NIELSEN PERISHABLES GROUP
Utah Food Industry Association8.14.2014
THE EVOLUTION OF FRESH
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WHO IS NIELSEN PERISHABLES GROUP?
NEW TOTAL-STORE PERSPECTIVE
ESTABLISHED LEADERSIN FRESH
EXPANDED INFORMATION AND CAPABILITIES
BAKERYDELIMEAT PRODUCE SEAFOOD
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CONCERNS SHARE OF RESPONSES
ECONOMY 20%
DEBT 12%
JOB SECURITY 13%
HEALTH 9%
FOOD PRICES 6%
FUEL PRICES 6%
UTILITY PRICES 3%
WORK/LIFE BALANCE 3%
ECONOMIC CONCERNS REMAIN TOP OF MIND
What are your biggest concerns over the next six months?
Source: Nielsen Global Omnibus Consumer Confidence Survey Q3 2013
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Forecast for 2014 Moderate Growth
U.S. GROWTH SLOWEDActual and Projected U.S. GDP Growth (2006-2017)
2.7%
1.9%
-0.3%
-3.1%
2.4%
1.8%2.2%
1.5%
2.4%
3.4% 3.4% 3.3%3.4%
2006 2007 2008
2009
2010 2011 2012 2013 2014 2015 2016 2017
Forecast
Source: IMF World Economic Outlook, Oct 2012; 2012-2014 from Wells Fargo forecasts as of Dec 21 2012; TCG Analysis
Actual
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Median household Income in 2012 Inflation Adjusted Dollars
Source: U.S. Census Bureau
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
$51,017
$51,100
$51,892
$53,285
$53,644
$55,627
$54,892
$54,486
$53,891
$54,079
$54,127
$54,766
$55,987
SHRINKING INCOMES IN THE MIDDLE CLASS DESPITE GDP INCREASESDecline in median household income in 9 of last 13 years – is this the new normal?
SO WHAT DOES THIS MEAN FOR FRESH?
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FRESH HAS NOT BEEN IMMUNE TO PRICE INCREASES
Source: Nielsen Perishables Group FreshFacts® Total U.S. (FCA) weeks ending 12/28/2013 vs. Year Ago
PROMOTIONPRICE
SALE
VOLUME % ON PROMO VS. YEAR AGO
AVG. RETAIL PRICE VS. YEAR AGO
-1.2%
-1.7%
+2.0%
SEAFOOD
BAKERY
DELI
PRODUCE
MEAT
-1.2
0.1
-0.3
-1.5
-1.5
2.7%
0.8%
1.0%
4.4%
2.0%
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MEAT PRODUCE DELI BAKERY SEAFOOD
4%
7%
6%
4%
6%
1%
3%
5%
3%
-0%
DESPITE PRICE INCREASES FRESH DEPARTMENTS THRIVE
Source: Nielsen Perishables Group FreshFacts® Total U.S. (FCA, does not include convenience, drug or dollar) weeks ending 4/26/2014 vs. Year Ago and Total U.S. - All Outlets Combined, plus Convenience ending 5/11/2014 (UPC only)
DOLLAR GROWTH
VOLUME GROWTH
Fresh growth continues to outpace rest of the store
FROZEN GROCERY DAIRY-1%
0%
2%
-2%
-0% -0%
1%
0.2%
TOTAL STORE TREND
FRESH DEPARTMENTS CENTER STORE FOOD DEPARTMENTS
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Dog Food (Pet)
SS Juices and Drinks
(Grocery)
Laundry Detergent
(HBC)Milk
(Dairy)Baked Bread
(Grocery)
Prerecorded Videos
(Non Food)
School/Office Supplies
(Non-Food)
Frozen Entrees (Frozen)
RTE Cereal (Grocery)
Soft Drinks (Grocery)
-$417 -$469 -$511 -$566 -$599 -$657 -$665-$783 -$785
-$1,376
Chicken (Meat)
Bacon (Meat)
Prepared Chicken
(Deli)
Berries (Produce)
Pkg Salad (Produce)
Potatoes (Produce)
Value-Add Fruit
(Produce)
Avocados (Produce)
Value-Add Veg
(Produce)
Dips/Spreads (Deli)
$636$575
$417$382 $371 $368
$300$272 $255 $237
WINNERS AND LOSERS ACROSS THE STORE
Source: Combined Nielsen Perishables Group FreshFacts® and Nielsen ScanTrack point-of-sale data sets – ranked by dollars per MM ACV for 52 weeks May 2014
THE IMPACTS
Top 10 Fastest Dollar Velocity ($ per MM ACV) Growth Categories Across the Store
Bottom 10 Biggest Dollar Velocity ($ per MM ACV) Losing Categories Across the Store
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SO HOW DOES AN ENVIRONMENT LIKE THAT PRODUCE A SCENARIO LIKE THIS?Agenda (Evolutionary Traits)
• Fresh is more available than ever
• Fresh fits the trip
• Fresh communicating consumer benefits (making a play for the need-state)
• Fresh has something for almost everyone
• Future of fresh – a critical piece in the total store “ecosystem”
FRESH IS MORE AVAILABLE THAN EVER
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ALTERNATIVE CHANNELS GROWING IN FRESH
Source: 1. Nielsen Homescan Total Shopper View 52 weeks ending 12/28/13 versus year ago 2. Nielsen TDLinx
DOLLAR STORES
CHANNEL41,378 Stores
+21%2013 vs 2007
PERISHABLES Purchase Frequency
+7.1% vs YAGO
CHANNEL25,486 Stores
+36%2013 vs 2007
PERISHABLES Purchase Frequency
+2.0% vs YAGO
GROCERY
CHANNEL2
33,445 Stores+7%
2013 vs 2007
PERISHABLES1 Purchase Frequency
-2.6% vs YAGO
DRUGSTORES
CHANNEL151,282 Stores
+32% 2013 vs 2007
PERISHABLES Purchase Frequency
+1.4% vs YAGO
CONVENIENCE STORES
Baskets with Fresh1.5 to 2x Bigger Than The Average Basket
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A GROWING NUMBER OF WAYS TO DELIVER FRESH TO CONSUMERS
Source: Nielsen Perishables Group
Dollar General MarketCity Target
Walmart Neighborhood MarketWalgreen’s
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WHAT’S AROUND THE CORNER?We’re probably not getting LESS busy
Source: Nielsen Perishables Group
FRESH FITS THE TRIP
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MORE OUTLETS, MORE FRAGMENTED TRIPS
Source: Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending March 2014
Quick Trip Fill-in Trip Stock-up Trip<6 items in the basket 6-15 items in the basket 15+ items in the basket
The Fast and the FrequentAcross all outlets, more than 55% of all trips have 6 items or less
The Power of FreshTrips to these outlets with fresh are up 4% (higher for quick trips)
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MILLENNIALS DRIVE QUICK TRIPS
Source: Nielsen Perishables Group Total Shopper Study, from FreshFacts® Shopper Insights powered by DataLogix, 52 weeks ending 3/29/14,Millennials defined as born between 1980 - 1995
Overall, Millennials make more trips per household than the average shopper
Millennials are also the most important generation to quick trips, and spend the highest per quick trip
Boomers and Generation X are the most important shoppers to stock-up trips
It’s a New WorldCan’t assume Millennials will make bigger
trips as they age – smart quick trip strategies are critical in food retail
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AS QUICK TRIPS BECOME MORE POPULAR SOME FRESH CATEGORIES STAND TO GAINNotably deli and bakery, two of the fastest growing fresh departments,
Source: Nielsen Perishables Group Total Shopper Study, FreshFacts® Shopper Insights powered by DataLogix for 52 weeks ending 3/29/14
QUICK TRIPS STOCK-UP TRIPS
MORE THAN 15 ITEMS6 ITEMS OR FEWER
MOST IMPORTANT TRIPS TO:
BAKERY DEPT.
MOST IMPORTANT TRIPS TO:
DELI DEPT. FROZEN DEPT. MEAT DEPT. PRODUCE DEPT.
DAIRY DEPT. DRY GROCERY DEPT.
Quick trips are different and offer different opportunities
to win shopper dollars
FRESH COMMUNICATING CONSUMER BENEFITS
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CONSUMER BENEFITS HAVE NOT CHANGED
MULTICULTURAL/GLOBAL
QUALITY/VALUEHEALTH CONVENIENCE
Source: Nielsen Perishables Group
WHAT WE BUY
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HEALTHY CONVENIENCE PREMIUM/INDULGENCE MULTICULTURAL/GLOBAL
7% 7%
5%
9%
3%
6%
4%
7%
DOLLAR GROWTHVOLUME GROWTH
Source: Nielsen Perishables Group FreshFacts® Total U.S. 52 weeks ending 12/28/2013 vs. Year Ago; Products in each group are not mutually exclusive
37% 18% 7% 2%
CONTRIBUTION TO FRESH DOLLAR SALES
HOWEVER HOW CONSUMERS MEET THOSE PRIORITIES IS EVOLVING
Fresh Growth by Consumer Priority
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TOP 10 FASTEST-GROWING FRESH CATEGORIES EXEMPLIFY CONSUMER PRIORITIES
Source: Nielsen Perishables Group FreshFacts® 52 weeks ending 12/28/13; includes categories with over 50% ACV selling over the 52 weeks ending 12/28/13
Produce Beverages
$972M; +17%Cooking Greens
$362M ; +24%
PRODUCE
Avocados
$994M; +15%Specialty Fruits
$502M; +15%
Squash and Pumpkins
$585M; +13%
DELI
Dips, Spreads and Toppings$994M; +15%
Deli Breakfast Foods$71M; +11%
MEAT
Bacon$3B; +12%
Citrus
$2.5B; +12%Value-Added Vegetables
$1.3 B; +13%
WHAT WE BUY
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BRANDS PLAYS AN INCREASINGLY IMPORTANT ROLE IN THE FRESH PERIMETER
Source: Nielsen Perishables Group FreshFacts®
BAKERY DELI MEATPRODUCE SEAFOOD
$14 billion33% of department
sales
$2.6 billion25% of department
sales
$10.1 billion45% of department
sales
$26 billion48% of department
sales
$2.3 billion39% of sales
Unbranded39.7%
Private Label20.0%
All Brands40.3%
Dollar Share of Total Perishable Sales52 weeks ending 6/28/14
+0.4
0.0
-0.4
Brand Dollars % Growth
Branded $56 B 6.2%
PRIVATE LABEL $27 B 5%
Unbranded $54 B 4.1%
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CONVENIENT OPTIONS BECOMING MORE POPULAR; CONSUMERS PAY MORE FOR A DIFFERENT KIND OF VALUE
Source: Nielsen Perishables Group FreshFacts®, 52 Weeks Ending 12/28/13; Total U.S. FCANielsen Perishables Group FreshFacts® Shopper Insights powered by Spire, 52 Weeks ending 12/28/13
Fresh Cut FruitJars and Cups
Overwrap
Meal PrepSide DishSnacking
Trays
HOUSEHOLD PENETRATION +0.8%PURCHASE FREQUENCY +2.1%
DOLLAR SALES +11.9%
HOUSEHOLD PENETRATION +2.0%PURCHASE FREQUENCY +4.0%
DOLLAR SALES +13.5%
VALUE-ADDED FRUIT VALUE-ADDED VEGETABLES
Frozen buyers are decreasing purchase of similar product
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EXOTIC FLAVORS AND NEW CONSUMER EXPERIENCES
Source: Nielsen Perishables Group FreshFacts®, 52 Weeks Ending 12/28/13; Total U.S. FCA, PMA 2013 trade show Nielsen Perishables Group FreshFacts® Shopper Insights powered by Spire, 52 Weeks ending 12/28/13
DOLLAR SALES +14.9%SPEND PER TRIP +3.1%
MANGO SALES +17.0%POMEGRANATE SALES +34.7%
PAPAYA SALES +21.3%
SPECIALTY FRUITS
Milennialls pay a premium for a unique eating experienceOld products deliver a new experience
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HEALTHY ISN’T HEALTHY ENOUGH
Source: PMA 2013 trade show, brand websites
Opportunity for messaging of health benefits in produce
SUPERFOODS CALORIE COUNTING
These commodities didn’t actually become healthier did they?
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CONNECTING TO A SPECIFIC EATING OCCASION
Source: PMA 2013 trade show, brand websites
Opportunities exist for premium-priced offerings
RISE OF SNACKING STRONG GROWTH IN BRANDED OPTIONS
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IT’S WORKING IN BOTH DIRECTIONS; FRESH IS INSPIRING NEW CONCEPTS IN OTHER PARTS OF THE STORE TOO
Garden-Lites Muffins:Veggie Blueberry Oat, Zucchini Banana Chocolate Chip,Zucchini Chocolate Veggie, Carrot Berry Veggie, Golden Corn Veggie Blue Hill Yogurt:
Carrot, Sweet Potato, Beet, ParsnipButternut Squash ,Tomato
Haagen-Dazs Ice Cream - Japan:Tomato-Cherry, Carrot-Orange
Magnolia Ice Cream:Avocado, Purple Yam
Green Giant Blend-ins:Carrot, Butternut Squash, Spinach
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Fresh Pretzels $5K 50.8%
Salty Snacks $17K 0.8%
Fresh Mini Cookies $157 7.1%
Cookies $5K 3.1%
LINES ARE BLURRING BETWEEN AISLES, MORE WAYS TO SOLVE THE SAME THE SAME NEED STATE
Source: Source: 1. International Dairy-Deli-Bakery Association, 2005 2. Nielsen Perishables Group FreshFacts® 52 weeks ending 3/29/14
WHAT’S IN?
• Low fat/low trans fat/lowcalorie
• High protein
• Nutrional ingredients
• Four to five smaller meals/day
WHAT’S OUT?
• High fat/high calorie
• Traditional, unhealthy snacks
• Processed snacks
• Three large meals/day90% of U.S. consumers eat at least one snack a day 1
FRESH CATEGORIES GAINING SHARE OF CENTER-STORE SNACKING OCCASIONS
CategoryDollar Per MM ACV % Change
Dollars Per MM ACV
WHAT WE BUY
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TO RECAP, CONSUMER BEHAVIOR IS EVOLVING AND IN SOME WAYS IT’S FAVORED FRESH PARTS OF THE STORE
More outlets offer us more options in more
ways -> Wider, harder battle
ground
Understand us and connect with our
priorities-> get in our basket more
Stock-up trips still where we spend big ->
but not the only opportunity to win our
dollars
Source: Nielsen Perishables Group
WHERE WE SHOP HOW WE SHOP WHAT WE BUY
SHOPPER
Is the whole store going to be fresh soon?
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Power Store Shopper Power Banana Shopper
Power Packaged Salad ShopperFresh Focused
>32%
Moderates17-24%
Center Store
Enthusiasts 11-16%
Center Store Focused<10%
Fresh Enthusiasts
25-32%
Percent of Households 10% 23% 33% 23% 10%
Fresh Segmentation: All households segmented by ratio of fresh to total store spending
Dividing Metric:% fresh share of
all spending
WE ARE ALL TOTAL STORE SHOPPERS
We are all total store shoppers
WHO BUYS WHAT
Source: Nielsen Perishables Group
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Fresh Focused& Enthusiasts
Center Store Focused & Enthusiasts
FrozenFrozen Vegetables
Unprepared Frozen Meat
Frozen MealsFrozen Novelties (Ice Cream Snacks)
Frozen Pizza Frozen Potatoes
CannedCanned Corn
Canned BeansCanned Tomatoes
Canned Green BeansCanned PineappleCanned Peaches
Canned Spaghetti
DrinksMilk
Refrigerated JuiceCarbonated Beverages
Shelf-Stable Juice
SweetsBaking Supplies Bakery Desserts
Chocolate CandyCookies
Bakery Desserts
Fresh Fruits Fresh GrapesFresh Oranges
Fresh Stone FruitFresh Melons
Fresh BananasFresh ApplesFresh Berries
Fresh Vegetables Fresh TomatoesFresh Celery
Fresh PeppersFresh Mushrooms
Fresh LettuceFresh PotatoesFresh OnionsFresh Carrots
CONSUMERS USE THE STORE TO SOLVE THE MEAL IN DIFFERENT WAYS
Source: Nielsen Homescan Panel, 52 weeks ending 03/29/2014
THE FUTURE OF FRESH
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FUTURE ISN’T A FRESH TAKE-OVER, BUT UNDERSTANDING THE ROLE FRESH IS GOING TO PLAY IN THE STOREWe’ve already observed many factors have played a role in the growth of fresh
Source: Nielsen Perishables Group
Total store as a complex “ecosystem” with many players that have impact on one another
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DRAWING CONNECTIONSQuantify impact, Identify friends and foes, Act with new paths to win
Source: Nielsen Perishables Group
314
Categories across the
entire store (incl. food &
non-food)
49,449
Sales Correlations
calculated for every store and
every week
+19 Million
Trips
across all outlets
New dataset for Nielsen Advanced Analytics combining UPC and non-UPC category retail sales data
NIELSEN TOTAL STORE
CONNECTIVITY STUDY
Improved Nielsen Homescan Total Shopper View, a specialty panel where shoppers track UPC items and random-weight
category purchases
Enabling Total Store Sales Analytics Enabling Total Store Buyer Analytics
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DEFINING RANGES OF SALES CONNECTIVITY ACROSS THE STORE
Source: Nielsen Total Store Connectivity Study, 2014
-1 0 +1
Strong positive
correlation
Weakcorrelation
Strong negative
correlation
Average correlation factor between any two categories = .32
-0.5 +0.5
Category sales trend in opposing direction
measured over time (week/store level)
Category sales trend in the same direction
over time (week/store level)
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INITIAL CONNECTIVITY CONFIRMATIONS AND SURPRISES – ABOUT MEAT
Average correlation between any two categories
Average correlation between beef and any other category
BEVERAGES: Tea & Cocoa: 0.70Water: 0.64New age bev: 0.63
INGREDINTS: Sauces/seasonings: 0.74Condiments: 0.72Fresh Onions: 0.65
SIDE DISHES: Fresh Potatoes 0.71Canned goods: 0.68FZ vegetables: 0.62
SNACKS: Salty Snacks: 0.69
Fresh Grapes: 0.68Dairy Brick cheese: 0.71
.42
.32
Fresh beef is an ANCHOR category with strong
connections across occasions and aisles throughout the
TOTAL STORE
BEEF
SWEETS/DESSERTS: Frozen Dessert: 0.69Fresh Cakes: 0.68Fresh Cookies: 0.56
Source: Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014
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SHIFTS IN “ANCHOR” CATEGORY PERFORMANCE CAN IMPACT SALES ACROSS THE ENTIRE STORE
Volume %Chg vs. YAGO
Total Beef ARP* %Chg vs. YAGO
+16% +11% +10% +11% +12% +12% +13% +13% +12% +15% +11% +9%
Source: Nielsen Perishables Group FreshFacts, Total U.S. – Traditional Grocery;Nielsen Scantrack, Total U.S. – All Outlets Combined;
*ARP = Average Retail Price (per pound)Source: Nielsen Perishables Group FreshFacts, Total U.S. – Traditional Grocery; Nielsen Scantrack, Total U.S. – All Outlets Combined;
Many center-store products were directly impacted when fresh beef prices increased in 2011. What will happen in
2014?
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Growth in INDEPENDENTS like deli prepared indicate a retailer is winning a
unique buyer, a unique trip or both
Average correlation between deli prepared categories and others.17
INDEPENDENT=
Low number of touch points across the store
DELI PREPARED FOODS$12.6 B, up 7.6%, 95% HH penetration
INITIAL CONNECTIVITY CONFIRMATIONS AND SURPRISES – ABOUT DELI PREPARED FOODS Despite their size and growth, some categories remain relatively independent
Source: Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014
.32Average correlation between any two categories
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Quick Trip; 62%Fill-In Trip; 22%
Stock-Up Trip; 17%
Quick Trip; 72%
Fill-In Trip; 16%
Stock-Up Trip; 12%
STRONG SALES IN INDEPENDENT CATEGORIES CAN DRIVE INCREMENTAL GROWTH FOR RETAILERS
Source: Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending 03/29/2014
Quick trip
Fill-in trip
Stock-up trip
Quick Trip; 13%
Fill-In Trip; 24%Stock-Up Trip;
63%
Share of Sales By Trip Type
TOTAL STORE DELI PREPARED SANDWICHES
$1.3B, up 6%, 29% HH penetration
DELI PREPARED PIZZA
$667M, up 3%, 18% HH penetration
<6 items in the basket
6-15 items in the basket
15+ items in the basket
Most deli prepared buying happens on quick trips and does appear to cannibalize stock-up meal solutions from other parts of the
store
CONCLUSION
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KEY TAKE-AWAYS
• The market environment is always changing (economy, natural events, store openings and closings)
• There are some “constants” (the desire for quality, convenience, savings etc…)
• What’s evolving is how consumers solve for these “constants” – the increasing diversity of consumer types, store formats and products competing for the same need state makes this whole ecosystem a little more complex
• Today we’ve investigated some examples of fresh products that are winning in the current environment, but fresh success doesn’t always lead to total store success
• Success down the road relies on understanding how consumers use not only fresh, but all products in the store to solve the meal
Source: Nielsen Perishables Group
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INNOVATION
PRICING/ PROMOTION
SHOPPER
GO-TO-MARKET
MARKETING/MESSAGING
MERCHANDISING/ASSORTMENT
CATEGORY
PUT MORE SIMPLYThe evolution of analytics is a model that puts the consumer at the center
PASTFUTURE
SUCCESS IN THE “ECOSYSTEM”Source: Nielsen Perishables Group
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THANK YOU
Source: Nielsen Perishables Group
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INITIAL CONNECTIVITY CONFIRMATIONS AND SURPRISES – ABOUT MEAT
Average correlation between any two categories
Average correlation between beef and any other category
BEVERAGES: Tea & Cocoa: 0.70Water: 0.64New age bev: 0.63
INGREDINTS: Sauces/seasonings: 0.74Condiments: 0.72Fresh Onions: 0.65
SIDE DISHES: Fresh Potatoes 0.71Canned goods: 0.68FZ vegetables: 0.62
SNACKS: Salty Snacks: 0.69
Fresh Grapes: 0.68Dairy Brick cheese: 0.71
.42
.32
Fresh beef is an ANCHOR category with strong
connections across occasions and aisles throughout the
TOTAL STORE
BEEF
SWEETS/DESSERTS: Frozen Dessert: 0.69Fresh Cakes: 0.68Fresh Cookies: 0.56
Source: Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014
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SHIFTS IN “ANCHOR” CATEGORY PERFORMANCE CAN IMPACT SALES ACROSS THE ENTIRE STORE
Volume %Chg vs. YAGO
Total Beef ARP* %Chg vs. YAGO
+16% +11% +10% +11% +12% +12% +13% +13% +12% +15% +11% +9%
Source: Nielsen Perishables Group FreshFacts, Total U.S. – Traditional Grocery;Nielsen Scantrack, Total U.S. – All Outlets Combined;
*ARP = Average Retail Price (per pound)Source: Nielsen Perishables Group FreshFacts, Total U.S. – Traditional Grocery; Nielsen Scantrack, Total U.S. – All Outlets Combined;
Many center-store products were directly impacted when fresh beef prices increased in 2011. What will happen in
2014?
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INITIAL FINDING: AN “ANCHOR” LIKE FRESH BEEF CONNECTS IN DIFFERENT WAYS TO DIFFERENT BUYERS
Each connection reveals a unique buyer profile- showing opportunity for different solutions even in
similar categories
Sources: 1- Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014 ; 2- Nielsen Homescan Total Shopper View Specialty Panel, latest 52 weeks ending 3/29/14
SIDE DISHES1: Potatoes 0.71
Canned goods: 0.68FZ vegetables: 0.62
BEEF
Frozen VegCanned
Veg2
Gen X to BoomersAffluentHigher EducationHH with older childrenFresh Enthusiasts
Empty NestersLess EducatedCouplesHispanic-skewFresh/Center Moderates
Boomers and olderLower education levelsCouplesHispanic-skew(Similar to Canned Veg)RuralFresh Focused
Fresh Potatoes
SWEETS/DESSERTS1: Frozen dessert: 0.69
Fresh cakes: 0.68Grocery cookies: 0.56
BEEF
Grocery Cookies
Frozen Desserts2
Gen XLess educatedYoung familiesMid-incomeHispanic
Empty Nesters and HH w older childrenAffluentComfortable countryFresh Enthusiast
Small and young familiesMid-income to affluentHispanicFresh Enthusiasts
Fresh Cakes
Highest Indexing Demographics/Fresh Segment for Beef And Side Dishes: Highest Indexing Demographics/Fresh Segment for Beef And Sweets:
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Growth in INDEPENDENTS like deli prepared indicate a retailer is winning a
unique buyer, a unique trip or both
Average correlation between deli prepared categories and others.17
INDEPENDENT=
Low number of touch points across the store
DELI PREPARED FOODS$12.6 B, up 7.6%, 95% HH penetration
INITIAL CONNECTIVITY CONFIRMATIONS AND SURPRISES – ABOUT DELI PREPARED FOODS Despite their size and growth, some categories remain relatively independent
Source: Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014
.32Average correlation between any two categories
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Quick Trip; 62%Fill-In Trip; 22%
Stock-Up Trip; 17%
Quick Trip; 72%
Fill-In Trip; 16%
Stock-Up Trip; 12%
STRONG SALES IN INDEPENDENT CATEGORIES CAN DRIVE INCREMENTAL GROWTH FOR RETAILERS
Source: Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending 03/29/2014
Quick trip
Fill-in trip
Stock-up trip
Quick Trip; 13%
Fill-In Trip; 24%Stock-Up Trip;
63%
Share of Sales By Trip Type
TOTAL STORE DELI PREPARED SANDWICHES
$1.3B, up 6%, 29% HH penetration
DELI PREPARED PIZZA
$667M, up 3%, 18% HH penetration
<6 items in the basket
6-15 items in the basket
15+ items in the basket
Most deli prepared buying happens on quick trips and does appear to cannibalize stock-up meal solutions from other parts of the
store
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SOLUTIONS CENTER SHOPPINGTrying to redefine convenience
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FIGHTING FOR FOOT TRAFFICPiggy backing partners
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BLUR THE LINES TO CREATE AN EXPERIENCE
Source: Mariano’s (Business Wire & Facebook); Leopardo (drawing); Source: KSDK-St. Louis; Photography by J. Pollack PhotographySources: Supermarket News; quote by Randy Edeker, Hy-Vee chairman, president & CEO
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MAKE IT EVEN EASIER THAN EVER FOR SHOPPERSYou don’t even have to leave your home
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A FULL STORE PERSPECTIVE WILL HELP KRAFT…
• …understand how to maximize product performance based on understanding competitive threats in the store but also aligning more strategically with key fresh drivers
• …optimize trade investments by designing and evaluating more compelling cross-aisle partnerships
• …innovate new fresh concepts with Kraft product lines and identify white space opportunities (product innovation, acquisitions, retail targeting)
…provide total store leadership to retail partners – new solutions to win bigger baskets and more frequent trips
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TRIP TYPES: FREQUENCY OR SPEND?
Source: 1- Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending March 2014 2- FreshFacts® Shopper Insights powered by DataLogix, 52 weeks ending May 2014
Share of Trips- Supermarket Grocery2
Share of Store Sales
Quick Trip Fill-in Trip Stock-up Trip
41% 32% 27%
63%24%13%
Larger item trips still drive two-thirds of a supermarkets’ bottom line – but they only happen around one-quarter of the time
Shifting FocusQuick trips are becoming increasingly important to win
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DESPITE TIGHTENING WALLETS, INTEREST IN TRADITIONAL PROMOTION WANES
Source: 1. Nielsen; 2. Market Track
Of the $216B in promoted sales,
only 17% is mutual growth that benefits both retailers and suppliers
Trade promotional spend is among the largest expenses for manufacturers, but success is low, even in a period of rising food costs.
Seafood Produce Deli Bakery Meat
-7.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
-4.3%-3.8%
-1.6%
-0.5%
-6.3%
Volume % Lift on Promotion Change vs YAGO: Per-ishables Departments
Volume % Lift on Promotion Change vs YAGO
Discounts down 2 pts
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Same-Store Sales: Average Growth, latest 52 weeks
Hom
e Depot
Whole Foods
CostcoD
ollar General
Petsmart
KrogerN
ordstromFam
ily Dollar
Lowe's
Dollar Tree
Macy's
Walgreens
CVSSafew
aySam
's ClubTargetW
almart
Kohl'sRite AidKm
artjcpenney
-25
-20
-15
-10
-5
0
5
10
DESPITE TIGHTENING WALLETS, SPECIALTY RETAILERS WIN ON INNOVATIVE EXECUTION AND EXPERIENCESuccessful retailers are nailing jobs
Source: Company press releases; monthly or quarterly news releases – excluding gas
Strong affluent shopper attraction
Strong lower income attraction
No strong attraction
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6-Count Muffins
Deli Breakfast Eggs
Strudel
Mini Bagels
Deli Breakfast Sandwiches
French Toast/Pancakes/Waffles
+94%
+49%
+47%
+26%
+22%
+15%
+76%
+22%
+31%
+18%
+13%
+21%
DOLLAR % GROWTHVS YAGO
VOLUME % GROWTH VS YAGO
FRESH BREAKFAST CATEGORIES
Breakfast heating up outside store
PRIORITY AREAS IMPACT MEAL OCCASIONS ACROSS THE STORE: BREAKFAST
Source: 1. International Dairy-Deli-Bakery Association, 2005 2. Deli Business, Jan. 2014 3. Nielsen Perishables Group 52-weeks ending 2/22/14 3. Supermarket News
WHAT WE BUY
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PRIORITY AREAS IMPACT RETAILERS: THE MOST HEALTH-ENGAGED SHOP AND SPEND
Source: Natural Marketing Institute (NMI), Health & Wellness Segmentation, Nielsen Homescan for Total U.S. – 52 weeks ending 12/28/2013; segment definitions in appendix
Across All Outlets Combined
WELL BEINGS are active shoppers & spend the most annually
WELL BEINGS
FOOD ACTIVES
MAGIC BULLETS
FENCE SITTERS
EAT, DRINK & BE MERRYS
157
153
151
142
137
Shopping Trips per Household
WELL BEINGS
FOOD ACTIVES
MAGIC BULLETS
FENCE SITTERS
EAT, DRINK & BE MERRYS
$49.40
$45.80
$46.72
$48.01
$45.38
Basket Ring $ per Trip
WELL BEINGS
FOOD ACTIVES
MAGIC BULLETS
FENCE SITTERS
EAT, DRINK & BE MERRYS
$7,754
$7,021
$7,047
$6,827
$6,210
Basket Ring $ Per Household
WHAT WE BUY
Concern Towards
Health & Wellness
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THESE CONCEPTS GO BEYOND FRESHHealth, convenience, quality/value and global are driving trends:
Inside the Store And Beyond
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WHO’S DRIVING YOUR GROWTH?While a category may be growing or declining overall, performance within segments varies signaling where focus should be to grow the category
Fresh Focused
Fresh Enthusiasts Moderates
Total Center Store Enthusiasts
Center Store Focused
Fres
h Ch
icke
nCa
nned
Sou
pW
ine
Dollar Growth by Segment:
Source: Nielsen Homescan Panel, 52 weeks ending 03/29/2014 & YAGO
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Fresh Focused Fresh Enthusiasts Moderates Center Store Enthusiasts
Center Store Focused
Who are they more likely to be? Affluent singles Affluent, mid-size
families Large families Start-up families Senior singles
THEY SHOP DIFFERENTLY- BUT EACH SEGMENT HAS AN IMPACT ACROSS AISLES AND OUTLETS
Source: Fresh Segmentation, Nielsen Homescan Total Shopper View Panel, 52 weeks ending 03/29/2014
$36.85 $37.35 $35.15 $33.22 $32.16
125 trips 138 trips 162 trips 189 trips 197 trips
>120<80
Index to Total Panel
Channel: Mass/Super WarehouseConvenience/Gas Drug$2MM+ Grocery
Avg Store Trip
Store Visits
Channel Trips Index
Avg Fresh Trip
Avg Center Trip
$21.13 $17.87 $14.69 $11.88 $8.84
$23.31 $25.36 $25.39 $24.64 $23.25
WHO BUYS WHAT
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FloristCafe
Dry Grocery
HBC FrozenBeverage
Center
Produce
Deli
SeafoodMeat Dairy
BakeryRx
Non-Food
BUT IT’S STILL ALL CONNECTED AND STEADY– BEYOND DEPARTMENT AND AISLE BORDERS
Source: Nielsen Perishables Group Total Shopper Study, Homescan Total Shopper View Specialty Panel, 52 weeks ending 3/29/14
= size indicates % of trip dollars
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EVOLUTION OF FOOD RETAIL
PAST PRESENT FUTURE
Fresh:commodity driven
Put shoppers at the center, take a holistic
approach
SHOPPER
Retailer: grocery dominated
Center store: brands, innovation
Fresh: growing more savvy
Retailer: more & more competition
Center store:disparate growth
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CONVENIENT OPTIONS BECOMING MORE POPULAR; CONSUMERS PAY MORE FOR A DIFFERENT KIND OF VALUE
Source: Nielsen Perishables Group FreshFacts®, 52 Weeks Ending 12/28/13; Total U.S. FCANielsen Perishables Group FreshFacts® Shopper Insights powered by Spire, 52 Weeks ending 12/28/13
Fresh Cut FruitJars and Cups
Overwrap
Meal PrepSide DishSnacking
Trays
HOUSEHOLD PENETRATION +0.8%PURCHASE FREQUENCY +2.1%
DOLLAR SALES +11.9%
HOUSEHOLD PENETRATION +2.0%PURCHASE FREQUENCY +4.0%
DOLLAR SALES +13.5%
VALUE-ADDED FRUIT VALUE-ADDED VEGETABLES
Frozen buyers are decreasing purchase of similar product
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EXOTIC FLAVORS AND NEW CONSUMER EXPERIENCES
Source: Nielsen Perishables Group FreshFacts®, 52 Weeks Ending 12/28/13; Total U.S. FCA, PMA 2013 trade show Nielsen Perishables Group FreshFacts® Shopper Insights powered by Spire, 52 Weeks ending 12/28/13
DOLLAR SALES +14.9%SPEND PER TRIP +3.1%
MANGO SALES +17.0%POMEGRANATE SALES +34.7%
PAPAYA SALES +21.3%
SPECIALTY FRUITS
Milennialls pay a premium for a unique eating experienceOld products deliver a new experience
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HEALTHY ISN’T HEALTHY ENOUGH
Source: PMA 2013 trade show, brand websites
Opportunity for messaging of health benefits in produce
SUPERFOODS CALORIE COUNTING
These commodities didn’t actually become healthier did they?
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CONNECTING TO A SPECIFIC EATING OCCASION
Source: PMA 2013 trade show, brand websites
Opportunities exist for premium-priced offerings
RISE OF SNACKING STRONG GROWTH IN BRANDED OPTIONS
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EXAMPLE OF CONNECTIVITY FINDINGS
Source: Nielsen Perishables Group Total Store Connectivity Study
BEEF
Average correlation between any two categories
Fresh meat sales connections strongest
outside of fresh while the fresh departments are
most tied to each other
Growth in INDEPENDENTS like deli prepared foods
indicate a retailer is winning a unique buyer, a
unique trip or both
INDEPENDENT=
Low number of touch points across
the store – incremental
opportunities
.32Average correlation between deli prepared categories and others
.17
Average correlation between beef and any other category
.42
ANCHOR=
Highly connected categories – critical
to everyone’s success
Correlations and household in common can confirm and surprise with the strength of what’s connected
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The Power of Sales + Shopper in Connectivity
Demographics and behavioral factors also play a vital role in understanding which consumers drive category connections
Chicken breasts
Pork chopsGround beef Macaroni and cheese
Macaroni and cheese
Macaroni and cheese
Purchase pairing indexes high for…
Price-focusedFamilies with childrenCouples without children
Purchase pairing indexes high for…
Purchase pairing indexes high for…
Convenience and value focusedLow – middle incomeFamilies with children in-home
Source: Nielsen Perishables - The Full Article At http://www.perishablesgroup.com/dnn/Newsletter/CurrentNewsletter.aspx
EXAMPLE CONNECTIVITY STUDY FINDINGS Demographics and behavioral factors also play a vital role in understanding which consumers drive category connections across the store
Health-focusedMiddle – affluent incomeFamilies with young children or Couples without children
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INITIAL FINDING: AN “ANCHOR” LIKE FRESH BEEF CONNECTS IN DIFFERENT WAYS TO DIFFERENT BUYERS
Each connection reveals a unique buyer profile- showing opportunity for different solutions even in
similar categories
Sources: 1- Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014 ; 2- Nielsen Homescan Total Shopper View Specialty Panel, latest 52 weeks ending 3/29/14
SIDE DISHES1: Potatoes 0.71
Canned goods: 0.68FZ vegetables: 0.62
BEEF
Frozen VegCanned
Veg2
Gen X to BoomersAffluentHigher EducationHH with older childrenFresh Enthusiasts
Empty NestersLess EducatedCouplesHispanic-skewFresh/Center Moderates
Boomers and olderLower education levelsCouplesHispanic-skew(Similar to Canned Veg)RuralFresh Focused
Fresh Potatoes
SWEETS/DESSERTS1: Frozen dessert: 0.69
Fresh cakes: 0.68Grocery cookies: 0.56
BEEF
Grocery Cookies
Frozen Desserts2
Gen XLess educatedYoung familiesMid-incomeHispanic
Empty Nesters and HH w older childrenAffluentComfortable countryFresh Enthusiast
Small and young familiesMid-income to affluentHispanicFresh Enthusiasts
Fresh Cakes
Highest Indexing Demographics/Fresh Segment for Beef And Side Dishes: Highest Indexing Demographics/Fresh Segment for Beef And Sweets: