Foodservice in the USA
Jason Hawkins
Kerry Americas - Brands
Kerry Foodservice Brands
Overview of Kerry’s Foodservice Brands in the US
Perspective on the US Foodservice Channel
Impact of the Current Economic environment
Recap & Discussion
1
Kerry Foodservice Brands in the US
Kerry’s US Brands Business
Key Channels
Traditional Foodservice
Restaurants
Non-Commercial (Colleges, Hospitals, B&I)
Travel & Leisure
Specialty Coffee
Coffee Roasters
Coffee Shops
Cash & Carry/Club Store
Foodservice Operator Purchases
Consumer Purchases
3
DaVinci Gourmet Brand
Product Portfolio
Flavored Syrups
Over 140 Flavors
Sugar Free (100% Splenda)
Signature & Classic Sauces
10 Flavors
Chocolate covered Espresso Beans
Key Customer Segments
Specialty Coffee
Restaurants
4
Oregon Chai Brand
Product Portfolio
Liquid Chai Tea Concentrates
Regular Concentrates (1:1)
Super Concentrates (5:1)
Dry Latte Mixes
Capp Machine Mixes
Single-Serve Packets
Key Customer Segments
Specialty Coffee
College & University
5
Jet Brand
Product Portfolio
Fruit Smoothie Mixes
11 Innovative Flavors
Easy to use – pour over ice & blend
Blended Beverage Bases
Formulated for high quality frappes
Key Customer Segments
Specialty Coffee
Restaurants
College & University
6
Golden Dipt Brand
Product Portfolio
Breadings & Batters
Panko Japanese Bread Crumbs
Multi-Purpose Coatings
Pre-Dip Batters
Bakery & Griddle Mixes
Cakes, Muffins
Pancakes, Waffles
Key Customer Segments
Restaurants
7
Perspective on the US Foodservice
Channel
Kerry Foodservice Distribution Model
Closed Dist.
(Chain)
Nat. Chain
(Applebee’s)
Kerry
Broadline Dist.
(Sysco)
Reg. Chain
(Forza Coffee)
Re-Dist.
Independent
Spec. Dist.
(Bob’s)
(Coffee)
1
20K+
800K+
9
Top 5 Broadliners
Control 30% of Market
Share of Market
2006
Top 5
Broadliners
1996
13%
30%
35%
Other
Broadliners
27%
Specialists/
Club Stores
43%
$216B
52%
$144B
10
Source: Technomic
Go-to-market considerations
Direct or indirect Sales force
Determine optimal distribution solution for your business
Utilization of Brokers
Brands and/ or private label platform
Local market knowledge is fundamentally important
11
Source: Technomic
Current Foodservice Issues
Managing through a recession
Sustainability
Localisation of offering – menu/ flavor development
Labeling and regulations
12
Source: Technomic
Challenges of the Economic Environment
Disposable Personal Income (DPI)
DPI Peak Due to Tax Rebate; Otherwise Flat
% Change vs. Prior Quarter
7.3%
Tax Rebate
Impact
1.4%
-0.6%
0.1%
4Q-07*
1Q-08*
2Q-08(F)
3Q-08(F)
-0.1%
4Q-08(F)
*Preliminary
Source: Blue Chip
14
Foodservice Channel Performance
US Foodservice Industry
Food & Non-Alcoholic Beverages Only
Total Restaurants & Bars
2006
93.7
4.5%
2007
99.0
5.7%
2008 F
98.7
-0.3%
Total Beyond Restaurants
78.7
3.3%
79.6
1.1%
73.2
-8.0%
Total Foodservice
172.5
4.0%
178.6
3.5%
171.9
-3.8%
Numbers may not add due to rounding. 2008 data are preliminary.
Source: Technomic, Inc. 10-08
15
Challenges in Today’s Environment
Average Price Increase This Year
9%
8%
7%
6%
% Taking Price
5%
5%
55%
60%
6%
5%
59%
70%
77%
Operators
87%
100%
95%
Manufacturers
2005
2006
2007
2008
16
Source: Technomic Surveys; Distributor Intelligence Service
Real Restaurant Sales Moving Downward
12-Month Moving Average
% Change vs. Prior Year
Recessions
7. 0%
Mar 1994
6. 0%
Sep 2000
Apr 2004
5. 0%
4. 0%
3. 0%
Dec 1990
2. 0%
May 1993
1. 0%
Nov 2001
0. 0%
-1. 0%
Source: US Census Bureau; Technomic, Inc.
07
20
04
20
01
20
98
19
95
19
92
Nov 1991
19
19
89
-2. 0%
17
Consumer Insights
91% of consumers cutting back – eating out less frequently
Cutting back more at Full Service than limited service restaurants
Recognition of need for price increases
75% attribute to rising gas/ ingredients
Would prefer gradual increases by operators
Consumers still willing to pay for “high quality” and “premium”
ingredients
Retailer prepared meals have growing appeal
Source: Consumer Pricing Strategy Report; Technomic, Inc.
18
Resulting Actions
Manufacturer Actions
Consolidating SKUs
Reformulations
“Firing” Unprofitable/ Unstable Customers
Distributor Actions
Focus on Value-Add services
Supply chain optimization to control costs
Operator Actions
Focus on Value to increase traffic
Control increased costs by reducing food waste and re-engineering menus
(reducing portions, expensive ingredients, etc)
Consumers
Cutting back on eating occasions
Quality still important
Industry Consolidation
19
Conclusions
Recap
US Foodservice market is dominated by some Key players
Foodservice market is extremely complex
Robust distribution and supply chain model is critical
Multiple go-to-market options
Direct
Indirect
Partner
Branded/ PL
Current economic environment
Consolidation inevitable across all players (manufacturers/ operators)
Must bring value added services and programs to customers
Critical to manage customer and product profitability
Cost & Price management is challenging
21
Thank You
Questions ?