Consumer Nation


  Friday, 8 Nov 2013 | 6:39 AM ET

Fast food giants locked in battle for Brazil

Posted By: Arjun Kharpal
Paulo Fridman | Bloomberg | Getty Images

Global fast food chains including McDonald's are locked in battle with Brazil's independent outlets and kiosks in the race to gain a foothold in the country's rapidly expanding fast food market, according to a report.

The Brazilian fast food market has seen rapid growth over the past five years with the sector set to hit sales of 50 billion Brazilian real ($21.7 billion) in 2013 -- up 82 percent since 2008 -- a report by Mintel shows.

A burgeoning middle class with disposable income has helped fuel the popularity of fast food with nearly one in 10 Brazilians eating in a fast food shop at least once a day.

"The main drivers for this are the expansion plans of big chains, breaking out of the developed South East and bringing more added value products to the emerging middle classes, particularly in regions such as the North East of the country," Jean Manuel Gonçalves, senior food analyst at Mintel said.

While McDonald's has the strongest foothold in the South American country out of all the fast food chains with 1,308 stores, there are around 386,000 independent stores, making expansion difficult for fast food giants, according to Mintel.

(Read more: Why Brazil's once-booming economy is losing its shine)

Gonçalves warns that chain stores face other big challenges.

"As well as a more challenging distribution chain, there are strong regional taste preferences especially for spicier flavours."

But fast food restaurants do have an edge, with 74 percent of Brazilian fast food users claiming their dining experience offers "good ambience" which kiosks and independent stores cannot emulate.

Despite a growing middle class, there is still a large number of poorer consumers in the Brazilian market, who are more likely to use their local street stall than a chain restaurant.

"The challenge remains for fast food restaurants to encourage new users from the lower economic groups through their door," the report said.

»Read more
  Monday, 4 Nov 2013 | 8:25 AM ET

Hispanics hold key to winning US coffee war

Posted By: Arjun Kharpal
Anthony Dawson| Flickr | Getty Images

Coffee wars between top U.S. brands are set to intensify as coffee houses battle to attract the Hispanic consumer to counter the loss of customers who prefer to drink their lattes at home.

Donut shops and coffeehouses have seen minimal growth since 2007 as single-serve machines have risen in popularity, according to a new report. Over a third of U.S. visitors to coffee shops were more likely to drink coffee at home than at a coffee house in 2012, the study by research firm Mintel found.

But a growing Hispanic population with increasingly greater spending power could be the key to unlocking growth in the coffee market, Jonny Forsyth, global drinks analyst at Mintel and author of the report, told CNBC.

"The growth ceiling is being hit. But suddenly this Hispanic audience who are not only growing in terms of numbers but also growing in terms of incomes are spending more money than before."

(Read more: Wake up and smell the coffee – market may perk up)

Hispanics are expected to show explosive population growth, making up 19 percent of the U.S. population by 2018, up from 15 percent in 2008.

The group's purchasing power will hit an estimated $1.7 trillion by 2017. In 2012, a quarter of Hispanics claimed to visit coffee houses compared to 16 percent of other Americans.

Food and drinks giants have seen the potential in the Hispanic market and have tried to target it with marketing. McDonald's has featured adverts featuring Hispanic actors and families and has run charity drives to donate money to programs which benefit Hispanic families.

Dunkin' Donuts has also jumped on the marketing drive launching its first Hispanic-focused campaign in 2012, asking "Que estas tomando?" or "What are you drinking?"

(Read more: How your cup of coffee is changing)

Starbucks does not actively target Hispanic customers, according to Mintel's report, but the "aspirational lifestyle ethos" and "mini-community" feel of the chain, fits with the values of Hispanic people.

But Forsyth is also expecting the Hispanic drive to go further than just advertising.

"We are going to see a lot more use of Hispanic cultural flavors and foods," he told CNBC. "It is going to be partly about marketing to the group and reflecting values, but also about providing food options that they will be more familiar with culturally."

»Read more
  Wednesday, 30 Oct 2013 | 4:28 AM ET

Watch: The future of food... packaging you can eat

Posted By: Arjun Kharpal
It might sound like whacky science, but the latest food revolution is an attempt to bring sustainable food to the fore. »Read more
  Tuesday, 15 Oct 2013 | 2:35 AM ET

Sugar: The food industry’s tobacco moment?

Posted By: Catherine Boyle
Photographer's Choice | RF | Getty Images

The food industry is facing a backlash against high sugar content on the same scale as the one experienced by the tobacco industry following studies showing a link between smoking and lung cancer, experts are warning.

With growing public awareness of the debate surrounding sugar, obesity and diabetes, "a structural decline in sugar consumption" is on its way, according to a recent report by the Credit Suisse Research Institute.

Sales of cigarettes in the developed world have been in steady decline since the 1970s, after the link between smoking and diseases like lung cancer and emphysema was proven. The industry was also hit by a round of lawsuits, which resulted in four major tobacco industry players agreeing to pay out $365.5 billion to settle claims over health issues caused by smoking cigarettes. Allegations that the industry was aware of the link between lung cancer and smoking as early as the 1950s were key to the cases.

At the beginning of the obesity epidemic, it was received wisdom that lowering fat and calorie consumption would shrink waistlines. Yet as the number of low-fat products on the market has risen, so have obesity rates - worldwide obesity has nearly doubled since 1980, according to the World Health Organization (WHO).

With the rise of obesity comes increased rates of Type 2 diabetes, heart disease and a raft of other health problems, which in turn makes treating patients more expensive for governments and insurers, according to the WHO.

(Read more: Putting a price on weight loss)

Scientists are still divided over the true causes of obesity, but the view that it is partly caused by high fructose corn syrup (HFCS), which is present in the majority of foods produced in the developed world, is gaining traction. HFCS is a cheap form of corn syrup used in most processed foods, cereals, and soft drinks, which gained popularity after the price of imported sugar increased in the U.S. during the 1970s.

Alarm bells have been ringing in the scientific community for years over the widespread use of HFCS, led by Dr Robert Lustig, who specialises in treating obese children and has written a book called Fat Chance about obesity.

(Read more: Obesity officially becomes a disease)

Lustig's talk: Sugar: The Bitter Truth has had nearly 4 million views on YouTube. In it, he argues that fructose is a "poison" which helps the body retain fat and is partly responsible for the obesity epidemic.

Fructose essentially delays the feeling of being full by suppressing the action of a hormone called leptin, which leads to further food consumption, according to Lustig's studies.

"It makes your brain think you're starving and now what you have is a vicious cycle of consumption, disease and addiction," Lustig said.

»Read more
  Friday, 27 Sep 2013 | 7:47 AM ET

McDonald's shakes up value menu, but will they bite?

Adam Berry | Bloomberg | Getty Images

Hold the fries, pass the salad. McDonald's on Thursday said it would offer healthy options as part of its popular value meals, letting customers choose a side salad, fruit or vegetables instead of french fries.

The announcement by the world's largest fast-food chain comes as more companies respond to government and consumer pressure to address the global obesity epidemic.

For its children's Happy Meals, the company said it would promote water, juice and low-fat milk as the drink choices on its menus and in-store promotions. Customers would still be able to buy soda though.

McDonald's, which often bears the brunt of criticism over the restaurant industry's penchant for tempting diners with indulgent and often high-calorie food, said it would offer the option in all of its 20 major global markets by 2020.

»Read more
  Monday, 23 Sep 2013 | 6:25 AM ET

Luxury tampons? Companies spurn middle class

Posted By: Ben Popken
Proctor & Gamble

Paper towels embossed to look like cloth. Tampon packages with a glossy metallic sheen. Designer ice cubes for $75 a bag. Marketers are going glam with everyday products, taking them upscale as they give up on selling to the middle class.

Companies have reacted for years to the shrinking middle class by developing both top shelf and bargain versions of their product lines. Toyota has been successful with the Lexus. Frito-Lay has introduced Olive Coast, kettle-cooked chips with a Mediterranean flavor, as well as "Taqueros," a discount tortilla chip. Apple's new iPhone comes in both a $199 version and a $99 one with cheaper components.

For the wealthy, a 20 percent markup is a small price to pay for "luxury." For some in the middle class, it's a way to feel affluent, at a cost. For the poor? There's the bargain brands. In an economic recovery that has magnified income inequality, consumers are either spending at the Family Dollar stores of the world, or at the Nordstroms.

(Read more: Luxury brands regain 'cool' but techs lose 'wow' factor)

The U.S. Census Bureau recently reported that national real median household income was $51,017 in 2012, 8.3 percent lower than in 2007 and 9.0 percent below the income peak in 1999. As the middle class feels like it's scraping by, it has less buying power to target with average products at average prices. By 2011, the top 5 percent of Americans by income accounted for 37 percent of all consumer spending, according to a Moody's Analytics survey. By contrast, the bottom 80 percent accounted for 39.5 percent.

Now traditional middle-of-the-road companies are experimenting with going up-market.

The Procter & Gamble Co's new Bounty DuraTowels are enclosed in thicker plastic and feature an embossed print that resembles a dish cloth. "3x cleaner than a germy discloth," says the package. "Feels and cleans like a cloth."

The cost is $0.05 per square foot, nearly double regular Bounty paper towels. Similarly, P&G's Cascade Platinum dishwasher detergent boasts that it is "our ultimate clean for dishes" and it "keeps the dishwasher sparkling," at a 12 percent markup.

(Read more: Burberry confident in China despite luxury crackdown)

Tampax "Radiant" costs 59 percent more per unit and use "designer packaging and wrappers." And Dean and Deluca is selling premium ice cube spheres "individually carved from a 300lb block to ensure flawless quality and a zero-taste profile." A 10 cube bag costs $75.

Dean & Deluca didn't respond to a request for comment but P&G spokesman Bryan McCleary said, "Our strategy is actually to offer great products across all price ranges." He pointed to how the company will soon start selling a lower-priced version of Tide called Simply Clean, and last year launched Tide Pods, "a great new way to wash clothes," priced in the higher tier.

More from NBC News:
Big box store selling rare, big bucks booze
The 'ShamWow Guy' cleans up his act
'Grand Theft Auto V' sales blow past $1 billion in three days

The trend driving the strategy is that consumers are scrimping on the products they don't care about to make room in their budget for those they do. US consumers plan on cutting back spending on eating out by 41 percent, and non-mobile electronics like TVs by 30 percent in 2013, according to the preliminary results of a survey by the Boston Consulting Group. Meanwhile, consumers reported they'll be spending 13 percent more on environmentally friendly home cleaning products, and nearly that much more on mobile electronics and fresh meat.

"It's an emotional splurge," said Steve Kazanjian, a brand strategist at packaging company MeadWestvaco Corp.

The premium prices may seem an impractical purchase for anyone, let alone for the 99 percent of earners who saw their incomes fall 11.6 percent during the most recent recession, but only go up up .4 percent during the recovery, according to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty.

(Read more: Cutouts to pastels: Fashion Week's hottest looks)

But while being middle-class can mean a lot to those who think they belong in it, marketers take a different view.

For them, "middle class" was simply a label to describe consumer behavior. It was also a very poor one, said Peter Fader, a professor of marketing at University of Pennsylvania's Wharton School.

"We had to bucket based on easily observable characteristics," said Fader, such as age, gender, income, and home ownership. "Not because it was was a proven way to discriminate purchasing habits, but because it was all we had."

Now with companies able to scoop up our data from the apps we tap and the remote control buttons we push, it's easier to figure out out what makes people tick, said Fader. "This person wants to be a super-fancy chef, this person wants to be a super-healthy mother, so let's position products accordingly."

(Read more: Beauty secret: fashion's bet on a $10 billion biz)

Consumers can now go for hand-harvested sea salt instead of Morton's, or spring for a "single origin" pour over coffee instead of Folger's. For a few dollars more, the premium products offer a whiff of a better life.

P&G and others are betting they can go the same route with items like paper towels and tampons designed for those who appreciate the finer things, even when wiping down a counter.

However, for consumers to truly accept a new luxury item, "you have to deliver discernible substantive benefits," said Milton Pedraza, CEO of the Luxury Institute. It needs to work better. It needs to look better. And it needs to feel like a reward.

But "going lux" might be an impossible task for some products entirely, where true innovation is hard to develop, and even harder to prove.

"Who's going to tell the difference between 'really clean' white sheets and 'super clean' white sheets?" said Pedraza.

»Read more
  Monday, 23 Sep 2013 | 5:55 AM ET

Luxury brands regain ‘cool’, techs lose ‘wow’ factor

Posted By: Arjun Kharpal, special to CNBC.com
Image source: Aston Martin

Luxury brands have regained their cool factor as signs of a healthier economy have boosted their appeal, but technology companies are losing their shine, according to a new brand survey.

The annual CoolBrands survey of the top 20 coolest brands, showed a swing in favor of luxury good companies with the likes of Rolex and Prada joining the list after an absence last year.

Apple topped the list for the second year running as die-hard fans queued outside stores across Europe and Asia for the new iPhone models, despite criticism the devices lacked a "wow" factor.

(Read more: Android KitKat software revealed by Google, Nestle)

"The big trend has been the shift from everyday brands to luxury brands. That might be to do with the fact that the economy is getting a little bit healthier or indeed because those brands, like Prada have had a better year," Stephen Cheliotis, chairman of the CoolBrands Council told CNBC.

»Read more
  Sunday, 22 Sep 2013 | 7:00 AM ET

Buffalo Wild Wings wooing diners, a beer at a time

Posted By: Tom Rotunno
Buffalo Wild Wings
Source: Buffalo Wild Wings
Buffalo Wild Wings

Forget about Bloomin' Onions or boneless wings, for many consumers, the choice of where to dine often comes down to a different factor: which restaurant has the best booze.

"Alcoholic beverages can be a key driver of traffic, differentiation, and loyalty," said David Decker, president of Consumer Edge Insight. According to the firm, two factors that keep customers coming back are "selection" and "pricing."

Consumer Edge Insight recently surveyed restaurant customers to find out which casual-dining spots generated the most loyalty with their alcoholic beverages.

»Read more
  Friday, 20 Sep 2013 | 7:48 AM ET

Scrooged? Target to cut back on holiday workers

Getty Images

Target plans to hire about 70,000 seasonal workers for the holiday shopping season, down about 20 percent from a year ago. The discounter is aiming to be more efficient in its hiring practices.

The move to hire 18,000 fewer temporary holiday workers versus last year's 88,000 comes as the Minneapolis-based chain saw that its own permanent employees wanted to get first dibs on working extra hours for the holiday season.

Target said it also wants to respond more quickly to the peaks and valleys of customer traffic, which have become more pronounced for many stores as shoppers time their buying for when they believe they can get the best deals.

(Read more: Firm expects slower holiday growth in 2013)

»Read more
  Thursday, 19 Sep 2013 | 3:33 PM ET

Don't even try to return that dress: Bloomie's

Posted By: Eun Kyung Kim, TODAY

Visit NBCNews.com for breaking news, world news, and news about the economy

You wear it, you own it.

Tired of customers returning used clothing, Bloomingdale's has begun attaching chunky, 3-inch black plastic tags to dresses costing more than $150 and leaving them on after their sale.

The special "b-tags," as they are called, are attached to visible places like the front bottom hemline to make them difficult to hide when the item is worn. Once the black plastic tag is removed, the garment cannot be returned.

(Read more at Today.com: Butterball turkey line enlists men for first time
'Tisn't the season, but it's never too early for layaway
Cheapism: Best budget high chairs)

Bloomingdale's is using the tags to help crack down on a practice so common it has its own name: wardrobing. That's when someone purchases a clothing item, wears it out once or twice—like to a party—and then returns it to the store.

»Read more

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  • From the products to the pitches to the people who buy them, we are a Consumer Nation. This blog focuses on all things consumer, taking the pulse of the attitudes that shape purchasing decisions, and providing insights that will help keep marketers, entrepreneurs and investors up-to-date on where trends are heading.



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