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Artificial Sweeteners

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Artificial Sweeteners. Andy Brown Tyler Clark. Summary. Introduction Category Depth Strength of Brands Private Label. Introduction to Artificial Sweeteners. Over $606m annual revenue 29.6% item penetration Mid level supplier control Category dominated by a few strong national brands - PowerPoint PPT Presentation
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Artificial Sweeteners Andy Brown Tyler Clark
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Page 1: Artificial Sweeteners

Artificial SweetenersAndy BrownTyler Clark

Page 2: Artificial Sweeteners

Summary

• Introduction•Category Depth•Strength of Brands•Private Label

Page 3: Artificial Sweeteners

Introduction to Artificial Sweeteners•Over $606m annual revenue•29.6% item penetration

•Mid level supplier control

•Category dominated by a few strong national brands

•Mid to low level private label activity

Page 4: Artificial Sweeteners

Category Depth

Retailer Total SKUs

Unique SKUs

Walmart 43 21

Harps 48 22

Walgreens 10 2

Target 6 1

Aldi 3 3

Total 75 49

*Unique SKU found ONLY at one retailer, may appear in more than one store.

Walmart HarpsWalgreensTarget Aldi0

10

20

30

40

50

60

Staple SKUs Unique

Page 5: Artificial Sweeteners

Category Audit Findings

•10 stores audited•75 SKUs found•28 brands found•49 unique SKUs found across 5 retailers

•Slow growth of SKUs•Driven growth in brands/trends

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Harp’s on Garland

Walmart NHM on Weddington

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Category DemographicsAd Hoc Demo

Private Label Equal Fasweet Splenda Sweet’N Low

2007 2007 2007 2007 2007TOTAL HOUSEHOLDS 100.0 100.0 100.0 100.0 100.0

INC - <$20,000 142.1 77.6 105.1 72.8 113.5INC - $20,000-29,999 112.1 101.6 174.7 83.3 101.0INC - $30,000-39,999 96.6 102.8 132.8 82.1 91.1INC - $40,000-49,999 105.4 73.0 119.7 102.4 118.3INC - $50,000-69,999 97.0 90.3 105.9 106.2 98.7INC - $70,000-99,999 83.9 132.1 40.2 114.7 101.9

INC - $100,000+ 68.5 113.5 58.6 128.2 82.1

SIZE - 1 MEM 81.2 68.9 98.5 62.8 82.6SIZE - 2 MEM 121.1 125.0 172.6 130.3 125.2

SIZE - 3-4 MEM 103.5 89.6 35.1 105.8 91.0SIZE - 5+ MEM 71.7 130.4 69.3 82.6 92.2

AGE FH - UNDER 35 77.5 38.3 55.8 71.5 43.1

AGE FH - 35-44 84.4 82.5 58.5 88.6 84.0AGE FH - 45-54 120.6 119.3 38.3 115.1 105.8AGE FH - 55+ 114.7 157.1 191.9 129.2 153.5

AGE FH - 55-64 110.0 148.7 209.5 138.0 157.1AGE FH - 65+ 119.4 165.7 174.0 120.3 149.8

AGE FH - NO FEMALE HEAD 90.7 68.1 103.8 77.6 81.3

Page 8: Artificial Sweeteners

Category DemographicsAd Hoc Demo

Private Label Equal Fasweet Splenda Sweet’N Low

2007 2007 2007 2007 2007

START UP FAMILIES 111.0 80.5 19.9 82.2 71.7

SMALL SCALE FAMILIES 95.7 74.0 43.2 85.0 62.5

YOUNGER BUSTLING FAMILIES 79.0 38.1 64.1 82.9 52.5

OLDER BUSTLING FAMILIES 76.9 139.5 23.5 97.9 112.3

YOUNG TRANSITIONALS 57.6 30.0 64.5 67.4 27.6

INDEPENDENT SINGLES 78.8 56.9 140.7 60.2 86.0

SENIOR SINGLES 97.3 107.9 25.5 72.5 98.0

ESTABLISHED COUPLES 135.1 113.4 54.4 131.9 105.8

EMPTY NEST COUPLES 122.5 158.9 270.2 157.4 173.8

SENIOR COUPLES 124.8 196.8 265.5 144.9 188.2

Page 9: Artificial Sweeteners

Category Demographics Summary

•No significant difference between brands•Artificial sweetener shopper tends to be older, empty

nester couples▫Could be because of dietary needs

Page 10: Artificial Sweeteners

Manufacturer Walmart - MLK Walmart - Joyce Walmart NHM Walgreens -

Township Target

Cargill(Truvia)

Mean GM% 23% 23% 43% 30% 22%% of Total SKUs 10% 8% 12% 7% 16%# of SKUs 4 4 2 1 1

Cumberland Packing(Sweet N’ Low)

Mean GM% 10% 10% 10% 27% 16%% of Total SKUs 3% 3% 4% 13% 12%# of SKUs 3 3 3 2 1

McNeil Nutritionals(Splenda)

Mean GM% 34% 35% 33% 52% 31%% of Total SKUs 47% 47% 57% 48% 46%# of SKUs 13 15 13 4 2

Merisant US(Equal)

Mean GM% 5% 5% 7% 46% 28%% of Total SKUs 1% 0% 1% 11% 20%# of SKUs 1 1 1 1 1

Private LabelMean GM% 30% 30% 31% 45% 8%% of Total SKUs 26% 21% 25% 11% 6%# of SKUs 8 8 6 1 1

OtherMean GM% 18% 26% 8% 45% % of Total SKUs 13% 21% 1% 11% # of SKUs 7 9 1 1

TotalMean GM% 26% 28% 28% 43% 23%% of Total SKUs 100% 100% 100% 100% 100%# of SKUs 36 40 26 10 6

Gross Margin %

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Category RoleITEM $ (000) DOLLAR SHARE ITEM

PENETRATION% REPEAT BUYERS

% ITEM $ ON DEAL

SUGAR SUBSTITUTES $606,156.08 100.0 29.6 60.0 15.7Private Label $68,773.02 11.4 5.5 51.0 6.9Equal $62,299.68 10.3 3.4 43.7 20.5Fasweet $544.59 0.1 0.1 35.1 16.4Splenda $348,378.14 57.5 16.9 49.5 17.2Sweet’N Low $66,770.00 11.0 6.4 51.1 12.7

•Cash machine•Mid-level volume•Good gross margins

Page 12: Artificial Sweeteners

Manufacturer Walmart - MLK Walmart - Joyce Walmart NHM Walgreens -

Township Target

Cargill(Truvia)

% of Facings 11% 10% 8% 10% 17%% of SKUs 12% 12% 6% 10% 14%# of SKUs 4 4 2 1 1

Cumberland Packing(Sweet N’ Low)

% of Facings 8% 8% 12% 20% 17%% of SKUs 10% 6% 6% 20% 14%# of SKUs 3 3 3 2 1

McNeil Nutritionals(Splenda)

% of Facings 36% 38% 50% 40% 33%% of SKUs 37% 38% 49% 40% 29%# of SKUs 13 15 13 4 2

Merisant US(Equal)

% of Facings 3% 3% 4% 10% 17%% of SKUs 2% 2% 4% 10% 29%# of SKUs 1 1 1 1 1

Private Label% of Facings 22% 20% 23% 10% 17%% of SKUs 25% 20% 30% 10% 14%# of SKUs 8 8 6 1 1

Other% of Facings 19% 23% 4% 10% % of SKUs 14% 21% 4% 10% # of SKUs 7 9 1 1

Total% of Facings 100% 100% 100% 100% 100%% of SKUs 100% 100% 100% 100% 100%# of SKUs 36 40 26 10 6

Category Depth

Share of Facings

Page 13: Artificial Sweeteners

Brand Dominance

•Splenda has almost 60% of total category revenue• It also dominates shelf space in stores

ITEM $ (000) DOLLAR SHARE ITEM PENETRATION

% REPEAT BUYERS

% ITEM $ ON DEAL

SUGAR SUBSTITUTES $606,156.08 100.0 29.6 60.0 15.7Private Label $68,773.02 11.4 5.5 51.0 6.9Equal $62,299.68 10.3 3.4 43.7 20.5Fasweet $544.59 0.1 0.1 35.1 16.4Splenda $348,378.14 57.5 16.9 49.5 17.2Sweet’N Low $66,770.00 11.0 6.4 51.1 12.7

Page 14: Artificial Sweeteners

Manufacturer Walmart - MLK Walmart - Joyce Walmart NHM Walgreens -

Township Target

Cargill(Truvia)

Mean GM% 23% 23% 43% 30% 22%% of Total SKUs 10% 8% 12% 7% 16%# of SKUs 4 4 2 1 1

Cumberland Packing(Sweet N’ Low)

Mean GM% 10% 10% 10% 27% 16%% of Total SKUs 3% 3% 4% 13% 12%# of SKUs 3 3 3 2 1

McNeil Nutritionals(Splenda)

Mean GM% 34% 35% 33% 52% 31%% of Total SKUs 47% 47% 57% 48% 46%# of SKUs 13 15 13 4 2

Merisant US(Equal)

Mean GM% 5% 5% 7% 46% 28%% of Total SKUs 1% 0% 1% 11% 20%# of SKUs 1 1 1 1 1

Private LabelMean GM% 30% 30% 31% 45% 8%% of Total SKUs 26% 21% 25% 11% 6%# of SKUs 8 8 6 1 1

OtherMean GM% 18% 26% 8% 45% % of Total SKUs 13% 21% 1% 11% # of SKUs 7 9 1 1

TotalMean GM% 26% 28% 28% 43% 23%% of Total SKUs 100% 100% 100% 100% 100%# of SKUs 36 40 26 10 6

Gross Margin %

Page 15: Artificial Sweeteners

Gross Margin %•Category average GM% = 28%•Started off by estimated lowest gross margin at 6%

Page 16: Artificial Sweeteners

ScorecardArt. Sweetener Scorecard - Spring 2012

ManufacturerWalmart -

MLK Walmart -

Joyce Walmart NHM

Walgreens -Township

Target

Cargill(Truvia)

% of Facings 11% 10% 8% 10% 17%% of SKUs 12% 12% 6% 10% 14%Mean GM% 23% 23% 43% 30% 22%# of SKUs 4 4 2 1 1

Cumberland Packing(Sweet N’ Low)

% of Facings 8% 8% 12% 20% 17%% of SKUs 10% 6% 6% 20% 14%Mean GM% 10% 10% 10% 27% 16%# of SKUs 3 3 3 2 1

McNeil Nutritionals(Splenda)

% of Facings 36% 38% 50% 40% 33%% of SKUs 37% 38% 49% 40% 29%Mean GM% 34% 35% 33% 52% 31%# of SKUs 13 15 13 4 2

Merisant US(Equal)

% of Facings 3% 3% 4% 10% 17%% of SKUs 2% 2% 4% 10% 29%Mean GM% 5% 5% 7% 46% 28%# of SKUs 1 1 1 1 1

Private Label

% of Facings 22% 20% 23% 10% 17%% of SKUs 25% 20% 30% 10% 14%Mean GM% 30% 30% 31% 45% 8%# of SKUs 8 8 6 1 1

Other

% of Facings 19% 23% 4% 10%  % of SKUs 14% 21% 4% 10%  Mean GM% 18% 26% 8% 45%  # of SKUs 7 9 1 1  

Total Mean GM% 26% 28% 28% 43% 23%# of SKUs 36 40 26 10 6

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Gross Margins and Display Space

•Most brands’ display space is proportionate with respect to the GM

•Truvia’s GM is about 25% but is only getting around 10% display space at stores

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Strength of Private Label

•Overall category private label strength is limited•GMs aren’t very high relative to competing brands

•Walmart has most active PL strategy▫PL’s compete with leading brands on display space and

GMs•Other retailers focus less on PLs due to lower GMs

•PLs are seen as a way to induce competition among suppliers, but retailers aren’t really committed to them

Page 19: Artificial Sweeteners

ScorecardArt. Sweetener Scorecard - Spring 2012

ManufacturerWalmart -

MLK Walmart -

Joyce Walmart NHM

Walgreens -Township

Target

Cargill(Truvia)

% of Facings 11% 10% 8% 10% 17%% of SKUs 12% 12% 6% 10% 14%Mean GM% 23% 23% 43% 30% 22%# of SKUs 4 4 2 1 1

Cumberland Packing(Sweet N’ Low)

% of Facings 8% 8% 12% 20% 17%% of SKUs 10% 6% 6% 20% 14%Mean GM% 10% 10% 10% 27% 16%# of SKUs 3 3 3 2 1

McNeil Nutritionals(Splenda)

% of Facings 36% 38% 50% 40% 33%% of SKUs 37% 38% 49% 40% 29%Mean GM% 34% 35% 33% 52% 31%# of SKUs 13 15 13 4 2

Merisant US(Equal)

% of Facings 3% 3% 4% 10% 17%% of SKUs 2% 2% 4% 10% 29%Mean GM% 5% 5% 7% 46% 28%# of SKUs 1 1 1 1 1

Private Label

% of Facings 22% 20% 23% 10% 17%% of SKUs 25% 20% 30% 10% 14%Mean GM% 30% 30% 31% 45% 8%# of SKUs 8 8 6 1 1

Other

% of Facings 19% 23% 4% 10%  % of SKUs 14% 21% 4% 10%  Mean GM% 18% 26% 8% 45%  # of SKUs 7 9 1 1  

Total Mean GM% 26% 28% 28% 43% 23%# of SKUs 36 40 26 10 6

Page 20: Artificial Sweeteners

Future of Private Label

•PLs are decreasing in importance to category▫Although Walmart’s PL strategy seems to be consistent

•Our recommendation to Walmart:1. Decrease role of PL in category2. Increase % of shelf space to Splenda and Sweet N’

Low3. Increase promotional with Splenda4. Negotiate better price deals with Cumberland

Packing (Sweet N’ Low) to increase GM


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