Valentine’s Day will serve as a reprieve from the daily grind, a day to gather around the table and treat ourselves as well as loved ones.”
New Year, New You…until Valentine’s Day
Nearly nine out of 10 Americans (87 percent) say it is ok to cheat on their diet when dining out on Valentine’s Day. Perhaps pointing to a certain comfort that comes with off-the-market status, those currently in a romantic relationship are more likely to find indulging and breaking their diet on Valentine’s Day acceptable than those who are single (90 percent vs. 79 percent).
Money ain’t a Thing
More than just cheating on their diet, 44 percent of Americans would want to make it count by splurging and ordering pricier items off the menu than they usually would. Men are more likely than women to bypass modest dishes for more decadent ones (55 percent vs 34 percent). As for singles, who will likely be footing their own bill, it appears they will be watching their pocketbooks, with only 32 percent saying they would order a more expensive menu item than usual for Valentine’s Day, compared to nearly half of their coupled counterparts (49 percent).
Hey, I just met you, but will you be my Valentine?
Half of Americans (50 percent) feel it is fine to dine out with a sweetheart on Valentine’s Day after less than a month of dating, with a surprising 1 in 5 (20 percent) saying it is acceptable as a first date.
No phones allowed, unless for a selfie or squad pic
More than half of Americans (55 percent) believe it is never acceptable to use a mobile phone for any reason during a Valentine’s Day meal. However, nearly one in three (32 percent) think it is permissible for selfies or group photos. Millennials (age 18-34), however, follow their own rules, with 71 percent saying it is ok to use a mobile phone for any reason during a Valentine’s Day meal.
More than nine in ten Americans believe there are surefire ways to boost (93 percent) or bust (95 percent) the mood during a Valentine’s Day meal. Among the mood enhancers, over three in five (62 percent) believe that arriving early with flowers or a gift is a definite win. Women are more likely than men to be particularly sweet on this romantic gesture to make a Valentine’s Day dinner date more special (67 percent vs. 57 percent). When it comes to top mood killers, using a mobile phone too much (78 percent), being rude to restaurant staff (76 percent), mentioning an ex (68 percent), poor table manners (68 percent), and discussing politics (42 percent) take the proverbial cake.
The survey was conducted online within the United States by Harris Poll on behalf of OpenTable from December 13, 2016 to December 15, 2016 among 2,058 U.S. adults ages 18 and older.
Super Bowl Stats
Wingstop expected to sell nearly 12 million wings Super Bowl Sunday thanks, in part, to technology.
Wingstop has prioritized technology and leveraging digital ordering to better serve consumers and drive operational efficiencies. Digital orders are also $4 higher on average, and made up 19 percent of sales exiting Q3, versus the fast casual average of six percent.
Number of wings sold in years past?
2016 – 11 million
2015 – Eight million
2014 – 6.6 million
2013 – 5.6 million
2012 – 4.8 million
2011 – 4.3 million
How much (percent) do sales increase on Super Bowl Sunday vs a normal Sunday?
On average, Wingstop restaurants see a 100 percent sales increase over normal Sunday sales. Some stores see sales increase of over five-times their average Sunday volume
The restaurant industry kicked off 2017 in a much more uplifting fashion than it ended 2016. While same-store sales growth was flat (0.0 percent) in January, it represented a welcome break from the ten consecutive months of negative sales growth experienced by the industry through the end of last year. January’s jump of 4.3 percentage points was the biggest month-to-month improvement in same-store sales growth in almost 4 years. This insight comes from data reported by TDn2K™ through The Restaurant Industry Snapshot™, based on weekly sales from nearly 26,000 restaurant units and 130 + brands, representing $65 billion dollars in annual revenue.
Three segments experienced positive sales growth in January: upscale casual, family dining and quick service.
“Although positive sales growth is always welcome, we have to be cautious about getting too optimistic about these latest results,” commented Victor Fernandez, Executive Director of Insights and Knowledge for TDn2K. “On one hand, it is common to see some large swings in comp sales during the winter, as significant weather events create fluctuating year-over-year comparisons. For example, sales were up between 20 and 65 percent in three of the regions on the East coast during the third week of the month, clearly weather related.”
“In addition to weather, there were unusual events in January that likely had some impact on restaurant sales. The year started with a federal holiday on January 2, which was unlike 2016. We also witnessed the effect of the presidential inauguration and the massive marches the following days. The combined impact is difficult to gauge, but operators will closely watch performance in upcoming weeks to get a sense if the downward trend in sales has been reversed or was simply obscured in all the noise.”
Consumer Spending and Millennial Impact
Growth slowed in the final quarter of the year, but the overall number was misleading,” explained Joel Naroff, President of Naroff Economic Advisors and TDn2K economist. “Consumer spending was quite solid and demand for domestic goods was strong. Incomes, including wages and salaries, grew at a solid pace and the gains accelerated in the second half of the year. With the labor market continuing to tighten, that trend should continue this year. That bodes well for consumer spending, which could be even stronger in 2017. Millennials are moving into their thirties and that means they should start forming households and having families. While they have greatly altered restaurant demand already, their aging could lead to another round of changes. Though any new trends that may emerge may be a few years off, it needs to be tracked starting now.”
Traffic and Average Guest Checks
Same-store traffic dropped by -2.5 percent in January. Although still negative, this was the best month for the industry since last May. Average guest checks grew by 2.4 percent during the first month of the year. On average, guest checks have grown at a pace of 2.3 percent year-over-year since August 2016.
Two-Year Growth Comparisons
A two-year view of sales performance offers another perspective of the slowdown in sales and reveals January’s sales growth to have been relatively weak. Same-store sales fell by about -0.8 percent compared with January of 2015. Two-year sales growth rates have been negative for all months since October of 2016. In contrast, same-store sales calculated on a two-year basis grew by an average 2.5 percent during the first six months of 2016 and by an average 3.0 percent for all months of 2015.
Three segments experienced positive sales growth in January: upscale casual, family dining and quick service. Quick service has been consistently in the top spot, but had slipped the past two months and rebounded in January.
January sales declined in fine dining and fast casual. For the first time in over five years, fast casual was the weakest performing segment based on sales growth.
Also noteworthy is the fact that casual dining was able to achieve flat results in January, breaking a streak of thirteen consecutive months of negative same-store sales growth.
Restaurant industry woes continue to extend beyond the declining sales and into the increasingly difficult task of keeping restaurants staffed. According to TDn2K’s People Report™, in December restaurants once again suffered an increase in their hourly employee and restaurant manager turnover.
Turnover rates for managers and hourly employees started increasing in 2010. Currently those rates are at the highest levels reported in over ten years. Turnover is clearly correlated to the overall unemployment rate, which means that, at close to full employment, continued employment pressures are expected through the year.
Terminated Managers Tend to Stay In the Industry
A recent survey by People Report revealed that 62 percent of responding restaurant companies estimate that over half of their terminated managers leave to go work for another restaurant company. “Right now, there are many vacancies appearing every day for restaurant managers, and they are mostly getting filled by people leaving their current restaurant jobs,” said Fernandez. “Many restaurant managers are not finding what they are looking for in their current jobs and are very willing to go look for it at another restaurant company.”
Location, Location, Location
Inneractive, an independent global mobile ad exchange, said based on an examination of their 2016 mobile ad traffic, they saw a rise of 170 percent in ad requests containing location data, and a ~20 percent in eCPM for ad requests that included GPS data for five of their top publishers. This research demonstrates that location-based mobile advertising is fast becoming a competitive differentiator as mobile ad players enjoy the benefits of providing a highly personalized relevant and timely user experience.
Inneractive examined their mobile ad traffic based on over 800 million unique monthly users worldwide and more than 2.5 million ad requests processed every minute to determine the increase in demand for location data. They examined parameters such as bid depth, win bid, clear rate and eCPM for five of their top publishers over the course of a year to measure ad performance.
“Location data delivers a win-win-win situation with users receiving more relevant ads and advertisers and publishers enjoying higher engagement,” saidRoni Anavi-Fass, VP Product at Inneractive. “The data on our platform shows that ad requests are enriched by GPS information, and location data has a higher value on exchanges.”
Additional key findings from Inneractive platform traffic:
- The number of bid requests in China grew by 33 percent and eCPM nearly doubled, as the rise in demand has allowed Chinese publishers to raise the prices for their traffic.
- There was an increase of 133 percent in video ad requests which is no surprise, however banner ads are still very popular with their eCPM growing by 81 percent.
- The number of programmatic private deals created between April and December 2016 grew 5x, while revenue from private deals, during the same time period, grew 13x, suggesting not only that this method of selling is being more widely adopted, but also that publishers are shifting more premium inventory to this channel.
RestaurantOwner.com released the results of their 2017 Independent Restaurant Outlook Survey based on input gathered from over 500 independent restaurant owners regarding their restaurant outlook for 2017. The results indicate independent restaurant owners are optimistic about 2017, a theme supported by a majority who plan to grow and invest in their restaurant business in 2017.
Independent restaurant owners are optimistic about 2017. 56 percent of respondents indicated they are more optimistic now than this time last year. 27 percent report they feel about the same, and only 17 percent indicate that they are less optimistic.
For those who report feeling optimistic, over half (51 percent) attribute it to improved business practices or systems. Interestingly, respondents tended to attribute their optimism to either internal factors (high quality staff, quality of the guest experience, labor costs, improved business practices or systems) or external factors (improving economic conditions, the positive impact of new government policies).
Of those who were not optimistic, over half (55 percent) attribute their outlook to higher labors costs. Responses tended to cluster into one of three concerns: staffing (high labor costs, staffing challenges), management (quality of our guest experience, lack of effective business practices or systems), or economic (stagnant or worsening economic conditions, negative impact of new governmental policies).
The goals and objectives independent restaurant owners are going to pursue in 2017 reflect optimism. Most (94 percent) indicate they have two or more goals for 2017. Plans to improve overall profitability, improve staffing, improve internal systems or business practices, or reduce costs were each endorsed by over half of respondents.
Independent restaurant owners’ plans for 2017 reflect their optimism. 83 percent have plans that reflect investing in or growing their restaurant business. Just under half (48 percent) have plans to make physical improvements.
Loyalty, Loyalty, Loyalty
According to Oracle, findings of two research initiatives aimed at identifying the consumer drivers for loyalty in the food and beverage and hotel industries and the impact of technology in curating a unique hotel guest experience. Insights from both studies highlight a global demand for loyalty programs in the hospitality industry and the critical role of technology to inspire hotel staff to create memorable guest experiences.
Identifying Consumer Drivers for Loyalty
Loyalty programs are a critical driver of repeat business for both the food and beverage and hotel industries with their ability to identify consumer habits, demographics and personalization opportunities. With these insights the hospitality industry can more effectively create frictionless experiences that encourage repeat engagement. To better understand what makes loyalty programs most effective Oracle Hospitality recently conducted a survey of 6,500 global food and beverage consumers and 8,000 hotel travelers represented by the U.S., Brazil, Mexico, Australia, U.K., Germany, France and Japan.
Key insights from the research for the food and beverage industry include:
Consumers around the world want to join loyalty programs. In the U.S., 65 percent of consumers are already members of one or more food and beverage programs. Even in Japan, where the lowest percentage of consumers were already members of a program from our survey, nearly one-third belonged to a loyalty program.
Plastic loyalty cards remain the preferred loyalty tool with mobile applications gaining popularity. At 62 percent overall, plastic swipe cards were the most preferred method across all generations. At a 56 percent preference, Millennials wanted to use apps for loyalty programs and 50 percent of Gen Xers also agreed that apps are a preferable method.
Perceived personal savings drive loyalty. Money off of every purchase (71 percent) and free products (63 percent) were the top two most attractive rewards to consumers.
Technology can address the industry’s dual challenge of operating efficiently at scale and simultaneously providing individualized service.
“Loyalty programs provide restaurant operators with the opportunity to reward guests for repeat business, to create a marketing database for personalized promotions, and to guide the strategy for future programs ensuring their relevancy,” said Mike Webster, senior vice president and general manager, Oracle Hospitality and Oracle Retail. “Oracle Hospitality has a differentiated offering that leverages best-in-class, cloud POS with an integrated gift and loyalty solution and cloud analytics suite that minimizes the creation of disparate data silos which can create false perspectives of guest engagement.”
Key insights from the research for the hotel industry include:
Hoteliers still have a chance to create long-term relationships. Among all survey participants, 58.7 percent reported that they do not belong to a hotel loyalty program. A mere 3.2 percent stated that they belong to 5 or more.
Loyalty initiatives are “sticky” and encourage repeat stays. Globally a pattern of repeat business was evident among respondents, ranging from 33.6 percent of Australians to 53.8 percent of Mexicans who said they often stay in hotels that offer loyalty programs.
Consumers want control over how they redeem rewards. Globally a majority of consumers identified that they are interested in being able to choose how they redeem their rewards (61 percent) and 57 percent are interested or very interested in being able to customize their hotel guest experience (room choice, newspaper, late check out, etc.).
Creating the Coveted Hotel Guest Experience
Oracle Hospitality also polled more than 2,700 travelers from the U.S., U.K., France and Germany to better understand technology’s impact on the hotel-guest experience and gain insight into how technology investments can be a differentiator for winning consumer business. The study also adds perspectives of hoteliers, both chains and independents, to shed light on their technological pursuits and gauge alignment with consumer expectations.
Key insights from the study highlight opportunities to engage guests prior to and during their hotel stay:
- Nearly two-thirds of U.S. guests said it was “very or extremely important” for hotels to continue investing in technology to enhance the guest experience.
- Ninety-four percent of business travelers and 80 percent of leisure travelers value the ability to use their smartphones to request service and message hotel staff.
- Guests are comfortable sharing with hoteliers a fair amount of personal information: 71 percent would share information about food preferences/allergies and 64 percent would share their entertainment preferences.
- Sixty-two percent of guests used non-hotel sources such as the Internet for dinner reservations and activity recommendations, bypassing the concierge from whom guests say they would prefer to get such assistance.
“Rather than worry that greater reliance on technology will erode the human aspect of hospitality, hoteliers need to embrace it for what it can be – an invaluable tool to better understand their guests and orchestrate stays that they will long remember,” said Mike Webster, senior vice president and general manager, Oracle Hospitality and Oracle Retail. “Technology can address the industry’s dual challenge of operating efficiently at scale and simultaneously providing individualized service.”
The revival of Southern-inspired treats such as Mississippi mud pie, Kentucky butter cake and fruit cobbler is just one of many leading dessert trends sweetening operator menus. According to data from Technomic’s latest Volumix Cakes and Pies Report, operators are ensuring that their guests save room for desserts in this category by increasing their purchases of these manufacturer products. In fact, total sales for the cakes and pies category increased 5.5 percent year over year in 2016, with the largest sales increases occurring in the fine-dining, fast-casual and casual-dining sectors.
Other notable takeaways from the Volumix Cakes and Pies Report:
- Sara Lee Bakery, Sweet Streets Desserts and Lawler Foods Inc. are the top three manufacturers in this category
- Distributor brands represent nearly 10 percent share of volume of cakes and pies
- The average price per pound of cakes and pies increased 3 percent over a year period
Volumix generates SKU-level data from over 28,000 independents and small chains, independent operators, serving as an effective tool for suppliers to better understand the competitive environment.
Drinks industry executives enter 2017 in a more pessimistic mood, according to the findings of the latest annual just-drinks Confidence Survey.
The majority of those surveyed (61.7 percent) said they still expected 2017 to be a better year for their business than 2016, but the figure represents a decline on last year’s figure of 67.2 percent. Meanwhile, nearly 11 percent – double the number in 2016 – expect their fortunes to worsen over the next 12 months.
There were also signs of increased pessimism in the responses to other questions on the drinks industry’s operating environment and consumer confidence, with roughly a quarter of those surveyed expecting both to deteriorate in the coming 12 months.
Despite this gloom, executives remain bullish about their own companies’ fortunes, with only a small (albeit growing) minority expecting their domestic or international sales to fall in the year to come.
The US remains the priority market for drinks companies by some distance, ahead of China, the UK, Germany, Australia and India. Economic problems have dropped Russia and Brazil further down the pecking order, however.
The survey also suggests that companies may reduce their expenditure on innovation and research and development during the year ahead, with a negative impact on the number of new products launched. Marketing investment is likely to continue to grow.
Wine in a Glass
A new survey finds that 95 percent of wine drinkers prefer drinking wine that comes in a glass bottle, with taste (80 percent) and quality (81 percent) leading as the top reasons consumers prefer wine packaged in glass.
Additionally, 61 percent of Millennial wine drinkers, and 55 percent of all wine drinkers, say glass wine bottles are the most sustainable, compared to 11 percent of all wine drinkers saying that about boxes, 4 percent for pouches, and 3 percent who say that about cans.
The October 2016 SurveyUSA poll interviewed 2,000 adults age 21+ in the U.S. from all 50 states about their wine purchasing habits and wine consumption preferences.
“A recent EcoFocus Trend Study confirms why consumers will increasingly look to glass as a packaging choice in 2017,” says Lynn Bragg, Glass Packaging Institute president. “Millennial consumers strongly believe that glass containers are one of the most likely packaging choices to protect them from chemicals leaching into beverages, and a best packaging option to lock-in freshness without using preservatives.”
Additional key survey findings show:
- 80 percent of wine drinkers, and 78 percent of Millennials, say wine tastes betterfrom a glass bottle, while 3 percent of wine drinkers say this about boxes, 1 percent about pouches and 0 percent for cans.
- 81 percent of wine drinkers believe that glass bottles contain the highest quality wine, while 3 percent of wine drinkers say this about boxes, 1 percent about pouches and 1 percent for cans.
- 55 percent of wine drinkers say that single-serve glass containers are just the right size, while 9 percent of wine drinkers say this about pouches, 6 percent about boxes and 13 percent for cans.
Record Wine Exports
U.S. wine exports, 90 percent from California, reached $1.62 billion in winery revenues in 2016, a new record. Despite challenges from a strong dollar, winery revenues were up 1 percent from 2015. Volume was 412.7 million liters or 45.9 million cases.
“California wine exports continue to reflect the trend toward premiumization with the dollar value of our wine sales outpacing volume shipments. Californiawines are well positioned for this trend—our vintners are offering quality, value, diverse styles and environmental stewardship in their winemaking. Combined with the state’s iconic lifestyle, innovative cuisine and beautiful destinations, California wines continue to gain attention from consumers worldwide,” saidRobert P. (Bobby) Koch, Wine Institute President and CEO.
The top 10 export markets for California wines are: the European Union’s 28-member countries, accounting for $685 million, followed by Canada, $431 million; Hong Kong, $99 million; Japan, $87 million; China, $82 million; Mexico, $24 million; South Korea, $23 million; Switzerland, $19 million; and Singapore, $14 million.
“California wine exports have grown 78 percent by value in the last decade despite heavily-subsidized foreign competitors and high tariffs. Our global trading partners are increasingly acknowledging the high quality of wine from the Golden State and responding to our California Wines marketing efforts throughout the world,” said Wine Institute Vice President International Marketing Linsey Gallagher. Gallagher manages Wine Institute’s California Wine Export Program, involving more than 170 wineries that export to 138 countries, and 15 representatives and offices in 25 countries across the globe.
“Trade agreements, such as the North American Free Trade Agreement (NAFTA), have helped to dramatically grow U.S. wine exports yet discriminatory non-tariff trade barriers continue to be crafted by foreign governments at a steady pace,” said Tom LaFaille, Wine Institute Vice President and International Trade Counsel. “We applaud U.S. government efforts to eliminate these barriers and strengthen our competitiveness globally, including the World Trade Organization (WTO) challenge against Canadawhich seeks to ensure that British Columbia grocery store consumers can choose from the vast array of the world’s great wines.”
Non-Alcoholic Drinks Market
A new report published by Allied Market Research titled, “Nonalcoholic Drinks Market – Global Opportunity Analysis and Industry Forecast, 2014-2022,” projects that the global nonalcoholic drinks market was valued at$1,548 billion in 2015, and is estimated to reach $2,090 billion by 2022, growing at a CAGR of 4.4 percent from 2016 to 2022. The soft drinks segment is expected to retain its dominant position, in terms of revenue generation during the forecast period. The Asia-Pacific region held the leading position in the global market in 2015, and is expected to maintain its lead in the future.)
The market is expected to witness notable growth in the near future, owing to rise in urbanization and increased disposable income in the emerging countries. Moreover, change in lifestyle patterns toward healthy functional food and increase in prevalence of diseases due to unhealthy lifestyle escalate the demand for nonalcoholic beverages. Furthermore, the impact of increase in awareness of health and wellness among consumers and millennial generation are expected to increase the demand for nonalcoholic beverages. In addition, broad range of preferences and innovative packaging also play pivotal role in the market growth.
According to Eswara Prasad, Team Lead, Chemical & Materials at Allied Market Research, “Government regulations associated with alcohol beverages,and growth in disposable income in the emerging economies are the prime factors resulting in significant growth in demand for nonalcoholic beverages. However, rise in awareness toward adverse health impacts due to excessiveintake of drinks is projected to hamper the market growth during the forecast period.”
Based on the product type, the market is segmented into tea & coffee, juices, bottled water, dairy drinks, soft drinks, and others. In the year 2015, the soft drink segment generated highest revenue and accounted for almost half of the total market share.
- The Asia-Pacific region is expected to continue to lead the global nonalcoholic beverages market.
- The bottled water segment occupied almost one-fourth share of the total market value in 2015.
- China is expected to witness highest CAGR of 9.2 percent during the forecast period.
- U.S. is the largest country in terms of demand and supply for nonalcoholic drinks in 2015.
Distilled Spirits Market
The distilled spirits sector achieved accelerated growth in 2016 with supplier sales up 4.5 percent to $25.2 billion, volumes up 2.4 percent to 220 million cases and a seventh straight year of market share gains relative to beer, the Distilled Spirits Council announced today at its annual economic briefing for media and Wall Street analysts, sponsored by Spirited Funds.
“The continued growth of the spirits sector clearly demonstrates that adult consumers’ taste for and interest in premium distilled spirits, across all categories, is trending upward,” said Distilled Spirits Council President and CEO Kraig R. Naasz. “Spirits makers continue to develop new innovations to appeal to a growing audience of adult millennials, and they are responding by purchasing and enjoying our products.”
American whiskey – Bourbon, Tennessee and Rye – continued to captivate U.S. consumers with volumes up 6.8 percent to 21.8 million cases and revenues up 7.7 percent to $3.1 billion. Several other spirits categories performed exceptionally well in the U.S. market including:
- Cognac volumes up 12.9 percent to 5.1 million cases; revenues up 15.3 percent to $1.5 billion;
- Irish Whiskey volumes up 18.7 percent to 3.8 million cases; revenues up 19.8 percent to $795 million;
- Tequila volumes up 7.1 percent to 15.9 million cases; revenues up 7.5 percent to $2.5 billion; and importantly,
- Vodka volumes, which represent one-third of all spirits volumes, up 2.4 percent to 69.8 million cases; revenues up 4.1 percent to $6 billion.
The Council estimated that overall retail sales of distilled spirits in the U.S. market reached nearly $78 billion in 2016, supporting more than 1.4 million jobs in the hospitality and manufacturing sectors.
The spirits sector’s strong performance in 2016 resulted in market share gains relative to beer for the seventh straight year, as reported by Council Chief Economist David Ozgo. Spirits’ market share increased by one-half a point to 35.9 percent. Each point of market share is worth approximately $700 million in suppler revenue.
Ozgo cited key factors contributing to the spirits sector’s continued growth, including:
- The American Whiskey trend has plenty of room for growth as the country trends back toward historic levels of whiskey consumption;
- Cocktails are exceptionally well-positioned to meet adult millennials’ demand for unique and varied experiences;
- Spirits fit nicely into the trend of consumer interest in brands with authentic, interesting backstories;
- Local distilleries are driving modernization of state and local laws and generating excitement in the overall spirits category; and
- Spirits have become a fixture in popular culture and are part of the norm.
Total U.S. spirits export volumes increased 6.8 percent in 2016, driven largely by American whiskey – Bourbon, Tennessee and Rye – which increased 10.2 percent in 2016.
Distilled Spirits Council Senior Vice President for International Affairs Christine LoCascio attributed the volume growth to global fascination with the American Whiskey story; the exporting of cocktail culture; and the mixabililty and versatility of America’s native spirit.
Embrace of Online Marketing
A majority of small business owners now embrace the use of online marketing channels like websites and social media to grow their company’s reputation and their revenue, but many have not harnessed the full potential of their online presence and may be leaving money on the table, according to a report from Web.com and Dr. David Ricketts, Innovation Fellow in the Technology and Entrepreneurship Center atHarvard.
“The good news is that our survey shows nearly two-thirds of small business owners truly believe having an online presence will help them grow revenue and attract new customers. However, our report also indicates those same small businesses find it difficult to keep up with the continually changing dynamic of the web,” said David Brown, chairman, CEO and president of Web.com. “In 2017, it is no longer enough for small businesses to be online with only a simple website. They need marketing tools like search engine optimization (SEO), which will get them to the top of search lists, and they need business-specific social media channels that engage customers. The real challenge they face is not knowing where to find the online marketing help they require so that they can focus on running the business.”
The first-ever Web.com Small Business Digital Trends Report surveyed small business owners nationwide to learn how they are using online channels to grow their businesses. The survey includes small business owners in a variety of professions, including dentists, contractors, artists, welders, hair salon owners, dry cleaners, and retailers with ecommerce sites.
Online Marketing: Using Basic Tools but Not All Necessary Tools
Despite the number of small business owners now embracing online marketing, only 54 percent of small business owners report they are very confident that their business’s online presence is doing the job it’s supposed to do. A deeper dive into the data shows small business owners have not yet tapped into the full suite of online marketing tools that are needed today to attract their next customer:
- Only 17 percent of small business owners will be investing in SEO in 2017
- 42 percent of small business owners admit they don’t use both a robust website and social media channels to market their business
- Only 12 percent cited that the main purpose of their website was for e-commerce, yet 31 percent of respondents identified themselves as a retail business
- 26 percent admit to having only a single-page website
- 43 percent say they have no plans to change or improve their online presence in 2017
- 85 percent are hitting some kind of roadblock when attempting to use social media to promote their business
A majority of small business respondents (68 percent) say they are handling the building and maintenance of their online presence entirely in-house or on their own, compared to 22 percent who outsource this work to an online marketing firm, and nine percent who solicit help from friends and family. When asked the number one area in online marketing they need help with in order to meet their top business priorities, the most popular answers were online advertising (29 percent) and website maintenance or expansion (26 percent).
Search Engine Optimization: An Underutilized Asset for Small Business Owners
Although SEO can help businesses stand out from their competitors, most small business owners are not citing it as a priority. Only 17 percent say they plan to add SEO to their online marketing strategy in 2017, and only 5 percent of respondents consider SEO a top priority for the year. The low number of respondents investing in SEO in 2017 may indicate a lack of awareness of the changing but important role of SEO and where to get help implementing it.
“Whatever a business’s strategy is to reach customers – whether that’s via social media, a website, or a combination of different strategies – small business owners need to stay focused on their main objective: to get their business in front of the right customers,” said Brown. “The best way for small business owners to be found is to first identify what’s unique and special about their business, and then make sure their site is visible using the right keywords and effective SEO.”
Online Security and Small Business: Security Breaches May Go Undetected
An overwhelming majority of small business owners (81 percent) say their webpages are secure or very secure – but they may be unaware of vulnerabilities that could compromise their businesses. A report from online security company Whitehat Security finds that 86 percent of all websites have at least one vulnerability, indicating small business owners may be putting too much faith in their current cyber protections.
“When addressing cybersecurity, the primary question is – do these small business owners truly know if they are secure or not?” says Dr. Ricketts. “Security breaches can go undetected by even the largest of organizations, so small business owners may unknowingly be at risk.”
Small Business Owners Are Hitting Roadblocks with Social Media
Small business owners are overwhelmingly (88 percent) embracing social media to support their businesses and half (54 percent) plan to invest in social media in 2017. However, a clear majority (85 percent) reported encountering challenges or roadblocks when using social media to market their business. These include:
- Concern of reputational risks (15 percent)
- Being overwhelmed with the upkeep, including the need to constantly develop interesting content (14 percent)
- Lack of understanding of how social media will help their business (13 percent)
- Knowledge of how to set up social media channels so they integrate with their business (10 percent)
- Additionally, 23 percent of respondents admit they only use their personal social media handles to market their business.
When asked which social media platform was most effective for their business, Facebook emerged as the clear winner, ranking as the ‘most effective’ four times more than any other social media channel. Twitter was the next most effective platform, ranking ahead of channels like Pinterest, LinkedIn, Instagram, Google+ and Snapchat.
Digital Coupons Rise
Analysis by Inmar, Inc. of 2016 coupon activity reveals an ongoing “promotional transposition” with paperless, digital coupons beginning to overtake traditional paper coupons in popularity. Inmar’s analysis shows that, among the more than 2.2 billion coupons redeemed by shoppers last year, the share of redemption captured by offers that shoppers load directly to their retailer loyalty accounts (Load-to-Card) grew 20 percent between 2015 and 2016. In comparison, share of redemption for paper coupons found in the Sunday newspaper (Free-standing Inserts) fell 10 percent over the same period.
At the same time, Inmar shopper behavior research finds shoppers reporting – for the first time ever –that they use Load-to-Card (L2C) offers more often than coupons found in Free-Standing Inserts (FSIs) or store circulars. This activity is continuing confirmation that shopper behavior is irrevocably changing – with convenience becoming an increasingly important factor in determining whether or not shoppers engage with coupons.
The fact that L2C coupons reached a record redemption rate of 6.2 percent in 2016 demonstrates further how shoppers – demanding that marketers simplify their saving experience – are actively responding when brands and retailers provide easy-to-acquire and immediately relevant offers. 2016 also marks the fifth consecutive year of double-digit growth in redemption share for L2C coupons.
“The marketplace is seeing change at an increasing rate,” said Inmar Chairman and CEO David Mounts. “Brands and retailers must reformulate their engagement strategies if they are to successfully motivate digitally driven shoppers. And, the effort must be inclusive,” adds Mounts. “Promotions must be personalized and highly relevant. Content must be authentic and originate from sources that shoppers trust.”
Though still largely reliant on traditional promotion methods, marketers are beginning to ramp up their digital offers in response to growing shopper demand; distribution volume for L2C offers grew by 22 percent in 2016. In comparison, distribution volume for FSIs, which accounted for 90 percent of the 307 billion coupons distributed in 2016, was down 3.3 percent compared to 2015.
Marketers were also more conservative with their promotions in 2016 as the total volume of offers distributed in the marketplace decreased by 4.3 percent compared to 2015. At the same time, the average face value for coupons distributed was down 5.6 percent to $1.64. (That’s about a dime less in savings per coupon than last year.) Still, shoppers were given the same amount of time, on average, to use their coupons with redemption periods holding steady at two months.
Regardless, coupons are still flowing through checkout. Even as low unemployment, a stable economy and less-rich offers helped pull down overall coupon redemption (-4.1 percent versus 2015), 89 percent of shoppers surveyed by Inmar reported using at least one coupon in the last three months of 2016.
Along with the savings benefit for shoppers, coupons are continuing to deliver real business benefit to their sponsors. Research for Inmar’s latest Shopper Behavior Study found that among the 49 percent of shoppers who used coupons during their most recent shopping trip in the last three months of 2016, 31 percent said that coupons made them buy more of the promoted product. Twenty-nine percent of these shoppers said coupons accelerated their purchase of the product.
Increasing consumer demand for organic and non-GMO foods led to a sharp rise in organic grain imports in 2016—prompting food manufacturers to explore new incentives for U.S. growers transitioning to organic production, according to a new report from CoBank. While U.S. production of non-GMO crops has risen, domestic production of organic corn and soybeans remains well short of demand.
“Domestic supplies of non-GMO corn and soybeans increased steadily in 2016, as growers converted acreage and captured moderate market premiums,” said Dan Kowalski, director of the Knowledge Exchange Division at CoBank. “Transitioning to organic production, however, is a multi-year, risk-reward calculation that’s likely holding some U.S. growers back from taking advantage of the market opportunity.”
Imports of organic grains, particularly corn, from countries such as India, Ukraine, Romania, and Turkey surged in 2016 to meet the burgeoning U.S. demand for organic food products. Organic corn imports more than doubled from 2015 to 2016 and accounted for nearly one-half of the U.S. organic corn supply. The domestic shortfall for organic soybeans was even greater, with roughly 80 percent of soybeans supplying the U.S. organic market imported in 2016.
Animal feed for organically raised dairy, beef, pork and poultry products, and ingredients used in organic consumer packaged goods are the two principal markets for organically produced grains. For U.S. farmers to satisfy this growing appetite for organic foods, analysts estimate between one and five million U.S. acres would have to be transitioned to organic production.
“Apprehension among growers is likely fueled by the three-year transition period before their crops can be certified as organic,” added Kowalski. “Remaining profitable during that period is often a struggle and, coupled with the volatility of organic price premiums in 2016, grower uncertainty about the sustainability of financial rewards for transitioning to organic is warranted.”
The report notes that some leading food manufacturers are finding new and innovative ways to incentivize growers for transitioning to organic production to help bolster domestic supply and reduce reliance on imports. Those include free agronomic services to contract growers and premiums for goods grown on transitional acres. A new transitional certification is also available that growers and food companies can use to market their products for a price somewhere between that of organic and non-organic crops.
“Proximity to local markets is another critical consideration for prospective organic and non-GMO growers,” said Kowalski. “If local buyers don’t exist, the cost of logistics involved with transportation can quickly erode pricing premiums, leaving little incentive to grow specialty crops.”
According to Kowalski, demand for both non-GMO and organic crops will continue to grow and, ultimately, monetary incentives will determine whether U.S. growers choose to step in and close the supply deficit. For growers in close proximity to a market and with options for multi-year contracts, non-GMO and organic production might be worth considering, Kowalski said.
Outdoor Furniture Market
Technavio’s latest market research report on the outdoor furniture market in the US provides an analysis of the most important trends expected to impact the market outlook from 2017-2021. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
Poonam Saini, a lead analyst from Technavio, specializing in research on furniture and home furnishing sector said, “Construction activities in the US have increased manifold since the recovery of the country’s economy from the global economic recession during 2008-2009. With the increasing construction activities, especially in the housing sector, the demand for outdoor furniture in the country is likely to increase during the forecast period.”
The top emerging market trends driving the outdoor furniture market in the US according to Technavio research analysts are:
- Increasing demand for grilling products
- Outdoor furniture products with multifunctional features
- Growing adoption of eco-friendly furniture
- Increasing demand for grilling products
The popularity of cookery shows and recipes available in magazines and on the internet has been generating a high level of interest among the US consumers to try new cuisines. As such, the demand for outdoor cooking equipment like grills is increasing. Consumers’ purchase decision of grills is largely influenced by modern grilling technologies. Also, with the concept of outdoor kitchens gaining traction, investments in equipment like grills is likely to increase in the coming years. Portable grills are mostly preferred by consumers who have limited yard space or who enjoy grilling in outdoor spaces. Grills with wheels and foldable stands also enable easy transportation and storage. Such grills also have a grease cup that rotates with the grill when it folds, thereby preventing it from dripping.
Outdoor Furniture Products with Multifunctional Features
The concept of outdoor living has led to an increased demand for multifunctional and flexible furniture. For instance, different types of chairs and tables that can be converted into large bookcases are available in the market today.
Tables and benches with built-in storage space, dining sets that can be converted into conversation sets, allowing consumers to reconfigure their arrangements as per their needs, and ottomans that serve as both casual seats and side tables are gaining considerable traction in the market. Consumers are increasingly renovating household items to convert them for use as their outdoor patio furniture.
Growing Adoption of Eco-Friendly Furniture
Eco-friendly furniture has become a part of the mainstream outdoor furniture. Environmental concerns, negative effects of deforestation, and the effects of toxic finishes in the air have prompted furniture manufacturers to adopt green solutions. Furniture manufacturers are implementing various strategies to adopt green manufacturing processes. For instance, in May 2015, IKEA started operating 30 windmills in Härjedalen, Sweden, to establish itself as an independent energy manufacturer in the Nordic countries.
“Vendors have started manufacturing a wide range of aesthetic and high-quality furniture using MOSO bamboo, which is stronger and harder than oak. Companies such as Greenington are involved in the manufacture of eco-friendly furniture,” says Poonam.
Unique Ice Cream Market
Ice cream has a reputation for being a sugar-heavy, nutrition void calorie bomb—and rightfully so. But today’s ice cream has the potential offer much more by adding much less (i.e., less sugar, less fat, etc.). Food industry marketers are astutely churning out a variety of healthier, yet still decadent, frozen treats to please modern American consumers, according to market research firm Packaged Facts in the new report, Ice Cream and Frozen Desserts in the U.S., 9th Edition.
“Ice cream and frozen novelties remain among the top ten food categories in supermarkets. More than 85 percent of U.S. household use ice cream or sherbet,” says David Sprinkle, research director for Packaged Facts. “And despite the maturity of the ice cream market, a lot is happening in terms of new product trends and corporate development.”
Notably, ice cream and other frozen dessert products have long been included in the ongoing development of the market for free-from foods. Dairy-free frozen desserts, usually water ice but also using vegetable oil of one kind or another, have been a common alternative to ice cream for centuries. For some favored these alternatives as a matter of taste, but for others it had to do with their being lactose intolerant, and so avoiding dairy-based products. In the last century, in response to dieter demands, ice cream makers added reduced- and free-from fat and/or sugar products. They also made products that were free of milk from cows given the bovine growth hormone rBST, which was considered by substantial numbers of consumers to be a potential health threat.
In the current market, ice creams and frozen desserts have added more items to the list of food components from which they are free. These include soy, gluten, artificial colors, flavors, and preservatives, and genetically modified ingredients. Products can also be organic, which is to say free of any pesticide residue, both real and philosophical.
Invariably this avalanche of new, free-from introductions will help the market overcome some of the lukewarm sales growth of recent years. Packaged Facts estimates that in 2016 the market for all ice cream and frozen dessert sales, including packaged ice cream and frozen novelties sold through retail channels and ice cream purchased at foodservice outlets, was just shy of $28 billion. Foodservice sales outpaced the retail channel by slightly more than $3 billion. Both segments are expected to see gains looking ahead to 2020.
Breakfast for Dinner
Krusteaz released the results of its third annual breakfast survey, a national poll conducted by ORC International, revealing that the “Breakfast Night” trend continues as nine out of 10 Americans say they eat breakfast for dinner. Forty-one percent are regulars, doing so at least 2-3 times a month, a 10 percent increase from survey respondents in 2015.
The Breakfast Night trend is most popular with millennials (93 percent) who also fire up their griddles for breakfast at other unexpected parts of the day such as lunch and late night snacking. Millennials are 84 percent more likely then Gen X and Boomers to eat breakfast for lunch and 83 percent more likely then Gen X and Boomers to enjoy breakfast as a late-night snack.
“Freedom and customization are king when it comes to millennial habits. This is why they are so drawn to the idea of having breakfast however they want, whenever they want,” said Andy Heily, President of Continental Mills.
As for topping choices, millennials are also more likely to mix it up. They are more than twice as likely than Boomers to top pancakes and waffles with strawberries, chocolate chips or whipped cream versus the more traditional syrup which is still the most popular topping for pancakes and waffles, selected by 60 percent of all respondents. Toppings are so important to those of all ages and only a mere 2 percent of us are willing to go bare.
And since all good meals are better when you share, it’s no surprise that 56 percent of millennials noted they would share their breakfast for dinner images on social media.
New Rules for Family Meal Time
Millennials aren’t the only ones leading the Breakfast Night charge. Ninety-three percent of families say they eat breakfast for dinner. Most (69 percent) families eat dinner together at least 4 nights a week, which is an 11 percent increase from 2015 survey results, and over one in three (37 percent) say they do so every night. Amongst all surveyed, the preference to eat Breakfast Night is at home with loved ones (55 percent) rather than at a restaurant (29 percent).
“We love to see that families continue to make Breakfast Night a part of their routine. It’s something easy for moms and dads, but deliciously exciting and customizable for kids,” continued Heily. “Krusteaz makes it easy for those all across America to enjoy delicious pancakes and waffles at all times of the day.”
“My experience consistently shows me that a large number of Americans live high-carb, high-sugar, caffeine-overloaded, stressed-out, no-exercise lives,” says Tieraona Low Dog, M.D, an internationally recognized expert in the fields of integrative medicine, herbal medicine and dietary supplementation, and author of National Geographic’s Fortify Your Life: Your Guide to Vitamins, Minerals, and More. “We may have good intentions when it comes to eating well, but the truth is that many of us fall short of an ideal diet – and that even when we do our best to eat well, it is extremely difficult to get all the nutrients we need on a regular basis with diet alone.”