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Low-fat, low-cholesterol products.

Most dietary guidelines currently recommend reducing consumption of fat, especially saturated fat, and cholesterol. As a result, consumers are increasingly demanding healthy, as well as convenient, foods. These trends are reflected in rising sales of low-fat and low-cholesterol foods, according to a new report by leading consulting research firm FIND/SVP.

"A majority of consumers are attempting to reduce the fat and cholesterol in their diets while changing their diets as little as possible," says Peter Allen, FIND/SVP's Vice President, Market Research Reports. "It's a question of changing the emphasis within the diet rather than adopting a radically different diet. And it is precisely this desire to change emphasis that provides the opportunity for marketers of low fat, low-cholesterol foods--most of which are reduced-fat and reduced-cholesterol versions of popular foods--to cash in" he adds.

FIND/SVP defines low-fat, low-cholesterol foods as products that are engineered or reformulated to contain less fat and/or cholesterol than they normally have in their original form. Fat reduction technology has focused on the development of fat substitutes.

Sales of low-fat, low-cholesterol foods totaled $32 billion in 1991, up 10.2% from 1990's $29.1 billion. The largest segment was refrigerated dairy products, which accounted for 66% of total sales, with fluid milk dominating the category. The market is expected to total $55.5 billion in 1996, representing a compound annual growth rate, from 1991-1996, of 11.6%.

Leading competitors in the low-fat, low-cholesterol foods industry include Borden, Kraft General Foods, Campbell Soup, and RJR Nabisco.

Market Segments and Forecasts

Refrigerated dairy products--this segment includes fluid milk, cheese, yogurt, cottage cheese, and eggs. Sales of low-fat, low-cholesterol dairy products comprise over two-thirds of sales of all low-fat, low-cholesterol foods. In 1991, sales of low-fat, low-cholesterol refrigerated dairy products neared $21 billion. This represented 54% of total refrigerated dairy product retail sales, which were $38.9 billion. By 1996, sales of low-fat, low-cholesterol refrigerated dairy products should reach $35 billion.

Frozen dinners and entrees--the low-fat, low-cholesterol segment of this market had sales of $1.475 billion in 1991 and showed a compound annual growth rate of 11.7% from 1986, when sales were $850 million. In that same time, sales of all frozen dinners and entrees increased at an annual rate of only 5.3%, from approximately $4 billion in 1986 to $5.2 billion in 1991. The market for low-fat, low-cholesterol frozen dinners and entrees is expected to grow at an annual rate of 10.5% from 1991-1996, bringing sales to $2.4 billion by 1996 and representing a 39% share of the frozen food dinners and entrees market.

Sweet baked goods--the low-fat, low-cholesterol segment of this market, which includes muffins, cakes, cookies, pastries, etc., remains relatively small with a 5.5% share of total sweet baked goods. 1991 sales of low-fat, low-cholesterol sweet baked goods were $650 million and are expected to increase at an annual rate of 5% to reach $829 million in 1996.

Frozen desserts--include ice milk, frozen yogurt, and sherbert. Overall growth will be led by low-fat, low-cholesterol products, which will climb from $4.2 billion in 1991 to $8.7 billion in 1996. At that time, low-fat, low-cholesterol frozen desserts will comprise a whopping 63% of the total frozen desserts market.

Condiments--include spreads, mayonnaise/spoonable dressings, pourable salad dressings, and sour cream/dips. Total sales of condiments were $5.8 billion in 1991, with low-fat, low-cholesterol products representing nearly 63% of that total, or $3.7 billion. Low-fat, low-cholesterol condiments are expected to reach retail sales of $4.8 billion in 1996.

Trends Impacting the Market

Demographics constitute a major factor which will stimulate sales of low-fat, low-cholesterol foods at a rate greater than that of total processed foods. The aging baby boomer population is a primary target of this market.

Changes In government regulations regarding nutrition labeling and health claims will decrease the rate of new food introductions, yet the number of products making honest claims will increase. Furthermore, the 1993 implementation of the Nutritional Labeling and Education Act should bolster consumer faith in label information.

"The |diet' market is evolving into a |healthy foods' market," notes Allen. "Scientific evidence, medical recommendations, and media saturation have contributed greatly to the development of this market segment. If food manufacturers can expand on this consensus and further persuade consumers that low-fat, low-cholesterol foods are not only healthy, but are also tasty and convenient, they will be extremely successful," concludes Allen.
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Publication:Frozen Food Digest
Date:Feb 1, 1993
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