INNOVATING TO WIN TODAY’S SHOPPERS · 2019-04-18 · Millennials Total Population Mentioned /...

Larry Levin

Executive Vice President

Consumer & Shopper Marketing

April 18, 2019

INNOVATING TO WIN TODAY’S SHOPPERS

New Product Pacesetters

Top Macro

Trends

© 2019 Information Resources Inc. (IRI). Confidential and Proprietary. 3

Trip Shifts: Many key channels driving Dairy sales are seeing trip growth

Total Trips

+1.8%

Food 38.1%

+1.1%Mass 3.8%

-2.1%

Club 4.8%

+2.1%Conv 2.6%

+6.2%

Drug 5.1%

-3.7%

Dollar 6.2%

+4.6%

Online 2.9%

+13.6%

Walmart 16.5%

+3.3%


Five Macro Trends Driving CPG

Abundant And

Blurry Choices

New Dynamics

Of

Transparency

Getting Personal

With

Personalization

Ecommerce

Legitimacy

Innovation In

America


Innovation is the Life Blood of CPG

But 9 Out of Every 10 New Products Fail

“Innovation is the oxygen of

the CPG industry and we

expect 9% of our topline

growth to come from new

products.”

Indra Nooyi

Former PepsiCo CEO


Seven Deadly

Sins of New

Product

Innovation

F

A

I

L

U

R

E

forecast

assortment

incremental

languish

unclear

retread

elusive

90% of Launches Fail

to Meet Critical

Milestones

© 2019 Information Resources Inc. (IRI). Confidential and Proprietary. 7© 2019 Information Resources Inc. (IRI). Confidential and Proprietary. 7

New or Extended Brand

NPP Criteria

Existing Brand

in a New Category

30% Distribution

Starts the Clock on Year-130%+ Distribution

at Year-1 CompletionTop 100 Brand Launches

in F&B and Non-Food

New Products

that Completed Their

First Year in 2017


Though Blockbuster Products Are Few And Far Between

200of these brands made

IRI NPP status

~13,000new brands were launched

in 2017

4of these brands

achieved >$100M


26.8

22.9

19.6

11.4

14.5 14.3

NPP13 NPP14 NPP15 NPP16 NPP17 NPP18

Food & Beverage

Median Year-One Sales are Trending

Down as Consumers Seek Customization


Million

Note: Numbers may not add to 100% due to rounding

<$20

$20-

$39

$40-

$59

$60-

$99

>$100

The Trend Continues: Blockbuster Products are Few & Far Between

YEAR-ONE DOLLAR DISTRIBUTION

37%

46%

67%

62%

66%

38%

37%

22%

27%

21%

14%

6%

4%

8%

8%

9%

8%

3%

4%

2%

4%

5%

4%

1%

3%

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8


17%

28%

20%

7%

19%

18%

14%

51%

41%

32%

42%

42%

24%

22%

24%

2015

2016

2017

2018

Less than $7.5 million $7.5-$9.99 million $10-$14.99 million $15-$20 million

Note: Numbers may not add to 100% due to rounding

A sizeable growth of smaller innovations landing under $15 millionShow a continued decline toward launches under $10 million


Smaller-sized Launches Draw Limited Distribution To Match Demographic Targets—not Being

“Everything To Everyone”!

37% 40% 4

6%

58%

34%

54%

64%

79%

81% 85%

59%

67%

82%

81% 86%

UNDER $20M $20-$39.99M $40-$59.99M $60-$99.99M OVER $100M

FIRST YEAR PACESETTERS DOLLARS

Average Starting Distribution Average Quad 13 Distribution Latest 52 (ending 3/17)


Helping

Smaller

Players Hit

It Big With

New ProductsSmall Companies

as a % of Total NPP Sales

Note: Large company has revenue of >$5B; medium $1B>x>$5B; small <$1B

62%

26%

26%

49%

12%

24%

NPP 2014 NPP 2017

+12 pts

Non-Food & Beverage

Small Companies

Medium Companies

Large Companies


Giving Rise To A Proliferation Of New Brand Innovations,

Particularly Across The Store

FOOD & BEVERAGE NON-FOOD

2004 - 2015

2016

2017

12%

39%

40%

2004 - 2016

2016

2017

8%

14%

25%


#1 Halo Top

$324.2M

T: 14.2% | R: 42.9%

#2 Good THiNs

$87.0MT: 11.4% | R: 29.8%

#3 Dunkin Donuts

Iced Coffee

$67.1MT: 4.2% | R: 52.9%

#4 Nestlé Splash

$55.2MT: 3.9% | R: 48.9%

#5 Lifewtr

$50.4MT: 1.6% | R: 48.4%

#6 SMARTMADE by

Smart Ones

$49.3MT: 3.3% | R: 42.5%

#7 HERSHEY’S

Cookie Layer Crunch

$47.7MT: 3.3% | R: 42.5%

#8 Hillshire

Snacking

$47.5MT: 2.8% | R: 46.5%

#9 Well Yes!

$47.3MT: 7.8% | R: 23.1%

#10 Cracker Barrel

Macaroni & Cheese

$46.6MT: 4.4% | R: 44.9%


Dairy Rising Stars which could Reach Pacesetter Status


…and the Next Wave Is Quickly Building!It’s About Experiences… and SolutionsAuthenticity Moves the NeedleThe Old Way is OBSOLETE!Changing Demographics are Changing the New Product Development Process


23%

24%

20%

23%

10%

% U.S. POPULATION (U.S. Census)

Silent Generation

Baby Boomers

Gen X

Millennials

Gen Z

Millennials Now Account for One-Quarter of the U.S. Population


23%

24%

20%

23%

10%

% U.S. POPULATION (U.S. Census)

Silent Generation

Baby Boomers

Gen X

Millennials

Gen Z

Millennials Now Account for One-Quarter of the U.S. Population


13

$240B

2022by


…and They Love to Tap into New Experiences Through New Products

% of Consumers Who Consider Themselves Avid New Product Adopters

5%

8%

7%

7%

10%

11%

17%

7%

10%

14%

18%

22%

23%

29%

Pet Care

Health Care

Home Care

Beauty/Personal Care

Electronics

Beverage

Food

Millennials Boomers+

+12 pts

+12 pts

+7 pts

+11 pts

Source: IRI 2018 New Products Survey.


Natural Ingredients MatterImpact of Natural Ingredients when Considering

New Products, by Sector and Age | Top 2 Box


18%

17%

23%

23%

25%

26%

27%

27%

Millennials Boomers+

Beauty / Personal Care

Health Care

Food & Beverage

Home Care

+4 pts

+4 pts

+7 pts

+9 pts


Healthy

Living is

Important


And, Of Course, Millennials Are Very Self-Care Focused

Source: Harnessing the Power of Self-Care to Drive Sustainable Growth

2%

3%

7%

11%

18%

19%

40%Lifestyle (Diet, Exercise, F&B)

Doctor / Lab Visits

Prescription Medications

Dietary Supplements

OTCMedications

Alternative Therapies

PharmacistConsultations

Lifestyle by Age

18-34 YO 52%35-44 YO 48%45-54 YO 42%55-64 YO 35%

65+YO 26%


37% of Consumers Say FOOD is Just As Powerful as MEDICATION

Placing Priorities on

Products that

Promote a Healthy Lifestyle

Better for You

Removal of Less Desirable Ingredients

Simpler Ingredients

Healthful Ingredients

Omega-3sFiber

ProteinFruits & Vegetables

Superfoods

Natural & Organic

Antibiotic-Free

Non-GMO


Prefer to Buy from Green CompaniesTotal U.S. = 32%

Source: IRI Consumer Connect Survey,

The Quest for Wellness

Extends to the Environment

36%Millennials

30%Gen X

30%Boomers

32%Seniors


Plants Are Now a

Common Ingredient

in Powerful CPG

Launches


Set Your New Brands Up to Win With Millennials


Note: IRI Shopper Loyalty™

A Halo on Top:

The Making of a Pacesetter


Invest to Understand

the Preferences of High-Value Consumers

Note: IRI Shopper Loyalty™

1. Sea Salt Caramel Light

2. Mint Chip Light

3. Chocolate Chip Cookie Dough Light

4. Vanilla Bean Light

5. Birthday Cake Regular

6. Chocolate Light

7. Peanut Butter Cup Light

8. Cookies & Cream Regular

9. Chocolate Almond Crunch Light

10. Black Cherry Light

Preferred FlavorsTotal Buying Households

1. Chocolate Chip Cookie Dough Light

2. Birthday Cake Regular

3. Mint Chip Light

4. Sea Salt Caramel Light

5. Peanut Butter Cup Light

6. Chocolate Light

7. Vanilla Bean Light

8. Cookies & Cream Regular

9. Chocolate Almond Crunch Light

10.Chocolate Mocha Chip Regular

Preferred FlavorsMillennial Households


Understand

That Millennials

Learn About

New Products

Differently




Millennials

Total Population

Mentioned / Recco.

by Family or Friend

Information from

Website or Email

Smartphone

Apps

Info from Blogs / Social

Networking Site

In-Store Touch Screen

Digital Signs 11%

15%

19%

34%

20%

34%

27%

34%

56%

70%

Influence in Driving Awareness of New

Products | % of Consumers, Top 2 Box

Understand That Millennials Learn

About New Products Differently


User-Generated Content Is a Trusted Source of Information

Source: http://www.adweek.com/brand-marketing/infographic-how-millennials-and-baby-boomers-consume-user-generated-content-175307/

47% of millennials trust user-generated content


User-Generated Content Is a Trusted Source of Information


trust content created by brands

47%vs.

25%


Tap Into Instagram to Drive Imagery Through Pictures


of millennials rate Instagram

as their preferred platform


Tap Into Instagram to Drive Imagery Through Pictures

Halo Top Share of Earned Social Volume by Channel | 2017 Calendar Year

Source: IRI Social Advantage™.

59.4%

28.6%

10.9% 1.0%

Images Microblogs Blogs Forums


And to Drive

Awareness

and Trial



Making Chobani Yogurt Drinks a $43M Pacesetter

ShopperSights Experian Marketing Service's Simmons


Keep Diversity in Mind!



ConfidentConnectors

FreeSpirits

Conscious Naturalists

NewTraditionalists

StrugglingWanderers

ConcernedAspirationalists



NewTraditionalists

StrugglingWanderers

Different Segments Show Noteworthy Differences in Purchase Behaviors

Source: National Consumer Panel

214DollarIndex

142DollarIndex



NewTraditionalists

StrugglingWanderers

New Traditionalists Spend 2X More Than the Total Population on Chobani Yogurt Drinks

Source: National Consumer Panel

214DollarIndex

142DollarIndex


Media MarketsTarget Pen

Index

Austin, TX 244

Washington, DC

(Hagerstown, MD)205

Dallas-Ft. Worth, TX 200

Salt Lake City, UT 198

Houston, TX 192

Denver, CO 187

San Diego, CA 154

San Antonio, TX 147

Minneapolis-St. Paul, MN 146

Seattle-Tacoma, WA 144

Target Advertising to High-Potential

Media Markets for Enhanced Impact

Top 10 Media Markets | Ranked Penetration Index and Where Target Millennial HHs Exist

ShopperSights DMAs


266

248

221

220

197

172

163

156

156

169

Super Target

Whole Foods Market

H-E-B Plus

Sprouts Farmers’ Market

Hy-Vee

Wegman’s Hy-Vee

H-E-B

Smith’s Food & Drug

Jewel / Osco

Ensure

Distribution

Aligns with

Retailer

Preferences

Top Retail Banners Ranked by

Index | Target ACV > $800M

ShopperSights Chain Store Guide (CSG)


600 N. Glebe Rd., Arlington, VA 22203

6701 Morrison Blvd., Charlotte, NC 28221

2425 N. Harrison St., Arlington, VA 22207

108 Purcellville Gtwy Dr, Purcellville, VA 20132

11806 Spectrum Ctr., Reston, VA 20190

112 S. Sharon Amity Rd, Charlotte, NC 28211

9720 Rea Rd., Charlotte, NC 28277

9600 Falls of Neuse Rd., Raleigh, NC 27615

42015 Village Center Plz., Aldie, VA 20105

4641 Duke St., Alexandria, VA 22304

$20.24M

$27.59M

$18.96M

$19.83M

$18.28M

$23.68M

$22.71M

$20.28M

$17.67M

$16.87M

Zeroing In

On Specific

Stores With

the Highest $

Potential

Top Store $ Potential

Ranked on Potential Index

ShopperSights Chain Store Guide Release

285

268

255

217

215

207

201

201

290

184

Product

Potential Index

Total Estimated

ACV Store Address

It’s Not About Perfect Distribution…..

It’s About Being Distributed Perfectly!


Also Reach Out Through The Media They Consume




Reach New Traditionalists on the

Websites They Frequent Most


Also Reach Out Through The Magazines They Read


P R E F E R R E D M A G A Z I N E S

Will you still love

me tomorrow?


Being a Pacesetter doesn’t ensure long term success

Year 2 Principles

Minimally retain distribution and tell people you are there

Variety is the spice of life

Repeat, repeat, repeat

Do not underspend


Support in Year 2 Drives Disproportionate Success

WHILE UNSUPPORTED PRODUCTS TRULY HAD TROUBLE FINDING THEIR WAY

4% of New Products

Achieve $20M

in U.S. MULO &

Maintain ACV in

Year 2

24% Maintained or

Increased Media in

Year 2

29% Sales Decreased

71%Sales Increased

76% Decreased Media

in

Year 2

36% Sales Increased

64%Sales Decreased


Questions

FOR MORE INFORMATION,

CONTACT…

Larry Levin

[email protected]

Twitter: @larrylevin127

1.818.450.7614

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INNOVATING TO WIN TODAY’S SHOPPERS · 2019-04-18 · Millennials Total Population Mentioned /...

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