Logical explanations for volume declines fail to fully satisfy

by Josh Sosland
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As first-quarter financial results are issued, it appears that relief from 2011 declines in grain-based foods sales volume did not occur in early 2012. Continuing weakness raises the stakes further for somehow gaining an effective handle on the key causes, particularly those that may be reversible.

At the annual meeting of the American Bakers Association, Todd Hale, a specialist in consumer insights for the Nielsen Co., was tasked with explaining why scanner data show consumers buying less, and he suggested a series of factors rather than any single item. Mr. Hale’s list included economic weakness, particularly for those earning less than $100,000 per year; aging baby boomers (who eat less than younger people); diminishing fertility rate; the growing proportion of Hispanics and Asians; demand for convenience and perception sandwiches are not convenient enough; growth of other channels, such as dollar stores; and the increasing proportion of supermarket sales from the store perimeter rather than center aisles (including bread).

Mr. Hale’s insights seemed valid and well expressed but were not entirely satisfying. Most of the influences he mentioned, such as an aging, less fertile and more ethnically diverse population were true five years ago when volume was rising. Additionally, how are those factors reconciled with the recent sales volume gains for alcoholic beverages, snack foods and candy while bread and other staples have sagged? Do aging baby boomers drink and snack more?

It is possible that the volume decline represents a convergence of many factors, heightened by the economic weakness. Still, the incredible importance of this weakening trend to grain-based foods argues for still deeper digging into what is happening.

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