Marketplace Trends to Watch For in 2013: It's Time to Think Small

Beverage manufacturers and all food processors must embrace the new, smaller American household.

By Suley Muratoglu, Tetra Pak USA

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With 2013 planning season in full swing, intensified competition and fickle demand have all of us looking for those rare uncontested market spaces where we can add value. These opportunities are increasingly hard to find, yet the emerging small household demographic represents such a space.

Our market rules are undergoing great change and will be altered by this new, dominant and growing demographic. The "family brand" is still relevant, but may not yield the greatest new growth and profit. Those manufacturers that reach, engage and design products for the new demographics will be the real winners in the marketplace.

It isn't easy to embrace a new, and very different, reality. Nevertheless, the model American family — with mom, dad and the kids living under one roof — is fading. According to 2010 U.S. Census Bureau figures, single- and two-person households now comprise 65 percent of all American households. A more stunning reality: Out of 112.3 million U.S. households in 2008, more than 60 percent have no children, according to data from the international trade group Organization for Economic Co-Operation and Development (OECD). These smaller households will continue to dominate the American demographic landscape and change every aspect of the way we live.

For beverage manufacturers, this signifies a sea change: It's time to think small. One- and two-person households have very different needs from families with children. For the beverage market, this means "supersize" and multi-serve containers are moving to the sidelines as "small-size" gains momentum.

Embracing this new order and effecting change requires manufacturers to cater to a diverse group running the gamut from recent college graduates to retirees. They can be single, widowed, cohabitating or married. But most fall into two segments: Millennials, now 18 to 34, and Baby Boomers, 45 to 65. The former is comprised of singletons and childless couples; the latter, empty-nesters, widowers and divorcees.

Yet the small household demographic has unmatched purchasing power. This past January, CNN Money reported that consumption by singles contributes $1.9 trillion annually to the economy, according to the U.S. Bureau of Labor Statistics. Doing the math, it's possible to extrapolate that two-person households spend $1.5 trillion annually.

New products created for this group may be fundamentally different. Both the health-oriented Boomers and multi-cultural Millennials like variety and flavors.

Packaging these new products also will require creative thinking and innovation. Grab-and-go is the biggest trend for beverage manufacturers right now because out-of-home consumption is huge. But there's also a growing demand for smaller packs that hold several servings — versus the previous trend toward family-sized containers.

Beyond mobility, packaging has a host of other marks to meet, especially since it must grab a consumer's attention within 10 seconds to influence purchasing behavior — so notes the market research guidebook GreenBook. And it must communicate the right message for its cohort, since consumers look for various packaging attributes based on their age.

A Mintel report titled "Beverage Packaging Trends" released this past January found that consumers 25 or younger show a high acceptance for stylish, unusual designs and are less likely to rate health and nutrition attributes as important. Those over 55 want simple, easy-to-read beverage labels and pay close attention to health claims.

The supply chain partners who produce and design these packages must innovate to create a range of user-friendly products that embrace traits that include individualization, grab-and-go portability, easy-to-use caps and innovative design. All allow brands to stand out in the sea of sameness on store shelves.

Clearly, the hurdles to moving forward in this new marketplace are challenging. But the most significant point to keep in mind is that small-sizing is here to stay, and the one- to two-person household will effect what, where and how products are purchased.

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