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									         The Baby Effect:
The Impact of Children 0-3 on Households‟
 Attitudes & Behaviors Toward Organics
           and Healthy Eating




              Prepared for: Whole Foods Market
                 The Natural Marketing Institute
                                 January 2007
                       Purpose and Methodology
      Purpose
      • To determine the impact of young children (under age 3) on a households’ attitudes toward and usage of organic
        foods and beverages.

      Methodology
      • Data was extracted from NMI’s proprietary 2006 Health and Wellness Trends Database™ (HWTD).
              • The HWTD is a comprehensive NMI consumer database based on an annual research study of general
                population, primary grocery shopper American households; the entire database includes 20,000+
                consumer respondents; based on attitudes, behavior and product usage within health and wellness; focus
                on consumer packaged goods across multiple categories, including nutritional supplements; conducted
                annually since 1999 and trendable; nationally projectable to U.S. households; statistically significant at the
                95% confidence level to +/-1-2%.
              • Topic areas reviewed include:
                     •Outlets shopped for healthy and natural products
                     •Past year usage of selected product categories
                     •Attitudes and opinions toward organic, natural and healthy products
      • Data from the WFM Organic Fiber Study (9/06) is also referenced on pages 9-10.
              • Groups analyzed include:
                                           Segment                   Abbreviation      Sample Size
                             Households with children under age 3     Kids Under 3          411
                             Households with children ages 3-17        Kids 3-17            1191
                             Households with children of any age        Any Kids            1616
                             Households with no children                 No Kids            4144
NMI – Baby Effect Analysis; January 2007                                                                   2
                       Executive Summary

Young children in a household have a significant impact on the households‟ usage of and attitudes
 toward organic products.
       • Specifically, households with Kids Under 3 are more likely than either those with Kids 3-17 and those with
         No Kids to…
               •have started using organic produce and organic packaged goods in the past year
               •be heavier users of organic milk
               •be significantly more likely to believe that organic foods are better for their kids and report
               they’ve been buying more organic foods specifically because of their children
While very young children have a clear impact, children 3-17 also play a key role. Households with
 children of any age are notably different (than those with no children) on numerous levels:
       • They are more likely to use organic beverages, organic milk, organic packaged foods and natural
         foods/beverages than those with No Kids
       • WFM Shoppers (of whom 20% have at least one child in the household) show more interest in organic
         cotton children's’ products (blankets, clothing, accessories) than those who don’t shop WFM
    • Those with Any Kids are less likely to perceive organic food as too expensive or believe it is not a good
      value than those with No Kids
Convenience is paramount for young families.
       • Most parents are stressed and desire ease and convenience. While most report shopping for healthy and
         natural products at conventional grocery stores, they are significantly more likely than those with No Kids
         to also frequent Mass Merchandisers and Convenience Stores
       • Parents are less likely than those with No Kids to read package labels
       • Parents have less time and energy to devote to their own health than those with No Kids. They are less
         likely to make an effort to eat healthy, but are more likely to use energy/sports nutrition products

NMI – Baby Effect Analysis; January 2007                                                               3
                       WFM Opportunities




      Households with children are an important target market for WFM. Parents are positively
       predisposed to organics. They believe they are better, they buy more, they desire more
       choices and they are less impacted by price premiums than those with no kids. WFM
       should actively market and merchandise healthy and organic choices for kids…especially
       those under age 3. These parents show particular interest and provide key opportunities
       for customer longevity, in addition to children being a “pathway” into organics.
      Households with children are key targets for other highly used categories: fortified
       products, soy products, canned foods (promote organic or WFM store brand options),
       dairy-free products, organic fiber products for children and natural and organic personal
       care. Beyond traditional organic foods/beverages…WFM should market other key
       categories to households with children.
      Parents want ease and convenience. They are stressed and have limited time, which
       impacts where and how they both shop and eat. WFM should offer clear and convenient
       choices for parents to help them in making food selections for both their children and
       themselves.




NMI – Baby Effect Analysis; January 2007                                           4
                       Parents Desire More Options For Healthy Foods
                       For Their Kids
                              (% consumer segment who agree “completely/somewhat” with statements)




               “I would like more selection of healthy food/beverage
                              products for my children”
                                                                                                 OPPORTUNITY!



                                             Kids Under 3             Kids 3-17

                                                   61%                    54%


                            Market and Merchandise healthy food and beverage choices for
                                          kids…especially those under 3.




NMI – Baby Effect Analysis; January 2007                                                              5
                       Usage of Organics May Be Driven By Young Child In
                       Household
                    (% consumer segment indicating they’ve been using product category for less than one year)

      Households With Young Children More Likely To Have Recently Started Using Organics…
                                                    Kids Under 3 (a)
                                                                                  72%bc
                                                    Kids 3-17 (b)
                                                    No Kids (c)
                                   59%bc                                                                 59%
                                                                                              55%
                                            47%        46%




                                     Organic Produce                          Organic Packaged Goods

               Agree completely/somewhat…                                                       Kids Under 3           Kids 3-17
               “I have tried organic foods & beverages specifically because of
               my children”
                                                                                                     26%                 20%
               “Organic foods/beverages are better for my children”                                 52%*                 45%
               “I’ve been buying more organic food because of my children”                          27%*                 18%
                                           Lower case letters denote significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007   * Denotes significant differences at the 95% confidence level vs. No Kids         6
                        HH With Kids Heavier Users of Organic, Natural
                        Products, But Not Produce
                                 (% consumer segment indicating usage of product category in past year)


                                                               Kids Under 3   Kids 3-17        ANY Kids          No Kids
         Product Usage in Past Year…
                                                                    (a)          (b)             (c)               (d)
         Organics…

         Organic Packaged Foods                                      48%d       40%               42%d            37%

         Organic Produce                                             54%        50%               51%             49%

         Organic Beverages (excl. milk)                              40%d       37%d              37%d            29%

         Organic Milk                                               39%bd       31%d              32%d            23%
         Naturals…

         Natural Foods                                               78%d       73%               74%d            70%

         Natural Beverages                                           67%        67%d              67%d            62%



                                                Significantly more likely than other groups to have been using
                                                for less than one year…are new kids driving usage?


Lower case letters denote significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                                                    7
                       Price of Organics Is Not A Key Deterrent For
                       Parents
                              (% consumer segment who agree “completely/somewhat” with statements)




                                                                                                                       Kids <3
                                                                                        65%                            Kids 3-17
                                                                                                                       No Kids
                  Organic food is
                                                                                         66%
                  too expensive
                                                                                                   ab
                                                                                             72%



                                                                   36%                                          Parents seem to
                  Organic food is                                                                           understand the value of
                   NOT a good                                                                               organics and are willing
                                                                      40%                                      to pay a premium
                   value for the
                      money
                                                                        43%a




NMI – Baby Effect Analysis; January 2007    Lower case letters denote significant difference at 95% confidence level      8
                       Awareness vs. Purchase of Baby, Toddler and
                       Children‟s Products Made from Organic Cotton
             (% of shoppers who have seen/heard about organic cotton products, % shoppers who made actual purchase of
                                                     organic cotton products)

    Roughly 1 out of 5                                  Seen or heard about
     are purchasing                                     Actually purchased (based on those aware)

                                                        Among WFM Shoppers
                                                                                                        29%
                                      Baby clothes
                                                                  7%



                                       Clothing for                                           24%
                                         toddlers              5%


                                        Baby                                                  25%
                                   blankets/sheets
                                         etc.                  5%

                                      Clothing for
                                      children (not                                               25%
                                       toddlers or           4%
                                         babies)

                                        Baby                                          20%
                                     accessories
                                   (bibs, hats, etc.)
                                                             4%


NMI – Baby Effect Analysis; January 2007           Source: Organic Cotton Study; September 2006               9
                         Purchase Intent of Organic Cotton Products for
                         Children
                            ( % segment VERY INTERESTED in purchasing the following organic cotton products from any retailer)




                                                                                            WFM                   Non-WFM
                                                                                          Shoppers                Shoppers
                                                                                             (a)                     (b)
                     Baby blankets, sheets etc.                                               25%b                    13%
                     Clothing for children                                                    25%b                    13%
                     Clothing for toddlers                                                    24%b                    12%
                     Baby clothes                                                             24%b                    13%
                     Baby accessories (bibs, hats, etc.)                                      22%b                    11%

                                                                  Top 3 Channels for WFM
                                                                 Children‟s Organic Cotton
                                                                          Buyers:
                                                                  Catalog or Website - 38%
                                                                 Whole Foods Market - 36%
                                                                Boutique Clothing Store - 34%

Lower case letters denote significant difference at 95% level
NMI – Baby Effect Analysis; January 2007                               Source: Organic Cotton Study; September 2006          10
                         Convenience is Key for Parents

             (% consumer segment indicating where they’ve shopped in past 3 months for healthy and natural products)

               Those with kids are more likely to shop for healthy/natural products at Mass
                     Merchandisers and Convenience Stores…Convenience is Key!

                                                                                         74%              Any Kids
                                Traditional Grocery Stores                                                No Kids
                                                                                         77%

              Mass Merchandisers W/ Fresh Meat &                                  55%*
                          Produce                                             48%
                                                                                                       Age of children in
                                                                                                        HH makes no
                                                                           38%                            difference
                                            Warehouse Clubs
                                                                           38%

                                                                           37%*
                                          Convenience Store
                                                                       29%

                                                                     23%
     Kids have no impact              Natural Supermarkets
                                                                    21%


* Significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                                                    11
                        Parent May Not Have Time To Study Labels
                        Help Them Find Healthy Options
                                 (% consumer segment indicating usage of product category in past year)


            Parents have little time to study package ingredient labels…merchandise
         products in ways to quickly help time-stressed parents identify healthy choices.

                            Kids <3 (a)
                            Kids 3-17 (b)                  62%ab
                            No Kids (c)
                                                 57%

                                     48%
                                                                                              44%ab
                                                                                      38%
                                                                              35%




                             I usually read labels on food &                 I select foods based on
                                   beverage products                       ingredient list on package
Lower case letters denote significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                                                  12
                        Demographic Profiles

                                                         (Demographic profile of segments)



                           Key Demographic Measures                        Kids Under 3      Kids 3-17   No Kids
                           of Segments…                                         (a)             (b)        (c)
                           Men                                                 44%             48%         48%
                           Women                                               56%             52%         52%
                           Average Age                                         33.8            38.0a      49.1ab
                           Married                                            77%bc            65%c        51%
                           Mean Income                                         $69K            $75Kc      $64K
                           College Grad or more                               34%bc            25%         26%
                           White                                               64%             58%        73%ab
                           Black                                               13%             12%         10%
                           Asian                                                4%              6%c        4%
                           Hispanic                                            16%c            18%c        10%



Lower case letters denote significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                                                    13
             APPENDIX
Other Opportunities For Households With
               Children
                         Attitudes Toward Food Safety & Organics…
                         Parents Not As Concerned As You‟d Expect


                                Agree Completely/Somewhat…        Any Kids    No Kids

                                   I believe the use of
                          pesticides/preservatives has caused      42%       49%*
                                increased food allergies


                                 Products labeled „natural‟ are    22%*      18%
                                basically the same as „organic‟



                               Pesticides used by farmers are      22%*      17%
                                       generally safe




* Significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                     15
                        Other Product Categories With Heavy Usage Among
                        Young Families…
                                 (% consumer segment indicating usage of product category in past year)



                                                                           Kids Under 3       Kids 3-17        No Kids
                           Product Usage in Past Year…
                                                                                (a)              (b)             (c)


                           Fortified foods/beverages                          73%c              67%c            60%

     Promote
     Organics?
                           Canned vegetables                                  88%c              84%             83%

                           Soy foods                                          41%c              36%             33%

                           Soy beverages                                      38%c              31%c            27%

                           Non-GMO foods                                      56%c              50%             46%

                           Dairy-free
                                                                              44%c              43%c            37%
                           foods/beverages
Lower case letters denote significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                                                  16
                        Those With Kids More Likely To Using Natural/
                        Organic Personal Care Products, Homeopathic
                        Remedies
Directional                      (% consumer segment indicating usage of product category in past year)
differences
only…HH w/                                                       Kids Under 3 (a)
                         56% 54%
ANY kids (54%)
                                                                 Kids 3-17 (b)
is significant                            50%
                                                                 No Kids (c)
                                                                                      43%c
                                                                                          40%c
                                                              36%c
                                                                  33%c                              33%
                                                                            27%




                       Natural Personal                     Organic Personal           Homeopathic
                            Care                                 Care                   Remedies


           No differences between HH with and without kids for use of Vitamins, Minerals,
                                  Multi‟s or Herbal Supplements
Lower case letters denote significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                                                  17
                        Sugar and Sweeteners…Parents Want To Avoid
                        Them, But Often Don‟t
                                (% consumer segment who agree “completely/somewhat” with statements)


                                                                                               Kids     Kids   ANY
                                                            Attitudes Toward                                          No Kids
                                                                                              Under 3   3-17   Kids
                                                            Sugar/Sweeteners…                   (a)      (b)    (c)
                                                                                                                        (d)

                                                            I’m concerned about negative
      All are equally concerned about
                                                            side effects of artificial         46%      47%    47%     48%
           artificial sweeteners…
                                                            sweeteners
                                                            I prefer not to serve my family
         …And HH with kids want to                          anything with artificial           39%      36%    37%d    33%
               avoid them                                   sweeteners
                                                            I usually check package label
         But those with kids are less
                                                            for forms of sugar/sugar           37%      42%    41%    48%abc
          likely to read packages…
                                                            content before I buy

        …Or want food with no sugar                         I prefer food with no sugar
                                                                                               30%      37%    35%    42%abc
        added (kids like sweet food!)                       added



        Opinions = Actions                                  No Differences between groups in past year usage of LOW
                                                             SUGAR, SUGAR-FREE, or ARTIFICIAL SWEETENERS

Lower case letters denote significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                                                       18
                       Having Kids Can Negatively Impact Parents’
                       Eating Habits…
                              (% consumer segment who agree “completely/somewhat” with statements)


                            Those without kids make more of an effort to eat healthy:
                                           Significantly more likely to agree than                 Adult Fat Intake
                                           those with kids of any ages…                            Associated With
                                           I try to eat balanced meals when possible           Presence of Children in
                                                                                                     Household
                                           I‟ve avoided some foods to eat healthier
                                                                                                “The presence of children
                                           I eat healthier than I used to                      in the home may affect
                                           I‟ve added foods to my diet to eat healthier        adults’ diets.
                                           Eating healthy is a vital part of my life           Study published 1/07

                                           I usually get the proper amounts of
                                           fruits/vegetables in my diet

                                      …While those with kids are more stressed:

                                           Significantly more likely to agree than
                                           those without kids…
                                                                                                     And stress impacts
                                           “I live a stressful life and look for ways                eating habits
                                           to simplify my lifestyle”
NMI – Baby Effect Analysis; January 2007                                                                 19
                        …But May Provide Opportunities to Market To
                        Parents
                                 (% consumer segment indicating usage of product category in past year)

         Those with kids show heavier usage of sports/energy nutrition products…quick
                          fixes for time and energy-needing parents?
                                     58%c
                                            52%c                           52%c
                                                                    48%c                                   Kids <3 (a)
                                                   46%
                                                                                                           Kids 3-17 (b)
                                                                                                 c         No Kids (c)
                                                                                        34%c 36%
                                                                                  31%

                                                                                                     21%




                                 Energy/Nutrition Bars              Sports Nutrition    Sports Nutrition
                                                                        Drinks              Foods

     Interestingly, those with children under 3 are the most likely to have used specialty/gourmet foods in the
     past year …(66% vs. 56% with kids 3-17 and 56% no kids). Do they “treat” themselves to specialty items to
     counterbalance a stressed, child-centric life?

Lower case letters denote significant difference at 95% confidence level
NMI – Baby Effect Analysis; January 2007                                                                     20
                                      The Natural Marketing Institute

                                               272 Ruth Road
                                            Harleysville, PA 19438

                                    Steve French, Managing Partner
                                           e-mail: Steve@NMIsolutions.com

                                            phone: 215-513-7300, ext. 214
                                                 fax: 215-513-1713

                                              www.NMIsolutions.com



NMI – Baby Effect Analysis; January 2007                                    21

								
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