Across the brick-and-mortar fast-moving consumer goods (FMCG) landscape, sales and volume figures remain modestly above those we reported a year ago. While the traditional FMCG industry has managed to avoid overall volumetric declines, physical consumption of products continues to slow as unit volume remains flat year-over-year. Inflationary factors have fostered more than $14.2 billion (or 1.8%) in sales growth, which has bolstered our industry, but dissecting this growth is the first step toward understanding where consumption may be expandable.
In a positive turn of events, center-of-store edible goods have returned to a position of growth, up nearly $6.3 billion in dollar sales from a year ago. Within these aisles, frozen foods have seen the swiftest pace of growth, up 2% in dollars and 1% in units. The reinvigoration and repositioning of frozen foods to appeal to consumers of broader ages and lifestyles is likely responsible for much of this growth. Meanwhile, inflation has spearheaded dollar lifts in grocery and dairy products.
Growth hasn’t been limited to the center of the store, and the perimeter continues to command a good portion of the retail spotlight. While perimeter growth hasn’t quite matched that of the center of the store, perishables have generated an impressive $5.8 billion in sales growth this year—a figure that’s much larger than what we’d expect relative to the category’s size. Considering that fresh foods command just 24% of in-store FMCG sales, they have accounted for a whopping 44% of brick-and-mortar growth in the past year. Despite these outsized dollar figures, however, it’s important to relate this back to a common volumetric denominator. In terms of unit volume, fresh foods fall flat, up just 0.3% in units this year.
As the search for consumption growth becomes increasingly challenging, it’s essential to follow consumer demand with granularity and regularity. Today, we’ve identified beverages as an in-store growth driver and an area where consumer demand is currently on the rise.
In the latest year, mainstream U.S. retail outlets have sold more than $56 billion in beverages, representing year-over-year sales growth of $1.8 billion (3%) and 2% unit volume growth. But not every beverage category across the store has out-performed, and following the path to growth is the first step on the journey to changing and reinvigorating consumption occasions with your products.
Today in the beverage space, functional drinks reign supreme. And kombucha, a fermented tea touted for its probiotic contents and healthful benefits, leads the way. It’s seen growth rates far and above other categories, up 43% in dollars and 42% in unit volume year-over-year. Ready-to-drink coffee is another popular drink variant that’s provided a functional energy boost to many. And like many beverages, it could be considered the equivalent of a snack, as Americans seek to not just eat, but to drink in between meals throughout the day.
Smoothies and blended fruit and vegetable beverages have fallen out of favor this year, showcasing the changing tastes in how America drinks. Even coconut water, which was a top growth driver just a couple years ago, has been negatively affected by consumers seeking enhanced waters for their hydration needs. In comparing what’s hot and what’s not, it becomes clear that what once might have been quenching, filling and nourishing, must now be purpose-fulfilling, light and fizzy. Water is a category that seems to meet all three of these criteria, and it’s breathing new life into the American beverage industry.
For additional insight, download our latest Total Consumer Report.