Trends and Insights
From Grain Based
Categories
Bill Goergen
ACNielsen
1
Copyright © 2004 ACNielsen
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
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2
Copyright © 2004 ACNielsen
a VNU business
What are we going to look at today?

Consumer Sales Trends of a variety of
grain based categories

Focus on Bread, Cereal, Pasta, and Rice

Regular vs Whole Grain Trends

Consumer take away and purchase
dynamics

Summary and Conclusions
3
Copyright © 2004 ACNielsen
a VNU business
Today’s Presentation

Covers Fixed Weight products, with a UPC
Code
- Fresh Bakery Products not included
- Any Product that does not have a UPC

Does not cover fresh or random weight
items

Generally, from the Grocery Channel
(Outlets noted on each slide)
- Wal-Mart is not included
4
Copyright © 2004 ACNielsen
a VNU business
Fun Facts to Know and Tell

Low Carb diets first appeared in the 19th
Century

Robert Atkins published his first diet book
in 1972

Through the first 6 months of 2004,
994 new low carb products have been
launched

Low Carb industry sales will top $25
Billion in 2004
5
Copyright © 2004 ACNielsen
a VNU business
A few thoughts for consideration..

Can we separate trends within “Grains”
from trends impacted by “Low Carb”?
- Yes, but…

Many factors impact Category Trends
- Pricing
- Promotion
- New Product Innovations
- Demographic Trends
- Consumer & Historical trends
- Etc…
6
Copyright © 2004 ACNielsen
a VNU business
High Carb Categories have clearly had
recent declines in Categories Sales
This
includes Grain Based categories as well.
 Some categories, like Cereal, may have been impacted but
have been declining for years.
Unit Pct Chg vs YAG
TOTAL US - FDM
TOTAL CEREAL
TOTAL BREAD & BAKED GOODS
TOTAL PASTA
DEHYDRATED POTATOES
SW. POTATOES & YAMS - CANNED
POTATO - FROZEN
TOTAL PIZZA/SNACKS - FROZEN
SALAD DRESSING - REDUCED/LOW CAL
TOTAL CRACKERS
TOTAL JUICES DRINKS - SHELF STBL
TOTAL PREPARED FOODS - DRY MIXES
ORANGE JUICE - REFRIGERATED
52 weeks
ending
04/21/01
(-2.4)
(-0.2)
(-1.3)
(-2.6)
(-2.5)
1.5
4.6
(-5.5)
2.1
(-1.5)
1.5
4.6
52 weeks
ending
04/20/02
52 weeks
ending
04/19/03
Latest 26
weeks thru
01/24/04
(-0.9)
(-0.1)
(-1.0)
2.2
(-4.3)
(-1.8)
(-0.5)
(-3.2)
0.3
1.6
(-2.1)
0.3
(-5.0)
(-2.9)
(-5.5)
(-8.6)
1.7
(-4.1)
2.1
(-4.7)
(-3.0)
0.8
(-4.7)
(-2.9)
(-1.5)
0.3
0.6
4.1
(-7.8)
0.5
4.9
(-4.5)
(-1.4)
1.2
(-0.4)
(-1.7)
Source: ACNielsen Strategic Planner – FDM (Food, Drug and Mass Combined xWal-Mart)
Copyright © 2004 ACNielsen
a VNU business
7
Some Trends Point Consumers Away from
Grain Based Foods
Monday, August 30, 2004
Copyright © 2004 ACNielsen
a VNU business
8
Declines in Grain Based Categories
accelerated after the death of Mr. Atkins
Post April ‘03
Pre April ‘03
RTE Cereal
-1.1
Pasta
-1.1
Rice
-3.4
-5.2
-4.9
-6.7
-3.2
-6.6
-1.7
Fresh Bread
Current Trend
-0.2
52 WK 4/12/03
-3.9
52 WK 4/10/04
-3.5
18 WK 8/7/04
Source: Strategic Planner
9
Copyright © 2004 ACNielsen
a VNU business
Copyright © 2004 ACNielsen
a VNU business
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01
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27
29
12
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11
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04
11
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09
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14
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28
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10
09
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/0
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/0
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/0
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3
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/0
3
/0
3
/0
3
/0
2
/0
2
/0
2
/0
2
/0
2
/0
2
% Chg EQ Vol
Fresh Bread Sales declined dramatically beginning
in the Spring of 2003
Total US FDM X WM
3
2
Rolling 4 wk % Chg vs YA
1
-
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
10
Total Bread
On a long term basis, we do not see signs of
recovery in Total Bread Sales
Total US Food/Drug/Mass Ex Wal Mart
1
Eq Volume Chg (000)
Eq Volume Change - Rolling 52 Week Basis
0
-1
-2
-3
-4
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
12
-2
901
10
/0
6/
01
-5
11
Column 1
Copyright © 2004 ACNielsen
a VNU business
Total Bread
Whole Wheat/Oat Bread Represents
a Significant Portion of Total Bread
Sales and…
White
Whole Wheat
Other
28%
45%
27%
Copyright © 2004 ACNielsen
a VNU business
12
Total Bread
…Whole Wheat Bread continues to
grow on a consistent basis
Total US Food/Drug/Mass Ex Wal Mart - Eq Vol Change - Rolling 52 Week Basis
White
6
Whole Wheat
Eq Volume Chg (000)
4
2
0
-2
-4
-6
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
12
-2
901
10
/0
6/
01
-8
13
Copyright © 2004 ACNielsen
a VNU business
Total Bread


Segments
Flavor Buyers
More Households purchase non-white Bread than White Bread
Wheat penetration gains were greater than White bread losses
Household Penetration
100
97.3
91.5
74.8
80
77.6
72.8
60
40
23.2
10.3
20
4.7
0
Pt.
Chg
Bread
White
NonWhite
Wheat
Oat/Oat
Bran
Rye
Pump
A/O NonWhite
-0.2
-1.7
+0.4
+2.9
-0.7
-0.9
+0.0
-0.9
52 weeks April 24, 2004
14
Copyright © 2004 ACNielsen
a VNU business
Total Bread


Quarterly Penetration
Total Fresh Bread is declining very slowly over time
# of Households buying White and Wheat bread are nearly the
same – White declining and Wheat growing
Household Penetration
100
90.0
90.9
91.1
89.7
89.5
90.7
90.1
89.3
Total Bread
75
57.7
58.9
59.5
56.3
56.2
56.7
56.8
53.8
White Bread
50
45.4
47.1
47.8
48.3
47.9
50.1
49.7
50.5
Wheat Bread
25
0
07/27/02 10/26/02 01/25/03 04/26/03 07/26/03 10/25/03 01/24/04 04/24/04
Copyright © 2004 ACNielsen
a VNU business
15
Total Bread
Where did the White Bread Buyers Go?


In total, White bread declines were almost equal across three
factors – but the largest percent was lost Baked good purchases
However volume was also shifted to other breads and other
(non-bread) baked goods
Percent of Volume Loss
100%
80%
60%
31.4
To Other
Breads
32.1
To Other
Baked
36.5
Lost
Baked
Volume
40%
20%
0%
White Bread Loss
Copyright © 2004 ACNielsen
a VNU business
16
Total RTE
Cereal
RTE Cereal Volume Trends
have been in long term decline
Total US Food $2MM
0
Eq Volume Chg (000)
Eq Volume Change - Rolling 52 Week Basis
-1
-2
-3
-4
-5
Copyright © 2004 ACNielsen
Column 1
a VNU business
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
12
-2
901
10
/0
6/
01
-6
17
08
/1
0/
09 02
/0
7/
10 02
/0
5/
11 02
/0
2/
11 02
/3
0/
12 02
/2
8/
01 02
/2
5/
02 03
/2
2/
03 03
/2
2/
04 03
/1
9/
05 03
/1
7/
06 03
/1
4/
07 03
/1
2/
08 03
/0
9/
09 03
/0
6/
10 03
/0
4/
11 03
/0
1/
11 03
/2
9/
12 03
/2
7/
01 03
/2
4/
02 04
/2
1/
03 04
/2
0/
04 04
/1
7/
05 04
/1
5/
06 04
/1
2/
07 04
/1
0/
08 04
/0
7/
04
% Chg EQ Vol
Total The
RTE
Cereal
4
Rate of volume decline for Ready to Eat
Cereal quickened in early 2003
Total US FDM
Rolling 4 wk % Chg vs. YA
2
-
(2)
(4)
(6)
(8)
(10)
18
Copyright © 2004 ACNielsen
a VNU business
Total RTE
Cereal

10-Year Penetration Trend
Like Bread, Penetration Trends on RTE Cereal have
been in decline for years
% of Households Purchasing RTE Cereal
100
95.695.7
95.3 94.9 94.7
94.4 93.7 93.4 93.6
93.5 92.9
75
50
94
95
96
97
98
99
'00
Source: Consumer*Facts 1999 - 2003
'01
'02
'03
'04
19
Copyright © 2004 ACNielsen
a VNU business
Total RTE
Cereal
10-Year Buying Rate Trend
In addition to penetration declines, Buying Rate
Trends for RTE Cereal have been softening for years
 The annual decline between ’03 and ’04 is the largest
in 10 years
Pounds Purchased per Household - RTE
Cereal
35

30
31.430.9
31.3
30.7
31.1
25
29.1
28.3
27.6
27.3
27.8
'00
'01
'02
'03
26.5
20
15
10
94
95
96
97
98
99
Source: ACNielsen Homescan Consumer Panel
'04
20
Copyright © 2004 ACNielsen
a VNU business
Copyright © 2004 ACNielsen
a VNU business
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3
/0
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2
/0
2
/0
2
/0
2
/0
2
/0
2
2
12
/
30
11
/
02
11
/
05
10
/
07
10
09
/
08
/
% Chg EQ Vol
Total Pasta
Pasta Trends are Similar to
Bread and Cereal
Total US FDM
Rolling 4 wk % Chg vs YA
-
(2)
(4)
(6)
(8)
(10)
(12)
(14)
21
Total Pasta
Long Term Pasta Declines
pre-date the Post Atkins acceleration
2
Eq Volume Chg (000)
Total US Food $2MM
Eq Volume Change - Rolling 52 Week Basis
1
0
-1
-2
-3
-4
-5
-6
-7
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
12
-2
901
10
/0
6/
01
-8
Column 1
22
Copyright © 2004 ACNielsen
a VNU business
Total Pasta
Total Whole Wheat Pasta sales, while
still strong, are moderating
Total US Food $2MM
100
Eq Volume Chg (000)
Eq Volume Change - Rolling 52 Week Basis
90
80
70
60
50
40
30
20
10
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
12
-2
901
10
/0
6/
01
0
23
Column 1
Copyright © 2004 ACNielsen
a VNU business
HEALTH CONSCIOUS
Total Pasta
Dry Pasta Dollar Shares &
Change vs YAGO
Health oriented Dry Pasta types are driving the
Specialty pasta increases
NOODLES
13%
-3%
SPECIALTY
14%
-2%
CORE
36%
+8%
Flavored
-19%
Wheat
+28%
Organic/Soy +52%
Filled
+30%
All Other
-1%
-3%
RECIPE READY
37%
Source: ACNielsen RMS Data; Total US; 52 w/e 4/19/04 vs YAGO; $2MM+ Grocery Stores
Copyright © 2004 ACNielsen
a VNU business
24
Total Pasta
Some Types of Pasta Appeal to
Different Types of Households

Spaghetti & other
Long Pasta
Hispanics

Elbows
Empty Nesters

Lasagna
Families w/ Kids
25
Copyright © 2004 ACNielsen
a VNU business
Copyright © 2004 ACNielsen
a VNU business
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02
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27
12
/
29
01
11
/
11
/
04
06
10
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09
/
09
12
08
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07
/
14
/0
4
/0
4
/0
4
/0
4
/0
4
/0
4
/0
4
/0
4
/0
3
/0
3
/0
3
/0
3
/0
3
/0
3
/0
3
/0
3
/0
3
/0
3
/0
3
/0
3
/0
3
/0
2
/0
2
/0
2
/0
2
/0
2
/0
2
4
06
/
17
19
05
/
04
/
22
22
03
/
02
/
25
28
01
/
12
/
30
11
/
02
05
11
/
10
/
07
10
09
/
08
/
% Chg EQ Vol
Total Rice
Do we see Recovery in
Recent Rice trends?
Total US FDM
Rolling 4 wk % Chg vs YA
2
-
(2)
(4)
(6)
(8)
(10)
(12)
26
Total Rice
6
Total Rice
Eq Volume Chg (000)
Total US Food/Drug/Mass Ex Wal Mart
Eq Volume Change - Rolling 52 Week Basis
4
2
0
-2
-4
-6
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
12
-2
901
10
/0
6/
01
-8
Column 1
27
Copyright © 2004 ACNielsen
a VNU business
Total Rice
Total Brown/ Wild Rice Volume Trends are
softening in recent months - in contrast to whole
grain segments of Bread, Cereal, and Pasta
6
Eq Volume Chg (000)
Total US Food/Drug/Mass Ex Wal Mart
Eq Volume Change - Rolling 52 Week Basis
5
4
3
2
1
0
-1
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
12
-2
901
10
/0
6/
01
-2
28
Column 1
Copyright © 2004 ACNielsen
a VNU business
Total Rice
Total Brown/ Wild Rice vs Other
Total US Food/Drug/Mass Ex Wal Mart
Eq Volume Change - Rolling 52 Week Basis
Brown/Wild
6
White/Instant
Eq Volume Chg (000)
4
2
0
-2
-4
-6
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
12
-2
901
10
/0
6/
01
-8
29
Copyright © 2004 ACNielsen
a VNU business
Summary and Conclusion



Grain trends are clearly impacted by the
Low Carb trends
- General Mills believes ~ 1%
Long Term trends are impacting overall
category performance
- Not just a low carb phenom
Whole Grain Segments are generally much
stronger than white/processed
- Good Carbs vs Bad Carbs?
- “Net Carbs” the next Marketing Buzz?
- An opportunity for Manufacturers?
30
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Thank You!
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a VNU business
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Appendix
32
Copyright © 2004 ACNielsen
a VNU business
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in master here
Total Pasta
Regular vs Whole Wheat Pasta
100
Total US Food $2MM
Eq Volume Chg (000)
Eq Volume Change - Rolling 52 Week Basis
80
60
40
20
07
/1
0/
04
04
/1
7/
04
12
/2
7/
03
10
/0
4/
03
07
/1
2/
03
04
/1
9/
03
12
/2
8/
02
10
/0
5/
02
07
/1
3/
02
04
/2
0/
02
-20
12
-2
901
10
/0
6/
01
0
Whole Wheat
Regular
33
Copyright © 2004 ACNielsen
a VNU business
Total Bread


Penetration
Over 60% of Low Carb Diet households still purchase White
- They are no less likely to purchase Bread than other households,
but fewer purchase White and more purchase Wheat
Wheat is increasing and White declining over all households
Percent of Households Purchasing
All Households
Low Carb
NOT low carb
120
100
95.3 95.2 95.3
80
66.0 62.2 66.6
61.7 65.9 61.1
White
Wheat
60
40
20
0
Point
Change:
Fresh Bread
-0.1
+0.3
-0.2
-2.2
-3.4
-2.0
6 months 11/03 Vs 11/02
+3.0
+2.8
+5.6
34
Copyright © 2004 ACNielsen
a VNU business