Recession Fueling These Cheap Eats

By Christina Cheddar Berk
|  Tuesday, Apr 7, 2009  |  Updated 3:15 PM CDT
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Many people think of food manufacturers as recession-proof, but a report out today from Mintel Reports shows that some food categories are recession-fueled.

"Over the past year, we've seen people trying to save money on food by either dining out less, cutting supermarket bills, or both," said Bill Patterson, a senior analyst at the market researcher.

"More people cook at home now, but they still want healthy, convenient, tasty food and drink for their dollar. As consumers spend less and stay in more, certain food markets are benefiting," he says.

So what are people buying? Think inside the brown bag:

  • Bread: From a breakfast bagel to a lunchtime sandwich to a roll with dinner, bread is a staple in American meals. Originally predicted to grow 2.1 percent in 2008, Mintel's latest figures show the bread market grew 7 percent last year. Based on this trend, the firm is expecting a higher growth rate for bread through 2013.
  • Sweet Spread:  PB&J is thriving in these recessionary times. Sales of sweet spreads are  expected to rise 26 percent from 2008 to 2013, Mintel says. That forecast is higher than Mintel's initial prediction of 12 percent growth for that period. 

Convenience has been a major trend in American eating habits for many years. In more prosperous times, this might have meant dining out. Consumers now may have less to spend, but they are still as time-pressed as ever. So how do you get food on the table quickly and easily? The solution:

  • Frozen Meals: Sales have really turned around in this category. Mintel originally expected sales in the category to fall 0.3 percent. Now, sales are expected to rise 4.5 percent in 2008.
  • Pre-prepped Side Dishes: This is an area where moms may spend a little to save some time. This category was only expected to see a 2.3 percent increase last year, but now sales are projected to be up 5 percent.

    One noteworthy trend inside the "side dish" trend, it's sales of comfort foods such as mac and cheese that's driving the growth.

Need to wash down all that food?

It should come as no surprise that folks aren't splurging on $4 lattes like they used to, but for many people coffee is not a luxury item. What's the impact from all those home brews? Mintel expects to see an increase of 6 percent in retail coffee sales in 2008. That's higher than its original forecast of 2.4 percent.

Mintel expects coffee's growth to continue to be brisk, but one factor that could slow it down a bit is a push toward less expensive coffee drinks at Dunkin' Donuts and McDonald's (NYSE: mcd).

Mintel doesn't get into which food companies are best positioned in this climate, but we've already seen some phenomenal growth from companies like Green Mountain Coffee Roasters (: gmc), which saw sales in its fiscal first quarter surge 56 percent to $197 million from year-ago levels, while J.M. Smuckers (NYSE: sjm) saw an 84 percent jump in its earnings in its fiscal third quarter.

Smuckers may truly be in the sweet spot of this trend. The company not only makes Smuckers jellies and Jif peanut butter, but it recently bought Folgers coffee, which Smuckers says, could double its annual sales.

More from Consumer Nation:

  • Hyatt Pulls Out The Perks as Travel Slumps
  • Retirement: Why You're Probably Not Prepared For It
  • Retail Sector May Be Stabilizing, Telsey Says

Questions? Comments? Email us at consumernation@cnbc.com

For more stories from CNBC, go to cnbc.com.

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