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Retail sales of rice products up 8% in 1990.

If growth trends in U.S. per capita consumption are any indication, American rice producers will have to increase significantly their yield (or decrease their exports) throughout the next decade in order to keep up with demand. From 1978 to 1991, domestic consumption of rice nearly tripled--from 5.7 pounds per capita to 17.7 pounds--and consumption has increased by at least one pound per capita every year since 1985. Other trends also favor rice growth, including the increased popularity of ethnic cuisines, the growing Hispanic and Asian-American populations, and the healthy-eating trend. Rice's many attributes--such as its fast and easy preparation and low-cost nutritional value--also promise a strong future following among time-pressed, health-conscious consumers.

Retail sales of rice and selected rice products--including dried rice, prepared rice (flavored rice mixes and canned rice), frozen rice, and rice cakes--totaled $1.24 billion in 1990, up 8% over their 1989 level of $1.15 billion, and up nearly 40% since 1986. The biggest annual sales gain--nearly 22%--occurred in 1988, following the five-year period's smallest gain (just 0.6%) in 1987. The market should continue to make strong gains over the next several years, with annual growth averaging 7% and dollar sales reaching $1.74 billion by 1995, according to a new study from Packaged Facts, the New York-based research firm.

As a commodity product, rice is highly vulnerable to global trends in production and consumption, which are often determined by the weather. For example, 1988's huge dollar gain was largely the result of a major hike in world prices, caused by a severe drought in Asia which upset the global production/consumption balance. According to the U.S. Department of Commerce, from the end of 1987 to the middle of 1988, the price per pound of long-grain uncooked rice at the production level jumped 24%, which translated into similar increases in supermarket prices. Although this type of situation naturally inflates retail prices in the short term, it seldom results in long-term gains, and may even engender consumer resistance to purchasing in the long run.

Although the United States accounts for less than 2% of the world supply, it is the world's second largest exporter after Thailand. This is because China and India, the world's first- and second-ranked producers of rice (which together accounted for nearly three-fifths of the global supply) consume their respective crops. And, if production trends are any indication, the United States may emerge as an even more important force in the future.

Nonetheless, the high road to profitability is in the domestic market, and of late the industry has been striding down it. From 1978 to 1991, domestic consumption of rice nearly tripled--from 5.7 pounds per capita to 17.7 pounds--and consumption has increased by at least one pound per capita every year since 1985. But, considering that the average Asian consumes 230 pounds of rice a year, there is still a long promising road to hoe.

"The United States," points out Packaged Facts' President, David A. Weiss, "is one of the lowest rice-consuming countries in the world. While other food marketers must battle for brand share, clearly, the mission for rice producers is simply to increase the overall popularity of rice." Mr. Weiss feels the key to increasing popularity is, "to climb on the backs of the ethnic and healthy food trends," adding, "those are places where rice certainly belongs." However, as far as increasing popularity goes, producers may not have to do all the work themselves. The Hispanic and Asian-American populations (both traditionally fond of rice) are on the increase.

In the United States, dried rice (mainly white, but also brown and wild) accounted for over half of all rice sales in 1990, amounting to about $649 million. Although dozens of gourmet and specialty brands compete, the market is dominated by a handful of major players, including Uncle Ben's (Uncle Ben's Converted), which claimed nearly a quarter of dried rice sales in 1990. Riviana Foods (Mahatma, Carolina, Success) ranks second with a 21% share, followed closely by Kraft General Foods (Minute Rice) with a 20% share. In recent years, all of these major players have been concentrating on more convenient, faster-cooking products, including ten-minute varieties of brown rice. In addition, Uncle Ben's recently tapped into the gourmet trend with a fast-cooking "Aromatica" blend, reminiscent of the sweet-smelling and tasting basmati rice strains of the Far East.

The second largest category, prepared rice, consists of various flavored mixes, most of which also fall under the fast-cooking classification. This category is led by Quaker Oats' Golden Grain Co. subsidiary, whose Rice-A-Roni brand claimed nearly two-fifths of sales in 1990. Other hard hitters include Uncle Ben's (23%) and Thomas J. Lipton (16%), both of which entered the business in the mid-1980s and are largely responsible for its dramatic growth. The buzz word in this area of the market is "flavors," since major and minor players alike continue to flood the market with a steady stream of new taste choices. From 1986 to 1990, the prepared rice category grew from $302 million to $449 million, a near-50% increase.

The two smallest rice categories--rice cakes and frozen rice--are similar in that each is controlled by just two--major companies. H.J. Heinz (Chico-San) and Quaker dominate the former, together claiming over 80% of the $100 million plus rice cake business in 1990. Pillsbury (Green Giant) and Kraft General Foods (Budget Gourmet and Birdseye International Recipes) lead the frozen category, which grew by 27% from 1986 to 1990 to reach $42 million. Unlike frozen rice, however, the rice cake business has been characterized in recent years by innovative new products, most of which respond to consumer demands for tasty bite sized ("mini") rice cakes.

Approximately 150 pages in length (including appendices), THE RICE MARKET contains an overview of the world rice market as well as the U.S. market. It also includes profiles of major and minor marketers, market size and growth statistics, and competitive analyses with brand shares. In addition, the report covers distribution, retail level activity, and consumer purchasing habits. A special feature is the inclusion of examples of print and TV advertising of rice products. [Tabular Data Omitted]

Information about THE RICE MARKET, which costs $1,750, can be obtained from Packaged Facts, Inc., 581 Ave. of the Americas, New York, N.Y. 10011.
COPYRIGHT 1992 Frozen Food Digest, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Publication:Frozen Food Digest
Article Type:Industry Overview
Date:Feb 1, 1992
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