Last June, we fielded a survey to our Nielsen Homescan panel which included a question asking primary shoppers about their tendencies for reading labels on food and beverage packages.  Just under two-thirds of U.S. households (61%) agree completely or agree somewhat that they read these product labels, with 31% agreeing completely.  And as you might expect, we do see some differences when we drill down across demographic groups, but we thought it would be interesting to also look at how shoppers at various retailers differ in terms of reading labels.

Here are the demographic groups who tell us they are more apt to read labels and whose response indexed 10% or higher versus the average household response.  No surprise here: better educated, older (probably needing to look at labels due to a health condition), higher income, and those in a professional/managerial occupation.  Is there an opportunity to increase font side on package labels to help older consumers decipher product ingredients?

% Households agreeing completely to “usually reading labels on food & beverage packages”:

• Total Households:  30.5%
• Female Head College Grad:  36.0% (118 index)
• Female Head Age 55 to 64:  35.0% (115)
• Female Head Age 65+:  34.8% (114)
• Incomes of $100k+:  34.1% (112)
• Professional/Managerial:  34.0% (111

Here are the demographic groups least likely to read labels and whose response indexed 10% or lower versus the average household response. These groups were blue collar, lower educated, families with kids of all ages, and larger families.  I suppose it makes sense that those larger, on-the-go families, who are managing tight budgets with more mouths to feed, are less likely to read labels on a regular basis.

However, it is disturbing given childhood obesity rates in this country, but also a good reason why I am pulling for the Guiding Stars program deployed by Delhaize banners to simplify the recognition of healthier products.

• Blue Collar:  24.8% (81)
• Female Head Not High School Grad:  24.9% (82)
• Families w/kids 13 to 17:  25.5% (84)
• Female Head Age 35 to 44:  26.0% (85)
• Families w/kids 6 to 12:  26.3% (86)
• Families w/kids under 6:  26.7% (88)
• 3 to 4 members:  27.1% (89)
• 5+ family members:  27.4% (90)

Here are the retailers whose shoppers (based on shopping in a retailer at least once over the year-ending May 2, 2009) were most likely to read labels and whose response indexed 10% or greater versus the average household response.  No surprise seeing Whole Foods top the list.  With Publix stores located mostly in the state of Florida (our oldest state) it ties with the above demographics insights.  Costco and Safeway probably benefit from a combination of their higher income draw as well as from focus on better-for-you offerings.

• Whole Foods:  52.4% (172)
• Trader Joe’s:  42.9% (141)
• Publix:  35.6% (117)
• Costco:  33.5% (110)
• Safeway Corp Grocery (all banners combined):  33.5% (110)

I’m happy to report that no retailer we tabbed had a response with an index of 10% or lower versus the average household.  However, only 26.8% of households who shop a Tobacco Store (index of 88) agree completely with usually reading labels.  These shoppers obviously forgot about reading labels a long time ago.

For further information or to arrange a comprehensive presentation on consumer shopping patterns, please contact Todd Hale at todd.hale@nielsen.com or 859-905-4615.

Highlights of the report include:

• Food labeled as “natural” generated $22.3 billion in sales in 2008, up 10% from 2007, and up 37% from 2004
• Organic foods (UPC-coded) accounted for $4.9 billion in sales, up 16% from the year before, and up 132% since 2004
• Foods that tout antioxidants produced $1.9 billion in sales, up 11% in 2008 and up 147% since 2004

• Foods that are targeted to those who are “carb conscious” saw sales decline 3% in 2008 to $2 billion, and declined 31% since 2004

• Hormone/Antibiotic-free foods saw sales grow 11% in 2008 to $2.4 billion, an increase of 66% since 2004

• Caffeine content seems to be less of a concern: sales of beverages labeled “caffeine free” declined 3% in 2008, and 5% since 2004

“Although much is written about organics, products labeled “natural” generate much higher sales.  In fact, sales of products labeled “organic” leveled off significantly in 2008 after four years of solid growth,” said Tom Pirovano, Director of Industry Insight at Nielsen. “Looking at the year ahead, it will be interesting to see how the economic downturn affects sales of foods and beverages that are primarily described as organic, which, for many consumers, have a reputation for being more expensive than other foods.”

When looking at specific types of food, Nielsen found several interesting facts, including:

• Milk represents 25% of all “fat free” sales although fat-free milk only makes up 18% of milk sales
• Cheese labeled “natural” represents 69% of all cheese sales and 32% of all “natural” food and beverage sales

• 38% of snack foods are described as saturated or trans fat-free

• Beer labeled as “reduced calorie” accounts for half of all beer sales and 41% of sales of food and beverages labeled as such

• 54% of all cereals are labeled as “whole grain” and cereals make up 40% of all foods described as such

Nielsen’s LabelTrends service tracks health and wellness claims for nearly every food product that passes through U.S. cash registers, including 55,000 items labeled “natural” and 21,000 items labeled “preservative-free.”

Nearly two-thirds (65%) of U.S. Consumers reported they notice nutritional information on food packaging more often now than they did two years ago.  More than half (51%) said they always check the fat content on nutrition labels, while nearly half check labels for calories (48%) and trans fats (43%). 

Nielsen also found that two-thirds (67%) of U.S. consumers claimed they “mostly” understand the nutritional information on food packaging, while less than half (44%) of consumers in other countries reported the same.

The Nielsen Global Online Consumer Survey was conducted in April 2008 among 28,253 Internet users in 51 markets in Europe, Asia Pacific, North America, and the Middle East.

View the full press release.