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INFLATION SITUATION

It has been a turbulent year for fresh foods. A massive spike in the price of animal feed has inflated input costs for egg, dairy and meat producers, and a worldwide drought has pressured wheat yields and boosted U.S. exports of the crop. A poor harvest, combined with low inventories, has forced citrus prices higher. As a result, dollar sales gains in many major perishables categories were inflationary

It has been a turbulent year for fresh foods. A massive spike in the price of animal feed has inflated input costs for egg, dairy and meat producers, and a worldwide drought has pressured wheat yields and boosted U.S. exports of the crop. A poor harvest, combined with low inventories, has forced citrus prices higher. As a result, dollar sales gains in many major perishables categories were inflationary this year.

Yet smaller categories that offer shoppers convenience or promise health benefits continue to show lots of potential. Refrigerated teas enjoyed another exceptional year, hummus retained its status as an emerging star, and as a mature category, yogurt continued to impress with steady growth.

It's unclear at this point how the sudden tightening of global liquidity may impact commodity markets, but there is a good possibility that non-commercial speculation in agricultural product futures will begin to moderate, offering some relief to fresh food producers and, ultimately, retailers.

LARGEST SALES $$
DOLLAR SALES % CHANGE FROM LAST YEAR
Milk $10.7B -0.2
Fresh Bread & Rolls $8.7B 2.7
Natural Cheese $6.3B 2.3
Refrigerated Juices $4.2B 4.0
Luncheon Meats $3.4B -0.2
TOP SALES GAINERS > >
DOLLAR SALES % CHANGE FROM LAST YEAR
Refrigerated Teas/Coffee $253.3M 27.6
Refrigerated Spreads $268.5M 22.3
Refrigerated Fresh Eggs $2.7B 11.7
Refrigerated Side Dishes $1.1B 11.0
Yogurt $3.3B 4.1
TOP SALES DECLINERS < <
DOLLAR SALES % CHANGE FROM LAST YEAR
Butter $1.2B -5.8
Refrigerated Salad/Coleslaw $2.7B -5.6
Refrigerated Pizza $154.7M -5.3
Processed Cheese $2.1B -5.0
Margarine/Spreads/Butter Blends $1.2B -2.4

TOP DOLLAR VOLUME $$

Refrigerated Juices

Low inventories and yet another year of poor citrus harvests in Florida pushed the price of orange juice up in late 2006 and early 2007. The resulting 3% dollar sales gain for the $2.68 billion refrigerated OJ industry was inflationary — unit sales dropped more than 12% during the same period. This activity was reflected in drug stores as well, where dollar sales gains of 7.3% were driven primarily by price increases in the channel's OJ sales. Yet despite rocky times for the refrigerated juice category's flagship product, there are several emerging stars to watch. Smoothies had another stellar year, with both unit and dollar sales up more than 40%, netting $121 million in sales. Similarly, the growth of the refrigerated lemonade segment appears to be slowing down from its recent boom, but unit sales there were up almost 6%, and dollar sales rose 21% to $164 million. Meanwhile, refrigerated cranberry, grape and pineapple juice products also enjoyed strong growth off of significantly smaller bases.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $4.2B 4.0
Drug $52.3M 7.3
F/D/MX $4.3B 4.4
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $3.901B -3.3 $4.013B 2.9 $4.076B 1.6
Drug $43.3M 2.7 $48.0M 10.9 $50.4M 5.0
F/D/MX $3.976B -3.2 $4.103B 3.2 $4.184B 2.0
SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Rfg Orange Juice $2.7B 3.2%
Rfg Fruit Drink $675.7M -2.1%
Rfg Blended Fruit Juice $268.4M 10.3%
Rfg Lemonade $164.4M 21.0%
Rfg Juice and Drink Smoothies $120.7M 47.2%
Rfg Grapefruit Juice $69.2M 4.3%
Rfg All Other Fruit Juice $55.6M -21.6%
Rfg Cider $53.0M 4.0%
Rfg Vegetable Juice/Cocktail $29.1M -6.4%
Rfg Fruit Nectar $20.3M 6.5%
Rfg Pineapple Juice $14.3M 10.4%
Rfg Apple Juice $9.5M 12.0%
Rfg Cranberry Cocktail/Drink $8.0M 42.0%
Rfg Lemon/Lime Juice $6.6M 4.3%
Rfg Grape Juice $5.3M 46.5%
Rfg Cranberry Juice/Cran. Juice Blend $2.0M 68.7%
Rfg Juice/Drink Concentrate/Syrup $1.8M 55.5%
Rfg Cocktail Mixes $180,948 27.0%
Rfg Grapefruit Cocktail/Drink $48,504 -70.7%

TOP DOLLAR VOLUME $$

Fresh Bread & Rolls

Fresh bread products suffered modest unit sales declines across the board during the latest 52 weeks, with even bagels and bialys marking their first slump in several years. However, dollar sales of the products continued to grow, reflecting price inflation led by rising wheat and fuel costs. Retailers continue to tell SN that shoppers are trending toward artisan and whole-grain products at in-store bakeries.

CALENDAR 2004 2005 2006
YEAR $ SALES % CHANGE $ SALES % CHANGE $ SALES % CHANGE
Suprmkts $8.282B -0.1 $8.430B 1.8 $8.594B 2.0
Drug 43.2M 10.2 $50.8M 17.6 $53.7M 5.8
F/D/MX $8.411B 0.2 $8.583B 2.1 $8.773B 2.2
52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $8.7B 2.7
Drug $56.8M 8.4
F/D/MX $8.9B 2.9

TOP DOLLAR VOLUME $$

Luncheon Meats

SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Rfg Sliced Lunchmeat $3.194B -0.1%
Rfg Non-Sliced Lunchmeat $216.8M -2.0%
52 weeks ending June 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $3.4B -0.2
Drug $7.3M 14.5
F/D/MX $3.5B 0.1

Packaged luncheon meats may be feeling the effects of an ever-widening variety of lunch alternatives sharing the same case with them. For the first time in years, supermarket dollar sales of this category are down, if very slightly. So are unit sales, by 3.2%.

One industry source pointed out there's a huge variety of “quick-pick” items sharing the case — items such as yogurts and smoothies, for example — that customers, who are increasingly health-conscious, perceive as better for them. Customers, too, are moving toward the service deli, where they are finding more variety with attributes they're looking for — such as nitrate-free, all-natural and organic. By comparison, unsliced luncheon meats have experienced declines during the last few years as shoppers turn to more convenient alternatives. Meanwhile, sales of sliced luncheon meats are up in drug stores, undoubtedly because more locations have begun carrying the products.

DOLLAR SALES % CHANGE
2004
Supermarkets
$3.379B 3.2
Drug
$6.1M 10.7
F/D/MX
$3.412B 3.3
2005
Supermarkets
$3.405B 0.8
Drug
$6.1M -0.9
F/D/MX
$3.445B 1.0
2006
Supermarkets
$3.411B 0.2
Drug
$6.7M 10.2
F/D/MX
$3.459B 0.4

TOP DOLLAR VOLUME $$

Natural Cheese

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $6.3B 2.3
Drug $9.0M 12.3
F/D/MX $6.4B 2.6
SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Natural Chunks $2.2B -0.5%
Natural Shredded Cheese $2.1B 1.0%
Natural Slices $744.3M 11.4%
Natural String Cheese $493.5M 9.4%
SS Grated Cheese $223.0M 0.9%
Natural Crumbled $194.9M 10.3%
Ricotta Cheese $172.8M -2.6%
Rfg Grated Cheese $86.0M 3.7%
Natural Cube $69.9M -7.9%
Natural All Other Forms $7.9M 14.0%

Reflecting the broader trend of shoppers preferring all-natural products, sales of natural cheese continue to grow, largely at the expense of processed cheese products. Cheese makers have responded by introducing innovative new products in light of consumer convenience preferences and increased snacking. Products like natural crumbled cheese and natural slices experienced a large increase over last year as consumers are increasingly drawn to the products' many uses and convenience for snacks, food toppings and home cooking. Consumers are also becoming more interested in varieties of specialty cheeses from watching cooking shows and traveling abroad.

CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $6.012B 11.3 $6.142B 2.2 $6.238B 1.6
Drug $5.5M 23.0 $7.5M 35.3 $8.4M 12.5
F/D/MX $6.061B 11.5 $6.206B 2.4 $6.321B 1.8

TOP DOLLAR VOLUME $$

Milk

The milk category's long, steady slump continued this year. Unit sales were down 2%, but dollar sales remained flat, reflecting higher prices caused by tighter supplies. With consumers being more health-conscious and drinking less whole milk, full-fat products suffered the most, with unit sales down more than 5% and dollar sales down more than 4%. Meanwhile, dollar sales of skim/low-fat milk rose on flat unit sales, and sales of kefir/milk substitutes and soy milk increased a whopping 8.7%, fueled by the subcategory's perceived health benefits.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $10.7B -0.2
Drug $420.5M 0.8
F/D/MX $11.3B 0.1
SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Rfg Skim/Low-Fat Milk $6.6B 1.1%
Rfg Whole Milk $2.8B -4.1%
Rfg Flavored Milk/Eggnog/Buttermilk $713.1M -0.3%
Rfg Kefir/Milk Substitutes/Soy Milk $457.4M 8.7%
Rfg Milkshakes/Non-Dairy Drinks $64.5M 3.8%
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $11.020B 6.1 $10.905B -1.0 $10.552B -3.2
Drug $335.4M 26.3 $422.7M 26.0 $402.1M -4.9
F/D/MX $11.515B 6.7 $11.502B -0.1 $11.146B -3.1

TOP GAINERS >>

Refrigerated Teas/Coffee

The refrigerated tea and coffee category continued its relentless growth streak, with sales up a whopping 27% during the latest 52 weeks. Regular sweet tea is still a major component of the category. But suppliers have continued to emphasize the health and antioxidant benefits of tea, and have kept the category hot by offering new varieties such as green teas, white teas, red teas and flavored blends — which shoppers are becoming familiar with through their single-serve counterparts — in a variety of new refrigerated gallons and half gallons. The tiny RTD refrigerated coffee and coffee concentrate market is showing promise in these sets as well, as iced coffee's popularity continues to grow.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $253.3M 27.6
Drug $5.8M 25.2
F/D/MX $261.8M 27.6
SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Rfg Coffee Concentrate $1.2M 118.9%
Rfg Ready-to-Drink Coffee $1.8M 174.7%
Rfg Teas $250.2M 26.8%
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $148.8M 10.9 $179.5M 20.7 $231.3M 28.8
Drug $3.1M 6.9 $4.0M 30.0 $5.1M 29.0
F/D/MX $153.2M 10.2 $185.3M 21.0 $238.8M 28.9

TOP GAINERS >>

Refrigerated Spreads

Led by booming sales of hummus, the refrigerated, flavored spreads category has been on a tear, growing more than 31% during the latest 52 weeks. Although analysts estimate that household penetration for hummus is currently less than 4% in the United States, the product's all-natural, healthy image and its association with Mediterranean diets indicate that the subcategory may have significant potential. Horseradish sauces and refrigerated meat spreads also grew off of smaller bases, although unit sales growth in both categories was flat at less than 1%.

SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Rfg Flavored Spreads $183.9M 31.3%
Rfg Meat Spread/Salad $62.8M 7.1%
Rfg Horseradish/Horseradish Sauce $21.6M 4.4%
Rfg Honey $323,372 -8.0%
52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $268.5M 22.3
Drug $209,692 -0.8
F/D/MX $270.0M 22.3
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $191.4M 10.0 $205.9M 7.6 $243.9M 18.4
Drug $139,188 114.0 $220,610 58.5 $189,722 -14.0
F/D/MX $192.0M 10.1 $207.0M 7.8 $245.2M 18.5

TOP GAINERS >>

Refrigerated Fresh Eggs

Dollar sales of fresh eggs, not surprisingly, have shot up by double digits at all retail venues, even as unit sales dropped slightly. A combination of factors — including high feed prices, fewer laying hens, lower production and, particularly, huge exports of eggs this past year — have pushed prices up. Corn, a major feed ingredient, has been in short supply as it's rerouted into ethanol production. Egg producers, pressured to provide roomier quarters for hens, have done so in the same buildings by decreasing the flock's size. Production faltered, too, during such changeovers, an American Egg Board source said. Also, retailers are not as apt to feature-price eggs, finding they don't need to. Indeed, they've probably taken a cue from such national brands as Eggland's Best, which commands a premium price for products and continues to show double-digit growth. The only time recently that dollar sales of generic eggs dropped was 2005, when demand was down as consumers moved away from the high-protein diet craze.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarket $2.7B 11.7
Drug $19.2M 19.9
F/D/MX $2.8B 12.0
SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Fresh Eggs $2.5B 12.8%
Egg Substitutes $201.6M 3.0%
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $2.835B 3.3 $2.398B -15.4 $2.487B 3.7
Drug $15.1M 6.8 $15.4M 2.2 $16.1M 4.5
F/D/MX $2.866B 3.4 $2.429B -15.3 $2.525B 3.9

TOP GAINERS >>

Refrigerated Side Dishes

Convenience reigns in the supermarket, and that trend is nowhere more evident than in refrigerated, easy-to-grab foods. Display cases are filling up with a variety that increases every day as more suppliers add mashed potatoes and a roster of other items — some non-starchy, some healthy and some quite esoteric. So it's not a very big surprise that dollar sales of refrigerated sides in supermarkets are up by double-digit percentages. Unit sales rose, too. “We would expect to see nearly any offering of meal solutions sell well in refrigerated/fresh format. This is the nexus of consumer needs,” a consumer research source said. Even as consumers get busier and busier, the quality of refrigerated meal components continues to improve, gaining an ever-widening audience.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $1.1B 11.0
Drug $899,995 -0.5
F/D/MX $1.1B 11.0
SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Rfg Side Dishes $342.8M 21.3%
Rfg Appetizers/Snack Rolls $308.0M 8.0%
Rfg Prepared Salad/Fruit/Coleslaw $447.0M 6.8%
Rfg Sauerkraut $32.6M 1.7%
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $771.6M 7.2 $946.7M 22.7 $1.080B 14.1
Drug $910,244 33.4 $896,706 -1.5 $853,879 -4.8
F/D/MX $774.3M 7.2 $951.6M 22.9 $1.086B 14.1
52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $3.3B 4.1
Drug $6.5M 5.0
F/D/MX $3.4B 4.6

TOP GAINERS >>

Yogurt

Flavor innovation, budding consumer awareness of probiotics, and an advertising push focused on healthy diets continued to boost dollar sales of yogurt by 4.1% during the latest 52 weeks, continuing a years-long trend. Although unit sales gains were more modest at 1.7%, that's hardly a drop in the bucket for this mature, $3.3 billion category. By contrast, sales of yogurt drinks have slowed since their heyday a few years ago, as shoppers reach for other breakfast or snack options such as smoothies and super-premium juices. Dollar sales of yogurt drinks were down more than 8%, according to IRI.

SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Rfg Yogurt $2.9B 6.2%
Rfg Yogurt Drinks $411.0M -8.5%
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $2.864B 6.3 $3.068B 7.1 $3.226B 6.5
Drug $5.3M 36.3 $5.8M 9.3 $6.4M 10.0
F/D/MX $2.898B 6.6 $3.113B 7.4 $3.326B 6.8

TOP DECLINERS

Butter

Ample supplies and stable demand led to falling prices on butter this year, landing the category on the Top Decliners list. While dollar sales declined by almost 6%, unit sales were flat, increasing slightly by 0.44% over last year. Several retailers are enjoying growing sales of premium, European-style butters, according to recent interviews with SN. However, the outlook for commodity butter products will be more of the same in the coming year, according to a U.S. Department of Agriculture report. Prices of butter are unlikely to increase as butter supplies continue to be ample this year, and domestic demand is fair at best with limited feature activity being reported, according to the USDA.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $1.2B -5.8
Drug $4.7M 14.7
F/D/MX $1.2B -5.6
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $1.313B 18.3 $1.310B -0.2 $1.221B -6.8
Drug $3.7M 60.9 $4.2M 12.6 $4.3M -2.6
F/D/MX $1.325B 18.5 $1.325B 0.0 $1.238B -6.6

TOP DECLINERS

Refrigerated Salad/Coleslaw

Bagged salads took a hit last fall when fresh spinach, a component in some salad mixes, suffered an E. coli outbreak. In addition, days later, a Salinas, Calif., company initiated a voluntary recall of lettuce when it found traces of E. coli in irrigation water. Shelves were temporarily emptied of the products at many supermarkets, and while the products were cleared soon after, and the government assured consumers all was OK, they obviously remained wary. As a result, refrigerated, bagged salads, a mature category that had continued to show steady, if modest growth until recently, suffered a dollar sales decline at supermarkets for the first time in years. “Sales had been running up prior to last fall's scare and that wiped out the growth,” one industry source said. While the figures show the drug store channel had positive year-to-date sales, the tracked sales base is so small that just a handful of locations could affect the numbers dramatically.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $2.654B -5.6
Drug $311,784 5.7
F/D/MX $2.680B -5.5
CALENDAR YEAR 2004 2005 2006

DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE DOLLAR SALES % CHANGE
Supermarkets $2.571B 6.6 $2.762B 7.4 $2.735B -1.0
Drug $379,067 17.1 $305,947 -19.3 $200,573 -34.4
F/D/MX $2.589B 6.6 $2.783B 7.5 $2.761B -0.8

TOP DECLINERS

Refrigerated Pizza

Dollar sales of refrigerated pizza dropped significantly year-to-date, just as they did in calendar 2006. The refrigerated variety could have taken a backseat to frozen pizza, since the quality of frozen pizza has been improving immensely over the last few years. As one source said, “Frozen pizzas are no longer hockey pucks. They're, in fact, very good.” And that trend continues. Kraft reported this year that it is investing heavily in upgrading its core products such as pizza. Meanwhile, dollar sales of refrigerated pizza crust and pizza dough are up. That could possibly reflect consumers' occasional efforts to be creative at the stove or grill. Fueled by television cooking shows, casual cooking, especially on weekends, has become a big thing. In fact, TV chefs and magazine articles have even been showing how to make pizza on outdoor grills.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $154.7M -5.3
Drug $53,474 49.0
F/D/MX $155.6M -5.4
SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Rfg Pizza Crust/Dough $53.3M 23.2%
Rfg Pizza/Pizza Kits $101.3M -15.5%
CALENDAR YEAR 2004 2005 2006

$ SALES % CHANGE $ SALES % CHANGE $ SALES % CHANGE
Suprmkts $166.0M 14.1 $173.1M 4.3 $156.1M -9.8
Drug $43,373 -18.7 $40,875 -5.8 $29,959 -26.7
F/D/MX $166.6M 14.1 $174.5M 4.7 $157.1M -10.0

TOP DECLINERS

Processed Cheese

SUBCATEGORIES SUPERMARKET SALES 52 WEEKS ENDING JUNE 17, 2007
Processed Shredded Cheese $7.4M -21.3%
Imitation All Other Forms $19.8M -18.1%
Aerosol/SqueezableCheese Spreads $70.0M -8.0%
Processed Loaf $253.4M -6.2%
Processed Slices $1.3B -5.8%
All Other Processed Cheese $159.2M -5.4%
American All Other Forms $16.4M -4.7%
Cheese Spreads/Balls $329.2M 1.8%
52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $2.1B -5.0
Drug $6.0M -5.3
F/D/MX 2.1B -5.0

Processed shredded cheese, imitation all other forms and aerosol/squeezable cheese spreads suffered sharp declines in dollar sales at supermarkets while cheese spreads/balls was this category's only sales gainer. The category's troubles can be traced to a variety of trends — from consumer concern about hormones and additives in dairy products to the product and packaging innovations that have positioned the natural cheese category as a viable alternative to their processed counterparts. Also, given the growing popularity of artisanal cheeses, consumers are becoming more sophisticated with their tastes and eating habits, and no longer believe that quality must be sacrificed in the name of convenience.

DOLLAR SALES % CHANGE
2004
Supermarkets
$2.378B 2.7
Drug
$5.6M 39.8
F/D/MX
$2.403B 2.8
2005
Supermarkets
$2.292B -3.6
Drug
$6.0M 7.7
F/D/MX
$2.320B -3.5
2006
Supermarkets
$2.152B -6.1
Drug
$6.0M 0.6
F/D/MX
$2.179B -6.1

TOP DECLINERS

Margarine/Spreads/Butter Blends

Margarine, spreads and butter blends have taken a hit since the Food and Drug Administration began requiring trans fat content to be listed on ingredient labels. Growing awareness of trans fats caused the category to lose its luster as a healthier alternative to butter, sending unit sales down more than 4% in 2005 and more than 7% in 2006. Suppliers have responded by launching products that are trans fat-free or enhanced with ingredients ranging from olive oil to cholesterol-reducing plant sterols. Higher prices for these products have helped slow dollar sales declines.

52 WEEKS ENDING JUNE 17, 2007 DOLLAR SALES % CHANGE FROM LAST YEAR
Supermarkets $1.2B -2.4
Drug $2.5M -11.4
F/D/MX $1.2B -2.3
CALENDAR YEAR 2004 2005 2006

$ SALES % CHANGE $ SALES % CHANGE $ SALES % CHANGE
Suprmkts $1.257B 3.2 $1.238B -1.5 $1.202B -2.9
Drug $2.4M 20.5 $2.7M 12.8 $2.5M -9.0
F/D/MX $1.267B 3.2 $1.249B -1.4 $1.214B -2.8