Ethnic households will represent the majority by 2050. Their spending power will increase 25 percent by 2020, and a staggering 75 percent by 2050. “It’s critical to understand how your portfolio stacks up and to develop strategies now that will reap future benefits,” said John Lewis, President, Nielsen North America, during a session at Nielsen’s Consumer 360 event in Orlando, Florida. “Where do multicultural consumers shop? What do they buy? And which product innovations will appeal to them?”

When we look at future landscape across select CPG categories, we see several themes begin to emerge. This chart below compares the development (% of volume from growing consumer groups) and the projected category growth to the year 2020.

Growth is expected in baby categories (baby food and formula), which is not surprising as the multicultural segments are well developed among younger families. A few personal care categories emerge (liquid hand soap and wipes) as well as natural cooking ingredients (eggs, oil and flour). Manufacturers and retailers should leverage these categories as trip drivers to attract these critical consumer segments.

Pet food categories are expected to grow at a slower rate than the population as dry dog and cat foods are underdeveloped among multicultural households and dry dog food among the aging population. While the wet and moist segments of these categories are expected to grow at a faster rate than dry, the growth is still projected to be slightly below the average.

Upon further investigation into pet ownership, the Hispanic segment represents the biggest opportunity as nearly 60 percent of Hispanics own a pet, compared to only about one-third (32%) of African American and 56 percent of 55+ households.

The beverage category is one that is slated for high growth – especially among flavored brands. “A solid focus on multi-cultural households is one of our global strategic pillars,” said Elina Brager, Lead, National Category Advisory Initiatives at The Coca-Cola Company.

As far as the retail landscape is concerned, the channels that will benefit from the shifts in the American population are the drug, dollar and club channels. “And we know,” continued Brager, “Fanta has a strong buyer overlap with the Family Dollar shopper, so we’ve teamed with Family Dollar to enhance the shopper experience via in-store promotions, which have been very successful.”

Family Dollar’s growth potential is off the charts, and multicultural shoppers are playing a major role in their success. “We actively seek ways to reach the Hispanic shopper in particular,” said Katie Pollock, DVP of Integrated Insights & Category Management at Family Dollar. “Their shopping baskets are on average 10 percent larger than any other group.”

Sparkling soft drinks are one of the top 10 items that are consistently purchased by Hispanic customers at the Dollar Store. So, the company created a campaign in partnership with Coca Cola that promoted Fanta in both English and Spanish to reach as much of the audience as possible.

The campaign was a huge success. “The Family Dollar value message came across to our Hispanic shoppers and drove an increase of over 50 percent in Fanta brand sales in impacted stores,” said Pollock, “I really recommend collaboration with supplier partners who share your focus. We have to stop thinking of multi-cultural groups as the exception to the rule, they are becoming the norm.”

Session takeaways:

Once risk and opportunities are identified, further analyses can help fuel an effective action plan. Ask questions about what diverse forces mean to you and what you can do differently:

• How do we strengthen vulnerable segments?
• Where do growing demographic groups shop?
• What new product innovations might attract them?
• Are there cross promotional opportunities to attract new categories?

Attendees at Linkontro met to discuss how to focus on innovation against a backdrop of low consumer confidence, ongoing political instability and expansive bureaucracy.

With more than 600 of Italy’s leading executives in the retail, manufacturing and media industries gathered for the event in Sardinia, off the coast of mainland Italy, speakers wasted no time in identifying points of concern that may lead to opportunity.

• Nielsen Country Manager, Roberto Pedretti, opened the event by reminding attendees that the traditional neighborhoods they had served for centuries were forever changed by the digital habits of young consumers. Pedretti painted a picture of media habits of a typical Italian 18-year-old and urged manufacturers and retailers to immerse themselves in the lives of the modern consumer. He encouraged brands to focus on delivering authentic messages and to become a natural part of the modern consumer’s day.
• During a panel session examining where new development should begin, Franco Pugliese, General Manager of Conad, one of the largest supermarket chains in Italy, said Italy sometimes appeared to lack the confidence it needed to drive change.
• Attendees heard from the panelists that Italy appeared to have lost its place in the world and that the primary commercial mission of Italy had been lost. They agreed that for Europe to recover from tough times, it was also important for Italy to win.
• Giuseppe Lavazza, Vice President of Lavazza, said Italians were good at entrepeneurship and innovation but had also gotten good at “creating obstacles” in the regulatory world. He cited labor, tax, health and safety laws as examples.

For faster change, the panel urged a move away from the red tape plaguing new and established businesses. They warned that investors would avoid Italy in favor of countries with more favorable environments for growth.

Academic Michele Boldrin, of Washington University in St. Louis, said as an Italian looking in on his home country from the United States, he saw “crazy public debt” and a labor market riddled with high costs. Boldrin said it was imperative for Italy to create comparative advantages over other countries in Western Europe. He also cited an ongoing brain drain because talented young people found it difficult to penetrate the hierarchy of businesses in Italy.

Facebook Country Manager, Luca Colombo pointed to opportunity with digitally active Italians. In a session that included Google and the Internet Advertising Bureau (IAB), attendees heard that the digital economy (in terms of ad sales) was only 2 percent of Italy’s GDP, leaving significant room for growth, particularly in the largely nascent area of online transactions.

Other sessions during the three days pointed to foreign retailers who had penetrated the Italian market in their stalwart fashion segment. Zara and The Gap are now common sights in Italian cities, a trend that came about with marketing campaigns that drove trust amongst Italian consumers, attendees heard.

On the third day of sessions, Nielsen’s European President, Christophe Cambournac, urged attendees to listen and act upon the “need states” of consumers or there was a danger they would lose them.

Linkontro was held from May 26 to 28. The event has been held for almost 30 years.

Charlie Buchwalter, SVP Research & Analytics, Nielsen Online

SUMMARY: The longer-term prospects for the global online medium continue to be bright. Led by social media, search, video and the continued online ramp up of the leading marketers, online’s share of total advertising spend will continue its steady upward trend as we emerge from the current recession.

Discussing the trajectory of the online medium in the midst of an historic economic downturn is a perilous business. Assaulted every day with downward-facing red arrows, many of the indicators concerning all things digital veer to the negative:

• Online media’s “favorite child” status (i.e., a long track record of outstripping the growth of every other medium by a wide margin) appears to have diminished over the past few months.
• Online advertising by the Financial Services, Retail and Auto industries has shrunk at a dizzying pace over the past six months.
• Online display advertising’s share of revenue has plateaued at 20% of total online ad spend in the U.S., and no panacea appears to be on the horizon.
• Despite online video’s persistent positive buzz, actual usage is averaging around six minutes per day in the U.S.
• The social media trend is today’s industry darling, but a monetization formula continues to elude the globe’s brightest marketers.

The audience growth and engagement quotient of online video is forcing marketers to positively re-assess the value of the online experience. Adoption of social networking capabilities, by both consumers and corporations, has crossed the chasm in what appears to be the blink of an eye. In the age of Twitter, feedback barriers have all but disappeared, creating a near friction-free environment for playing back brand experience, campaign reactions or brand events.

Search continues to be an indispensable tool for all online denizens and opportunities for additional growth continue to emerge. Search across social media networks is likely to be the next opportunity for search engines. And as consumers increasingly turn to their phones for a wide range of online content—improved network speeds and rising smartphone penetration helped to grow the mobile web in the U.S.—prospects continue to improve.

Bright future
While 2009 will not be a banner year for online advertising revenues, online will once again outperform all other media in terms of growth. China will likely be flat to down, partially due to the global slowdown, but more importantly, because it will be hard to match the Olympics-related surge during 2008. The U.S. and Japan will be flat to slightly up. There will be pockets of significant (+25%) growth, but it will be limited to small-to-mid-sized advertising countries such as Brazil, and throughout Eastern Europe and Southeast Asia.

The longer-term prospects for the global online medium continue to be bright. Led by social media, search, video and the continued online ramp-up of the leading marketers, online’s share of total advertising spend will continue its steady upward trend as we emerge from the current recession. And given the increased focus on all things digital by the leading packaged goods companies, online’s share of commerce will continue to rise as well.

When all is said and done, brands see tremendous opportunity to increasingly exploit the digital environment to maximize brand-favorable media impressions, but they are starting to look at the mix more holistically. Consumer-generated content has gained inclusion into the “earned media” club of marketing preferences, and the big question going forward will be how paid and earned media share the marketing expenditure pie.

Growth leaders
Today, online video and social media lead the way in terms of growth. It is rare to see segments significantly grow from both an audience and an engagement standpoint, but there has been exceptional growth over the past couple of years in both video and social media sites. While Member Communities (i.e., social networking sites) have been garnering impressive audience numbers for the past five years, video audiences have been growing at meteoric rates, surpassing personal e-mail audiences in November 2007. And from a time-spent perspective, Member Communities surpassed personal e-mail for the first time in February 2009.

The growth in social media is the single most significant story in the online media space today. Social networking sites eclipsed personal e-mail in global reach at 68.4% vs. 64.8%, in February 2009. And even more significant—in only the first few months of 2009—the reach of these sites is growing at a brisk pace, faster than any other online sector.

Mobile moves
Of course, any discussion about online audience behavior would be incomplete without understanding the mobile dynamic. In the U.S. today, nearly 50 million mobile subscribers access the Web via mobile devices on a monthly basis. In the U.S., the mobile Internet audience grew 74% between February 2007 and February 2009. Internationally, the U.S. is one of the leading markets for mobile Internet penetration, with more than 18% of subscribers accessing mobile Web. This is the highest penetration of mobile subscribers among the markets for which Nielsen reports mobile Internet adoption, followed by the U.K., where nearly 17% of subscribers used mobile Web in Q1 2008.

There’s an increasingly broad range of content consumed over mobile Web, too. While many initially expected the platform to be dominated by e-mail, news and weather, Nielsen’s latest U.S. mobile Internet research reveals a long tail of content interest. Portals, e-mail, weather and news do garner audiences of more than 20 million unique mobile users each, but categories such as food and dining, travel and health and fitness also attract millions of mobile Internet users each month.

Recessionary impact
From an advertising perspective, it seems funeral dirges for online display advertising were heard throughout 2008, and things went from bad to worse in the fourth quarter, when the bottom fell out of the economy and all forms of advertising were hammered. As the dreary holiday season came to a close and 2008 ended with a whimper, many were wondering if the days of online advertising’s favorite-child status were at an end.

While many other metrics registered all-time worst numbers in 2008, Nielsen reports that online advertising overall did a bit better than the doomsayers thought. Quarter four showed a 4.5% uptick from Q3, and a 2.6% increase from Q4 2007. And for the full year, online ad revenues grew more than 10%. Despite the slightly-better-than-expected year-end performance of online advertising, the true impact of the deep recession will be told in the 2009 numbers.

Global roundup
When scanning the globe, the country-by-country online advertising experience is a true patchwork quilt. The Scandinavian countries, Australia and China are clearly in the fast lane, while the U.K., France, Spain and Japan are moving ahead, but at a slower pace. Germany, Switzerland and Italy are barely growing, and the Benelux countries appear to be moving backwards.

It’s clear that the global economic downturn is having an effect on all markets, and while online ad volumes appear to be brisk in some quarters, online ad rates are under such pressure that many advertisers are finding that rates from publishers are essentially the same rates they’re receiving from ad networks. As many of these international markets are starting from a significantly lower base of online advertising, their growth rates will outstrip the U.S. in many cases as the global economy picks up again.

Overall in November, trips to retailers declined by 2.9% from the previous year.

Retail Channel Trends
Toy stores, electronics stores, and department stores saw the most dramatic declines in the number of shopping trips last month vs. a year ago.  Trips to toy stores dropped by 23%, trips to electronics stores were down by 21%, and trips to department stores fell by 17%, Nielsen reported.

Retail channels offering low prices and strong value fared the best during November.  Trips to dollar stores (+6%), online retailers (+4%), supercenters (+2%), and club stores (+1%) showed the only year-over-year increases in trip growth rates.

Private Label Trends
In October, value-minded consumers increasingly shifted their purchases to private label products, as the U.S. economy weakened.  Unit sales of private label brands grew by 5% in October — up from 2% growth throughout the past year.

Meanwhile, unit sales of branded products showed a mirror opposite trend, with growth declining by 4% in October after showing an overall 2% decline during the 52-week period ending November 1.  As the U.S. economy slipped further in the third quarter and continued to slide in the fourth quarter, unit sales of branded products worsened in every grocery department — except frozen foods.

In terms of dollar sales, private label products maintained steady 10% growth in October – a trend that has remained constant throughout the past year.  Private label alcoholic beverages, fresh and packaged meats, fresh produce, frozen foods, and dry grocery products saw the fastest dollar sales growth in October.

In contrast, overall sales growth for branded products slipped to 2% — down from 3% during the 52-week period ending November 1.  Although still growing, sales of branded dairy, deli, and fresh produce experienced the greatest declines in dollar sales growth.  Sales of general merchandise products dropped markedly in October and during the 13-week period ending November 1.

Given the continued weakening of economic conditions, Nielsen expects this behavior to intensify in December and into 2009.

Nielsen’s Tips For Manufacturers, Marketers, and Retailers
-Exploit new growth areas: consumer appetite for at-home products, basic necessities, and good values will only intensify.

-Don’t assume consumers are not willing to pay a premium: price is important, but delivering a clear value proposition is more critical.

-Protect your turf: manufacturers should work proactively with their retail partners on branded vs. private label shelf-set rationalization.

-Companies that maintain sales and marketing efforts during recessions typically enjoy better post-recession growth: now is the time to utilize advertising to build customer loyalty and differentiate your brand.

Stay tuned on Nielsen Wire for regular updates on U.S. retail trends and other key economic indicators.

Year-over-year growth at hypermarkets reached 6% during the period, while the smallest convenience outlets declined by almost 2% during the 12-week period.

In comparison, year-over-year growth in the British grocery sector stood at 3.2% during the 12 weeks ending 29 November, according to Nielsen.  Grocery multiples showed stronger growth (+5.6%) during the period.

“In order to save money shoppers are making less visits to grocery stores,” Mike Watkins, senior manager retailer services, Nielsen, noted.  “Nielsen has identified that virtually every major food retailer saw the number of visits per shopper fall in November versus a year ago and the big casualties are those retailers that people visit to do top up, small basket, and indulgence shops.”

According to Nielsen, there are exceptions to this trend.  Retailers like Morrisons and Asda, and value retailers like Iceland drew plenty of shoppers — and even showed accelerating sales in the most recent 12-week period. 

View the press release.

Edible essentials, like bread, milk, cheese, and fresh produce, were among the top retail categories for October, according to Nielsen. 

Discretionary items like carbonated beverages, candy, and snacks were also among the top sellers in October — but most of these categories showed year-over-year unit and dollar sales declines.

Top Categories: October 2008 (Dollar Sales: Food/Drug/Mass Merchandiser Sales)

Top Categories: October 2008 (Unit Sales: Food/Drug/Mass Merchandiser Sales)

Products geared toward at-home use — canning supplies, baking ingredients, and wine — were among the fastest growing food, drug, and mass merchandiser retail categories in October, according to Nielsen. 

That trend may signal a shift in consumer behavior, as Americans increasingly opt to save money by staying in and eating at home. 

Fastest Growing Categories: October 2008 (Dollar Sales Growth: Food/Drug/Mass Merchandiser Sales)

Fastest Growing Categories: October 2008 (Unit Sales Growth: Food/Drug/Mass Merchandiser Sales)

Learn more about global consumers’ responses to the current economic crisis on Nielsen Wire.

According to Nielsen, the chain increased its market share from 14.9% a year ago to 15.6% during the last quarter — the retailer’s highest ever market share, aside from the Christmas 2007 season.

Asda’s performance (8.7% sales growth) during the most recent 12-week period ending November 1, 2008 easily bested the rest of the British grocery market, Nielsen reported Tuesday.  The chain showed especially strong growth during October, when the global financial crisis reached a boiling point.

Growth (by value) of food sales at British supermarkets continued to slow during the most recent 12-week period, dipping to 5.1%, versus the same period in 2007, according to Nielsen.

During the previous 12-week period ending October 4, food sales growth was slightly stronger in Britain (5.4%), despite especially weak September sales growth (4.5%).

“The topline growths at the Multiples are slowing, when they should, in fact, be accelerating,” Mike Watkins, senior manager, retailer services, Nielsen, noted.  “It’s looking like a tough Christmas ahead for food retailers.”

Among the top UK food retailers, Tesco remained the dominant value retailer, with a 28.1% share of grocery market spending during 12-week period ending November 1, 2008 — up 0.1% over the chain’s 28.0% share of value sales during the same period last year.

Morrisons continued to grow by more than 9% year over year for the quarter, but in the most recent four weeks, the chain’s growth dropped to under 7% year over year.

View the press release.