ORGANIC AFFORDABILITY & ACCESSIBILITY Thursday, September 14, 2017
4:00-5:00 p.m.
SPEAKERS Maxine Wolf, Publisher, KIWI Magazine / Mom’s Meet Andrew Mandzy, Director of Strategic Insights, Nielsen
Patrick Knight, Director of Consumer Insights, SPINS
MODERATOR John Grubb, Managing Partner, The Sterling Rice Group
@OrganicTrade #ExpoEast #Organic
1
JOHN GRUBB | MANAGING PARTNER | [email protected]
SEPTEMBER 14, 2017EXPO EAST
AFFORDABILITY /
ACCESSIBILITYINCREASING EVERYONE’S ACCESS TO ORGANIC
2
WE GROW BRANDS for
some of the most
sophisticated, as well as
entrepreneurial, brands in
the world.
Boulder-based.
34 years old.
120 people.
3
GROWTH in once
fringe segments now
4X conventional.
4
1980 1990 2000
Banner
2010
Organic at Retail
2017
Brands
Game
Changers
1970
5
ACCESS AND MOTIVATION
• 75% of
categories
Buying organic is often life-stage or event driven
• 82% of
households
• Nearly $50 Billion
in total sales
6
AFFORDABILITY BARRIER
Price is most often mentioned purchase barrier
$2.43 $3.87 + 60%
Source: USDA ERS
7
SUPPLY CHALLENGES
Transition Costs and Demand Uncertainty
• Building Fertility
• Managing Pests
• Knowledge Gaps
• Peer Pressure
8
FUNDAMENTAL
DEMAND SHIFTS
Damaged brand equity
and enterprise valuation
have stimulated
commitments to change.
Shorter ingredient lists,
natural colors, whole
grain, ABF free, Non-GMO,
B Corp, other steps on the
path to organic!
9
Private food
and beverage
challenger
brands:
$5.9B in investment
capital in 1,300 deals
disrupting categories
across the store in past 5
years
Source: CB Insights
10
FarmersMarkets
GroceryDelivery
ACCESS:
Non-brick-and
Mortar Food
Choices3rd
Party
Hot meals
$400M
$211M
$135M$120M
$52M
Meal Kits & Solutions
$50M
$189M
11
ACCESSIBILTY
This changes everything!
+
12
$3.7B
$485B: 2016
2,300,000
$21B
$227M
340,000
$136B: 2016
$468B
1% Growth 27.1% Growth
SALES
EMPLOYEES
PROFIT
TOTAL VALUE
SALES
MARKET VALUATION
13
INCUMBENT CHALLENGES
“It is not the strongest of the species
that survive nor the most intelligent
species. It is the one that is most
adaptable to change”
Attributed to Charles Darwin
momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
The Mom Market: A Compilation of Consumer Data
on Organic Affordability and Accessibility
Maxine Wolf, CEO May Media Group, LLC
“Affordability / Accessibility: Increasing Everyone’s Access to Organic”
September 14, 2017
2 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
• Online community of over 132,000 health-minded moms
• Influencers and change agents in their communities and on social media
• Raising awareness and trial of over 400 better-for-you products and brands since 2010
• Group Sampling Programs
o 65,000 Mom Ambassadors, trained to educate group members and record group consensus on surveys
o 1.3MM opinions (~ 20 members per group)
o Awareness + Education + Trial + Community = Purchase
Overview of Moms Meet & Methodology
3 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
• Data from over 100 organic product sampling programs from 2011–2016
• Sampling groups represent ~ 760,000 individual moms
• Product categories:
o Dairy/dairy alternatives o Soup, sides, meals o Beverages o Snacks o Produce o Eggs o Sweeteners o Personal care o Store brands
Organic sampling programs: summary
16% Products targeted to babies/toddlers/kids
Data: group sampling programs
4 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
Top purchase drivers
Q: Please indicate how important each of the following attributes are to you and most of your group members when you are considering buying [product category].
(Very important, Somewhat important, Not very important, Not at all important)
Source: Moms Meet MA group sampling programs of organic and other food products, 2016 N= 51 programs, 35K groups, 700K opinions
92%
81%
74%
63%
55%
93%
83%
72%
65%
Taste
Available where I shop
Brand I can trust
Price
Organic
Organic products
All products
5 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
Organic sampling programs: recommendations
• On average, higher than purchase intent
• Less affected by purchase barriers than purchase intent
• Each group member recommends to about 16 friends
67% 53%
28% 39%
Likely to recommend
Likely to purchase
Probably would
Definitely would
Purchase influenced by recommendations
95% 92%
Source: Moms Meet MA organic product group sampling programs 2010-2016
6 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
Organic sampling programs: purchase barriers
43%
36%
15%
6%
Price
Availability
Happy with current
Product (taste/texture)
Top purchase barriers
Source: % of groups indicating they Probably would purchase, Probably would not purchase, or Definitely would not purchase the product being sampled. Moms Meet MA organic
product group sampling programs 2010-2016
Q: Which of the following best describes why any of your group members might not or would not purchase [product]?
7 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
Purchase intent : Price relationship
Store brand (average): $1.95 $1.28 $2.09
Organic brand SRP: $5.99 $5.50 $4.49
88%
90%
95%
73%
30% 24%
Eggs (one dozen)
Bread (one loaf)
Milk (half-gallon)
Purchase intent (Top2Box)
Purchase barrier (% Price)
Source: Moms Meet MA organic product group sampling programs, 2016
8 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
Q:. How many times per week do you generally shop for groceries?
Source: Moms Meet MA Grocery Shopping Habits Survey, July 2016
Moms shop an average of 2.2 times per week
Average = 2.2 times per
week
8%
22%
35%
20%
8% 5%
2%
< 1 1 2 3 4 5 ≥ 6
70% shop 2 or more times per week
9 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
12%
44%
31%
9%
3% 1%
1 2 3 4 5 ≥ 6
Q: When you shop for groceries, how many stores do you generally shop at in order to get all of the items you need?
Source: Moms Meet MA Grocery Shopping Habits Survey, July 2016
When shopping for groceries, ~ 90% of moms go to 2 or more stores to get all desired items
Average = 2.5 stores
88% go to 2 or more stores per shopping trip
10 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
Q: For each of the following statements, please indicate how likely they are to be the reason why you might shop at more than one store. (Very likely, Somewhat likely, Not very likely, Not at all likely)
Price, Availability, Store location and Specialty departments are reasons for multiple trips
Source: Moms Meet MA Grocery Shopping Habits Survey, July 2016
Pric
e
Ava
ilab
ility
58%
57%
55%
50%
34%
57%
50%
The product I want is on sale at another store
The product I want has a lower everyday price at another store
The brand or product I want is not available at the same store where I am
I have a store-specific coupon
They are out of stock
I need something last-minute and the store is conveniently located
I prefer another store's specialty department (Produce, Bakery, Meat, etc.)
"Very likely"
11 momsmeet.com, ©2017 May Media Group, LLC, All rights reserved.
Concluding remarks
• Purchase drivers: Price is important, but not the mostimportant. Attributes such as taste, organic, availability, andbrand trust matter, too.
• Purchase barriers: Price and availability are the top barriersto purchase, and the main reasons why moms shop multipletimes a week at multiple retailers per trip.
• Purchase = Awareness, education, trial, community Drive purchase by educatingmoms about new products, givethem an easy way to try newproducts and grow brand trust,and leverage their natural desireto share their experiences,opinions, and recommendations.
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Copyright © 2017 The Nielsen Company. Confidential and proprietary.
THE BLURRING OF CHANNEL LINES IN DELIVERING ORGANIC PRODUCTS
ACCESSIBILITY OF ORGANICS
ANDREW MANDZY, DIRECTOR OF H&W STRATEGIC INSIGHTS, NIELSEN
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MORE CONSUMERS ARE FOCUSED ON SUSTAINABILITY
Source : NMI 2017 Sta te of Susta inab ility in Am erica
COMPOSITION OF SEGMENTS TRENDED 2006-2016
16%
23% 22%
16%
Lifestyle of Health & Sustainability
Conventionals
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CLEANER, SUSTAINABLE PRODUCTS ARE GAINING SHARE
say they trust industrially prepared foods
44%
Nielsen Product Insider, powered by Label Insight, 52 weeks ending 04/29/2017
Levels of Clean Label and Food & Beverage Sales Growth vs YA
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SUSTAINABILITY MEANS DIFFERENT THINGS
Sustainability in Food And Beverage Products - Growth VS Year Ago
2.5% 3.9% 10.8% 11.4% 4.2% 3.2%
Packaging Material
Animal Welfare
Business Practices
Sustainable Farming
Production Methods
Sustainable Fishing
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ORGANIC IS GROWING ACROSS THE STORE
Source: Nielsen 2017 Health Care Homescan Survey Source: Nielsen Answers On Demand, 52 Weeks Ended 8/26/2017 Source: Nielsen FreshFacts, 52 Weeks Ended 7/29/2017
of U.S. Respondents
said that organic claims are important
29%
ORGANIC CLAIM $ GROWTH BY DEPARTMENT VS YA
13%
10% 31%
6%
10%
6%
Organic claim sales up +9.8% vs YAG
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ORGANICS ARE MORE ACCESSIBLE THAN EVER
Source: Nielsen Answers On-Demand Syndicated Panel, 52 weeks ending 07/29/2017 *UPC Coded
ORGANIC SPEND DISTRIBUTION BY OUTLET AND SHIFT VS 2YA
CONVENTIONAL GROCERY
SHIFT vs 2YA +0.6pts +0.8pts -3.4pts +1.2pts +0.8pts
WAREHOUSE CLUB
PREMIER GROCERY
SUPERMARKET MASS
VALUE GROCERY
21% 27% 26% 18% 7%
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BUT WHERE CONSUMERS THINK ABOUT ORGANICCAN DIFFER
Source: Nielsen 2017 Category Shopper Fundamentals Survey
% OF U.S. SHOPPERS THAT SAID ORGANIC WAS IMPORTANT WHEN PURCHASING THIS CATEGORY
40% 15% 9% 14% 12%
BABYFOOD YOGURT EGGS VITAMINS PASTA
SAUCE MILK LOTION
8%
ICE CREAM
4% 6%
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ORGANICS COST MORE, AND MAY IMPACT CONSUMER DECISION MAKING
Source: 2017 Nielsen Barriers to Health Survey Source: Nielsen Answers On Demand, 52 Weeks Ended 8/26/2017
Of U.S. Respondents said that
financial costs associated with eating healthier foods
are a barrier to their personal health
41%
PRICE OF ORGANIC & % DIFFERENCE FROM NON-ORGANIC
BABY FOOD YOGURT EGGS VITAMINS
PASTA SAUCE MILK LOTION
ICE CREAM
+43% +87% +55% +41%
+20% +78% +122% +40%
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PRIVATE LABEL CAN BRING VALUE TO ORGANIC
Source: Nielsen Answers On Demand, 52 Weeks Ended 8/26/2017
BABY FOOD
YOGURT
EGGS
VITAMINS
PASTA SAUCE
MILK
LOTION
ICE CREAM
% DISCOUNT PRIVATE LABEL COMPARED TO BRANDED
-37% -12% -29% -20%
-18% -18% -6% -21%
Lower price for this organic basket private label basket
compared to branded organic basket
18%
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CALL TO ACTION
Understand the trends. Organic products and sustainability will continue to drive growth across the store.
By category, understand the pricing decisions that consumers make around organic products.
Do not miss out. Transparency and organic products are a mainstream trend, and competition for this consumer will continue to increase.
Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.
THANK YOU!
.
NATURAL & ORGANIC REACH
Natural & Organic Products are purchased by nearly all households.
Percent of Households Buying at Least Once in the last year
NATURAL & ORGANIC (NPI) ORGANIC*
Total NPI Food & Beverage
SPINS Organic* Food & Beverage
84% 99%
* at least 70% organic content
All Outlets, Total US, 52 Weeks Ending 12/25/16 CONFIDENTIAL | Copyright © 2017
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NATURAL & ORGANIC ATTITUDES
…but households purchase Natural & Organic for different reasons.
Environment and sustainability is important to me.
I want my kids to be as healthy and happy as possible.
Natural & Organic is healthy, but it also needs to be
convenient!
I trust the brands I have always used to be healthy.
CONFIDENTIAL | Copyright © 2017
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SPINS/IRI NATURALINK
SPINS and IRi have partnered to create NaturaLink.
NaturaLink is unique in that it reflects a representative sample of the Total U.S. population – not just those who buy Natural/Organic products.
5,000 demographically balanced respondents were surveyed.
Survey Topics included a broad range of attitudinal, behavioral and demographic information.
Over 45,000 HHs were then typed for richer insight into purchase behavior across total population.
METHODOLOGY
CONFIDENTIAL | Copyright © 2017
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SPINS/IRI NATURALINK
26% Percentage of Total Natural & Organic Dollar Sales
True Believers 10% (+16)
12%
Resistant Non-Believers
15% (-6)
16% 12% 14% 11% 9%
Enlightened Environmentalists
10% (+2)
Healthy Realists 14% (+2)
Strapped Seekers 10% (+2)
Indifferent Traditionalists
25% (-9)
Struggling Switchers 17% (-6)
NaturaLink presents a powerful combination of attitudes and purchase behaviors. Two segments form the leading edge of Natural/Organic trends: True Believers and Enlightened Environmentalists.
Percentage of Total Shoppers
CONFIDENTIAL | Copyright © 2017
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NATURAL & ORGANIC
More Natural/Organic inclined Less Natural/Organic inclined
65 62
47 41
21
9 4
62
35
13
20
2 1 1
All Natural Organic
OVERALL IMPORTANCE
All Natural: 31%
Organic: 15%
True Believers Enlightened Environmentalist
s
Healthy Realists Strapped Seekers Indifferent Traditionalists
Struggling Switchers Resistant Non-Believers
Consumer sentiment regarding All-Natural and Organic is highly polarizing.
CONFIDENTIAL | Copyright © 2017
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Total Organic Dollar Sales by NaturaLink Group
31.2 27.9
13.6 12.4
16.0 16.3
10.5 11.9
0
10
20
30
40
50
60
70
80
90
100
2015 2016P
erce
nt T
otal
Dol
lars
Spe
nt
-3.2 pts
-1.2 pts
+0.3 pts
+1.4 pts
Data citation
• While sales for Organic items areincreasing across all groups, somegroups are increasing faster
• Struggling Switchers areincreasing their purchases ofOrganic items across the store+34% versus the previous year
• Core Natural/Organic will alwaysbe at the heart of industry sales, butStruggling Switchers representwhere much of the incrementalgrowth is happening
So who are these people???
.
STRAPPED SEEKERS I’m passionate about…. Trying new things and living a healthy lifestyle (but sometimes I know I should make healthier food choices than I do). My friends often come to me for product recommendations! I make a point to seek out Natural/Organic products, but my limited budget is often a barrier to buying name brands. That’s okay, because I think store brand products are just as good. Bottom-line, though, product taste/efficacy are my biggest priorities.
BUT I SKEW DISPROPORTIONATELY
WHAT Holds Me Back
• Expense of natural/organicproducts
• Availability of natural/organicoptions at local store
• No all-natural/organicoptions available for productsI like
Northeast & West
These Are My Top 3 Priorities For…
Food & Beverage Personal Care Home Care
Best taste Free of chemicals Most effective
Made w/all natural ingredients
Most effective ingredients Is on sale/coupon
Is on sale/coupon Made w/all natural ingredients Multi-purpose
These Things Are Important and I’m Willing to Pay More
Food & Beverage Personal Care Home Care
All Natural All Natural Eco-Friendly
Organic Eco-Friendly All Natural
Eco-Friendly Organic Organic
Non-GMO
Fair Trade
10%
HOW I GET Information
10% US Households
12%Natural Product
$ Volume
MY MEDIAN INCOME IS $45K
MY AVG. AGE 45
I ATTENDED
MY FAMILY
All Levels of School
Non-White
I LIVE
63% Caucasian
Skew South
BUT I SKEW
CONFIDENTIAL | Copyright © 2017
ORGANIC AFFORDABILITY & ACCESSIBILITY
QUESTIONS?
SPEAKERS Maxine Wolf, Publisher, KIWI Magazine / Mom’s Meet Andrew Mandzy, Director of Strategic Insights, Nielsen
Patrick Knight, Director of Consumer Insights, SPINS
MODERATOR John Grubb, Managing Partner, The Sterling Rice Group
@OrganicTrade #ExpoEast #Organic
