THE EVOLUTION OF
FRESH
NIELSEN PERISHABLES GROUP
Utah Food Industry Association
8.14.2014
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
WHO IS NIELSEN PERISHABLES GROUP?
ESTABLISHED LEADERS
IN FRESH
MEAT
PRODUCE
DELI
BAKERY
NEW TOTAL-STORE
PERSPECTIVE
EXPANDED INFORMATION
AND CAPABILITIES
SEAFOOD
2
ECONOMIC CONCERNS REMAIN TOP OF MIND
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
What are your biggest concerns over the next six months?
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%
Source: Nielsen Global Omnibus Consumer Confidence Survey Q3 2013
3
U.S. GROWTH SLOWED
Actual and Projected U.S. GDP Growth (2006-2017)
Forecast for 2014 Moderate Growth
Actual
Forecast
2.7%
2.4%
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
1.9%
3.4%
2015
2016
3.3%
2.4%
2.2%
1.8%
3.4%
1.5%
-0.3%
2006
2007
2008
2010
2011
2012
2013
2014
2017
2009
Source: IMF World Economic Outlook, Oct 2012; 2012-2014 from Wells Fargo forecasts as of Dec 21 2012; TCG Analysis
4
SHRINKING INCOMES IN THE MIDDLE CLASS
DESPITE GDP INCREASES
Decline in median household income in 9 of last 13 years – is this the new normal?
Median household Income in 2012 Inflation Adjusted Dollars
2000
$55,987
2001
$54,766
2002
$54,127
2003
$54,079
2004
$53,891
2005
$54,486
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
2006
$54,892
2007
$55,627
2008
$53,644
2009
2010
$53,285
$51,892
2011
$51,100
2012
$51,017
Source: U.S. Census Bureau
5
SO WHAT DOES THIS MEAN FOR FRESH?
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
FRESH HAS NOT BEEN IMMUNE TO PRICE
INCREASES
VOLUME % ON PROMO VS.
YEAR AGO
MEAT-1.2%
SALE
PRICE
PROMOTION
-1.7%
PRODUCE
-1.5 +2.0%
2.0%
-1.5
4.4%
DELI
-0.3
1.0%
BAKERY
0.1
0.8%
SEAFOOD
Source: Nielsen Perishables Group FreshFacts® Total U.S. (FCA) weeks ending 12/28/2013 vs. Year Ago
AVG. RETAIL PRICE VS.
YEAR AGO
-1.2
2.7%
7
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
DESPITE PRICE INCREASES FRESH DEPARTMENTS THRIVE
Fresh growth continues to outpace rest of the store
FRESH DEPARTMENTS
CENTER STORE FOOD DEPARTMENTS
7%
6%
6%
5%
4%
4%
3%
3%
2%
1%
0%
MEAT
PRODUCE
DELI
BAKERY
-0%
SEAFOOD
-1%
FROZEN
-0%
GROCERY
-0%
DAIRY
-2%
DOLLAR GROWTH
1%
TOTAL STORE TREND
VOLUME GROWTH
0.2%
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)
8
THE IMPACTS
WINNERS AND LOSERS ACROSS THE STORE
$636
Top 10 Fastest Dollar Velocity ($ per MM ACV) Growth Categories Across the Store
$575
$417
$382
$371
$368
$300
Chicken
(Meat)
Bacon
(Meat)
Prepared
Chicken
(Deli)
Berries
(Produce)
Pkg Salad
(Produce)
Potatoes
(Produce)
Value-Add
Fruit
(Produce)
$272
Avocados
(Produce)
$255
$237
Value-Add Veg Dips/Spreads
(Produce)
(Deli)
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
Bottom 10 Biggest Dollar Velocity ($ per MM ACV) Losing Categories Across the Store
Dog Food
(Pet)
SS Juices and
Drinks
(Grocery)
Laundry
Detergent
(HBC)
Milk
(Dairy)
Baked Bread
(Grocery)
-$417
-$469
-$511
-$566
-$599
Prerecorded School/Office
Videos
Supplies Frozen Entrees
(Non Food)
(Non-Food)
(Frozen)
-$657
-$665
-$783
RTE Cereal
(Grocery)
Soft Drinks
(Grocery)
-$785
-$1,376
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
9
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
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”
10
FRESH IS MORE AVAILABLE THAN EVER
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
ALTERNATIVE CHANNELS GROWING IN FRESH
GROCERY
DRUGSTORES
DOLLAR STORES
CONVENIENCE
STORES
CHANNEL2
33,445 Stores
+7%
2013 vs 2007
CHANNEL
41,378 Stores
+21%
2013 vs 2007
CHANNEL
25,486 Stores
+36%
2013 vs 2007
CHANNEL
151,282 Stores
+32%
2013 vs 2007
PERISHABLES1
Purchase Frequency
-2.6% vs YAGO
PERISHABLES
Purchase Frequency
+7.1% vs YAGO
PERISHABLES
Purchase Frequency
+2.0% vs YAGO
PERISHABLES
Purchase Frequency
+1.4% vs YAGO
Baskets with Fresh
1.5 to 2x Bigger Than The Average Basket
Source: 1. Nielsen Homescan Total Shopper View 52 weeks ending 12/28/13 versus year ago 2. Nielsen TDLinx
12
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
A GROWING NUMBER OF WAYS TO DELIVER FRESH
TO CONSUMERS
City Target
Dollar General Market
Walgreen’s
Walmart Neighborhood Market
Source: Nielsen Perishables Group
13
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
WHAT’S AROUND THE CORNER?
We’re probably not getting LESS busy
Source: Nielsen Perishables Group
14
FRESH FITS THE TRIP
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
MORE OUTLETS, MORE FRAGMENTED TRIPS
The Fast and the Frequent
Across all outlets, more than 55% of all trips have 6 items or less
Quick Trip
<6 items in the basket
Fill-in Trip
6-15 items in the basket
Stock-up Trip
15+ items in the basket
The Power of Fresh
Trips to these outlets with fresh are up 4% (higher for quick trips)
Source: Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending March 2014
16
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
MILLENNIALS DRIVE QUICK TRIPS
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 World
Can’t assume Millennials will make bigger
trips as they age – smart quick trip
strategies are critical in food retail
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
17
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
AS QUICK TRIPS BECOME MORE POPULAR SOME FRESH
CATEGORIES STAND TO GAIN
Notably deli and bakery, two of the fastest growing fresh departments,
QUICK TRIPS
STOCK-UP TRIPS
6 ITEMS OR FEWER
MORE THAN 15 ITEMS
MOST IMPORTANT TRIPS TO:
MOST IMPORTANT TRIPS TO:
DELI DEPT.
BAKERY DEPT.
FROZEN DEPT.
MEAT DEPT.
DAIRY DEPT.
PRODUCE DEPT.
DRY GROCERY DEPT.
Quick trips are different
and offer different opportunities
to win shopper dollars
Source: Nielsen Perishables Group Total Shopper Study, FreshFacts® Shopper Insights powered by DataLogix for 52 weeks ending 3/29/14
18
FRESH COMMUNICATING CONSUMER
BENEFITS
WHAT WE BUY
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
CONSUMER BENEFITS HAVE NOT CHANGED
HEALTH
Source: Nielsen Perishables Group
CONVENIENCE
QUALITY/VALUE
MULTICULTURAL/
GLOBAL
20
HOWEVER HOW CONSUMERS MEET THOSE PRIORITIES IS
EVOLVING
Fresh Growth by Consumer Priority
7%
9%
7%
7%
6%
DOLLAR GROWTH
5%
VOLUME GROWTH
4%
3%
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
HEALTHY
37%
CONVENIENCE
18%
PREMIUM/INDULGENCE MULTICULTURAL/GLOBAL
7%
2%
CONTRIBUTION TO FRESH DOLLAR SALES
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
21
WHAT WE BUY
TOP 10 FASTEST-GROWING FRESH CATEGORIES
EXEMPLIFY CONSUMER PRIORITIES
DELI
PRODUCE
Dips, Spreads and Toppings
$994M; +15%
Cooking Greens
Produce Beverages
Avocados
Specialty Fruits
$362M ; +24%
$972M; +17%
$994M; +15%
$502M; +15%
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Deli Breakfast Foods
$71M; +11%
MEAT
Bacon
$3B; +12%
Value-Added
Vegetables
$1.3 B; +13%
Citrus
$2.5B; +12%
Squash and
Pumpkins
$585M; +13%
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
22
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
BRANDS PLAYS AN INCREASINGLY IMPORTANT ROLE IN THE
FRESH PERIMETER
Dollar Share of Total Perishable Sales
52 weeks ending 6/28/14
Brand
+0.4
All Brands
40.3%
Unbranded
39.7%
-0.4
Dollars
% Growth
Branded
$56 B
6.2%
PRIVATE LABEL
$27 B
5%
Unbranded
$54 B
4.1%
Private
Label
20.0%
0.0
BAKERY
DELI
PRODUCE
MEAT
SEAFOOD
$2.6 billion
$10.1 billion
$14 billion
$26 billion
$2.3 billion
25% of department
45% of department
33% of department
48% of department
39% of sales
sales
sales
sales
Source: Nielsen Perishables Group FreshFacts®
sales
23
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
CONVENIENT OPTIONS BECOMING MORE POPULAR;
CONSUMERS PAY MORE FOR A DIFFERENT KIND OF VALUE
VALUE-ADDED FRUIT
Fresh Cut Fruit
Jars and Cups
Overwrap
VALUE-ADDED VEGETABLES
Meal Prep
Side Dish
Snacking
Trays
HOUSEHOLD PENETRATION +0.8%
HOUSEHOLD PENETRATION +2.0%
PURCHASE FREQUENCY +2.1%
PURCHASE FREQUENCY +4.0%
DOLLAR SALES +11.9%
DOLLAR SALES +13.5%
Frozen buyers are decreasing purchase of similar product
Source: Nielsen Perishables Group FreshFacts®, 52 Weeks Ending 12/28/13; Total U.S. FCA
Nielsen Perishables Group FreshFacts® Shopper Insights powered by Spire, 52 Weeks ending 12/28/13
24
EXOTIC FLAVORS AND NEW CONSUMER EXPERIENCES
SPECIALTY FRUITS
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
DOLLAR SALES +14.9%
SPEND PER TRIP +3.1%
MANGO SALES +17.0%
POMEGRANATE SALES +34.7%
PAPAYA SALES +21.3%
Old products deliver a new experience
Milennialls pay a premium for a unique eating
experience
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
25
HEALTHY ISN’T HEALTHY ENOUGH
These commodities didn’t actually become healthier did they?
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
SUPERFOODS
CALORIE COUNTING
Opportunity for messaging of health benefits in produce
Source: PMA 2013 trade show, brand websites
26
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
CONNECTING TO A SPECIFIC EATING OCCASION
RISE OF SNACKING
STRONG GROWTH IN BRANDED OPTIONS
Opportunities exist for premium-priced offerings
Source: PMA 2013 trade show, brand websites
27
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
IT’S WORKING IN BOTH DIRECTIONS; FRESH IS INSPIRING NEW
CONCEPTS IN OTHER PARTS OF THE STORE TOO
Haagen-Dazs Ice Cream - Japan:
Magnolia Ice Cream:
Green Giant Blend-ins:
Avocado, Purple Yam
Carrot, Butternut Squash, Spinach
Tomato-Cherry, Carrot-Orange
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, Parsnip
Butternut Squash ,Tomato
28
WHAT WE BUY
LINES ARE BLURRING BETWEEN AISLES, MORE
WAYS TO SOLVE THE SAME THE SAME NEED STATE
WHAT’S IN?
90%
of U.S. consumers eat
at least one snack a
day 1
WHAT’S OUT?
• Low fat/low trans fat/low
calorie
• High fat/high calorie
• High protein
• Processed snacks
• Nutrional ingredients
• Three large meals/day
• Traditional, unhealthy snacks
• Four to five smaller meals/day
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
FRESH CATEGORIES GAINING SHARE OF
CENTER-STORE SNACKING OCCASIONS
Dollar Per MM
ACV % Change
Category
Dollars Per
MM ACV
Fresh Pretzels
$5K
50.8%
Salty Snacks
$17K
0.8%
Fresh Mini Cookies
$157
7.1%
Cookies
$5K
3.1%
Source: Source: 1. International Dairy-Deli-Bakery Association, 2005 2. Nielsen Perishables Group FreshFacts® 52 weeks ending 3/29/14
29
TO RECAP, CONSUMER BEHAVIOR IS EVOLVING AND IN SOME WAYS IT’S
FAVORED FRESH PARTS OF THE STORE
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
WHERE WE SHOP
More outlets offer us
more options in more
ways ->
Wider, harder battle
ground
HOW WE SHOP
Stock-up trips still
where we spend big ->
but not the only
opportunity to win SHOPPER
our dollars
WHAT WE BUY
Understand us and
connect with our
priorities-> get in our
basket more
Is the whole store going to be fresh soon?
Source: Nielsen Perishables Group
30
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
WHO BUYS WHAT
WE ARE ALL TOTAL STORE SHOPPERS
Fresh Segmentation: All households segmented by ratio of fresh to
total store spending
Moderates
17-24%
Center
Store
Enthusiasts
11-16%
Center Store
Power
Store Shopper
Focused
10%
25-32%
Power Banana
Shopper
<10%
Percent of
Households
Dividing Metric:
% fresh share of
all spending
Fresh
Enthusiasts
23%
33%
Power Packaged
Focused
SaladFresh
Shopper
>32%
23%
We are all total store shoppers
Source: Nielsen Perishables Group
10%
31
CONSUMERS USE THE STORE TO SOLVE THE MEAL IN
DIFFERENT WAYS
Fresh Focused
& Enthusiasts
Center Store Focused &
Enthusiasts
Frozen Vegetables
Unprepared Frozen Meat
Frozen Meals
Frozen Novelties (Ice Cream Snacks)
Frozen Pizza
Frozen Potatoes
Canned Corn
Canned Beans
Canned Tomatoes
Canned Green Beans
Canned Pineapple
Canned Peaches
Canned Spaghetti
Milk
Refrigerated Juice
Carbonated Beverages
Shelf-Stable Juice
Baking Supplies
Bakery Desserts
Chocolate Candy
Cookies
Bakery Desserts
Fresh Fruits
Fresh Grapes
Fresh Oranges
Fresh Stone Fruit
Fresh Melons
Fresh Bananas
Fresh Apples
Fresh Berries
Fresh Vegetables
Fresh Tomatoes
Fresh Celery
Fresh Peppers
Fresh Mushrooms
Fresh Lettuce
Fresh Potatoes
Fresh Onions
Fresh Carrots
Frozen
Canned
Drinks
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Sweets
32
Source: Nielsen Homescan Panel, 52 weeks ending 03/29/2014
THE FUTURE OF FRESH
FUTURE ISN’T A FRESH TAKE-OVER, BUT UNDERSTANDING THE
ROLE FRESH IS GOING TO PLAY IN THE STORE
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
We’ve already observed many factors have played a role in the growth of fresh
Total store as a complex “ecosystem” with many
players that have impact on one another
Source: Nielsen Perishables Group
34
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
DRAWING CONNECTIONS
Quantify impact, Identify friends and foes, Act with new paths to win
Enabling Total Store Sales Analytics
Enabling Total Store Buyer Analytics
New dataset for Nielsen Advanced Analytics combining UPC
and non-UPC category retail sales data
Improved Nielsen Homescan Total Shopper View, a specialty
panel where shoppers track UPC items and random-weight
category purchases
314
49,449
Categories
across the
entire store
(incl. food &
non-food)
Sales
Correlations
calculated
for every
store and
every week
Source: Nielsen Perishables Group
+19
Million
Trips
across all outlets
NIELSEN
TOTAL STORE
CONNECTIVITY
STUDY
35
DEFINING RANGES OF SALES CONNECTIVITY ACROSS
THE STORE
-1
+0.5
-0.5
Strong
negative
correlation
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
+1
0
Weak
correlation
Category sales trend in
opposing direction
measured over time
(week/store level)
Strong
positive
correlation
Category sales trend in
the same direction
over time (week/store
level)
Average correlation factor between any two categories = .32
Source: Nielsen Total Store Connectivity Study, 2014
36
INITIAL CONNECTIVITY CONFIRMATIONS AND
SURPRISES – ABOUT MEAT
.32
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
.42
Average correlation
between any two
categories
SNACKS:
Salty Snacks: 0.69
Fresh Grapes: 0.68
Dairy Brick cheese: 0.71
SWEETS/DESSERTS:
Frozen Dessert: 0.69
Fresh Cakes: 0.68
Fresh Cookies: 0.56
Average correlation
between beef and
any other category
Fresh beef is an ANCHOR
category with strong
connections across occasions
and aisles throughout the
TOTAL STORE
BEVERAGES:
Tea & Cocoa: 0.70
Water: 0.64
New age bev: 0.63
BEEF
INGREDINTS:
Sauces/seasonings: 0.74
Condiments: 0.72
Fresh Onions: 0.65
SIDE DISHES:
Fresh Potatoes 0.71
Canned goods: 0.68
FZ vegetables: 0.62
Source: Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014
37
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
SHIFTS IN “ANCHOR” CATEGORY PERFORMANCE CAN
IMPACT SALES ACROSS THE ENTIRE STORE
Many center-store products were directly impacted when
fresh beef prices increased in 2011. What will happen in
2014?
Volume %Chg
vs. YAGO
Total Beef +16%
ARP* %Chg
vs. YAGO
+11%
+10%
+11%
+12%
+12%
+13%
+13%
Source: Nielsen Perishables Group FreshFacts, Total U.S. – Traditional Grocery;
NielsenGrocery;
Scantrack,
Total
U.S. –Total
All Outlets
Source: Nielsen Perishables Group FreshFacts, Total U.S. – Traditional
Nielsen
Scantrack,
U.S. – AllCombined;
Outlets Combined;
*ARP = Average Retail Price (per pound)
+12%
+15%
+11%
+9%
38
INITIAL CONNECTIVITY CONFIRMATIONS AND
SURPRISES – ABOUT DELI PREPARED FOODS
Despite their size and growth, some categories remain relatively independent
DELI PREPARED FOODS
$12.6 B, up 7.6%, 95% HH penetration
INDEPENDENT
=
Low number of touch
points across the store
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
.17
.32
Average correlation
between deli
prepared categories
and others
Average correlation
between any two
categories
Growth in INDEPENDENTS like deli
prepared indicate a retailer is winning a
unique buyer, a unique trip or both
Source: Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014
39
STRONG SALES IN INDEPENDENT CATEGORIES CAN DRIVE
INCREMENTAL GROWTH FOR RETAILERS
TOTAL STORE
Share of Sales By Trip Type
DELI PREPARED
SANDWICHES
$1.3B, up 6%, 29% HH
penetration
Quick
Trip,
13%
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
Stock-Up
Trip, 63%
Fill-In Trip,
24%
Stock-Up
Trip, 17%
Fill-In Trip,
22%
Most deli prepared buying happens on
quick trips and does appear to cannibalize
stock-up meal solutions from other parts of
the store
Source: Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending 03/29/2014
DELI PREPARED
PIZZA
$667M, up 3%, 18% HH
penetration
Stock-Up
Trip, 12%
Quick Trip,
62%
Fill-In Trip,
16%
Quick Trip,
72%
Quick trip
<6 items in the basket
Fill-in trip
6-15 items in the basket
Stock-up trip
15+ items in the basket
40
CONCLUSION
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
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
42
Source: Nielsen Perishables Group
PUT MORE SIMPLY
The evolution of analytics is a model that puts the consumer at the center
MARKETING/MESSAGING
INNOVATION
SHOPPER
CATEGORY
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
GO-TO-MARKET
MERCHANDISING/
ASSORTMENT
PRICING/
PROMOTION
PAST
Source: Nielsen Perishables Group
FUTURE
SUCCESS IN THE “ECOSYSTEM”
43
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
THANK YOU
Source: Nielsen Perishables Group
44
QUESTIONS?
CONTACT
NIELSEN PERISHABLES GROUP
CHRIS BALZER │ CHRIS.BALZER@NIELSEN.COM
773.929.7013
INITIAL CONNECTIVITY CONFIRMATIONS AND
SURPRISES – ABOUT MEAT
.32
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
.42
Average correlation
between any two
categories
SNACKS:
Salty Snacks: 0.69
Fresh Grapes: 0.68
Dairy Brick cheese: 0.71
SWEETS/DESSERTS:
Frozen Dessert: 0.69
Fresh Cakes: 0.68
Fresh Cookies: 0.56
Average correlation
between beef and
any other category
Fresh beef is an ANCHOR
category with strong
connections across occasions
and aisles throughout the
TOTAL STORE
BEVERAGES:
Tea & Cocoa: 0.70
Water: 0.64
New age bev: 0.63
BEEF
INGREDINTS:
Sauces/seasonings: 0.74
Condiments: 0.72
Fresh Onions: 0.65
SIDE DISHES:
Fresh Potatoes 0.71
Canned goods: 0.68
FZ vegetables: 0.62
Source: Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014
46
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
SHIFTS IN “ANCHOR” CATEGORY PERFORMANCE CAN
IMPACT SALES ACROSS THE ENTIRE STORE
Many center-store products were directly impacted when
fresh beef prices increased in 2011. What will happen in
2014?
Volume %Chg
vs. YAGO
Total Beef +16%
ARP* %Chg
vs. YAGO
+11%
+10%
+11%
+12%
+12%
+13%
+13%
Source: Nielsen Perishables Group FreshFacts, Total U.S. – Traditional Grocery;
NielsenGrocery;
Scantrack,
Total
U.S. –Total
All Outlets
Source: Nielsen Perishables Group FreshFacts, Total U.S. – Traditional
Nielsen
Scantrack,
U.S. – AllCombined;
Outlets Combined;
*ARP = Average Retail Price (per pound)
+12%
+15%
+11%
+9%
47
INITIAL FINDING: AN “ANCHOR” LIKE FRESH BEEF
CONNECTS IN DIFFERENT WAYS TO DIFFERENT BUYERS
Each connection reveals a unique buyer profileshowing opportunity for different solutions even in
similar categories
SIDE DISHES1:
Potatoes 0.71
Canned goods: 0.68
FZ vegetables: 0.62
SWEETS/DESSERTS1:
Frozen dessert: 0.69
Fresh cakes: 0.68
Grocery cookies: 0.56
Highest Indexing Demographics/Fresh Segment for Beef And Side Dishes:
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
Canned
Veg2
Empty Nesters
Less Educated
Couples
Hispanic-skew
Fresh/Center
Moderates
Frozen Veg
BEEF
Gen X to Boomers
Affluent
Higher Education
HH with older children
Fresh Enthusiasts
Fresh
Potatoes
Boomers and older
Lower education levels
Couples
Hispanic-skew
(Similar to Canned Veg)
Rural
Fresh Focused
Highest Indexing Demographics/Fresh Segment for Beef And Sweets:
Frozen
Desserts2
Empty Nesters and
HH w older children
Affluent
Comfortable country
Fresh Enthusiast
Grocery
Cookies
BEEF
Gen X
Less educated
Young families
Mid-income
Hispanic
Fresh
Cakes
Small and young families
Mid-income to affluent
Hispanic
Fresh Enthusiasts
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
48
INITIAL CONNECTIVITY CONFIRMATIONS AND
SURPRISES – ABOUT DELI PREPARED FOODS
Despite their size and growth, some categories remain relatively independent
DELI PREPARED FOODS
$12.6 B, up 7.6%, 95% HH penetration
INDEPENDENT
=
Low number of touch
points across the store
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
.17
.32
Average correlation
between deli
prepared categories
and others
Average correlation
between any two
categories
Growth in INDEPENDENTS like deli
prepared indicate a retailer is winning a
unique buyer, a unique trip or both
Source: Nielsen Total Store Connectivity Study sales correlation modeling, preliminary findings as of July 2014
49
STRONG SALES IN INDEPENDENT CATEGORIES CAN DRIVE
INCREMENTAL GROWTH FOR RETAILERS
TOTAL STORE
Share of Sales By Trip Type
DELI PREPARED
SANDWICHES
$1.3B, up 6%, 29% HH
penetration
Quick
Trip,
13%
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
Stock-Up
Trip, 63%
Fill-In Trip,
24%
Stock-Up
Trip, 17%
Fill-In Trip,
22%
Most deli prepared buying happens on
quick trips and does appear to cannibalize
stock-up meal solutions from other parts of
the store
Source: Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending 03/29/2014
DELI PREPARED
PIZZA
$667M, up 3%, 18% HH
penetration
Stock-Up
Trip, 12%
Quick Trip,
62%
Fill-In Trip,
16%
Quick Trip,
72%
Quick trip
<6 items in the basket
Fill-in trip
6-15 items in the basket
Stock-up trip
15+ items in the basket
50
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
SOLUTIONS CENTER SHOPPING
Trying to redefine convenience
51
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
FIGHTING FOR FOOT TRAFFIC
Piggy backing partners
52
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
BLUR THE LINES TO CREATE AN EXPERIENCE
Source: Mariano’s (Business Wire & Facebook); Leopardo (drawing); Source: KSDK-St. Louis; Photography by J. Pollack Photography
Sources: Supermarket News; quote by Randy Edeker, Hy-Vee chairman, president & CEO
53
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
MAKE IT EVEN EASIER THAN EVER FOR SHOPPERS
You don’t even have to leave your home
54
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
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
55
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
TRIP TYPES: FREQUENCY OR SPEND?
Larger item trips still drive two-thirds of a supermarkets’ bottom line – but they
only happen around one-quarter of the time
Quick Trip
Share of Trips- Supermarket Grocery2
41%
13%
24%
Fill-in Trip
Stock-up Trip
32%
27%
63%
Share of Store Sales
Shifting Focus
Quick trips are becoming increasingly important to win
56
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
DESPITE TIGHTENING WALLETS, INTEREST IN
TRADITIONAL PROMOTION WANES
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Trade promotional spend is among the largest expenses for manufacturers,
but success is low, even in a period of rising food costs.
Of the $216B in
promoted sales,
only 17% is
mutual growth
that benefits
both retailers
and suppliers
Volume % Lift on Promotion Change vs YAGO:
Perishables Departments
Seafood
Produce
Deli
Bakery
0.0%
-1.0%
-0.5%
-2.0%
-1.6%
-3.0%
-4.0%
-5.0%
Discounts
down 2 pts
-3.8%
-4.3%
-6.0%
-7.0%
-6.3%
Seafood
Source: 1. Nielsen; 2. Market Track
Meat
Produce
Deli
Bakery
Meat
57
DESPITE TIGHTENING WALLETS, SPECIALTY RETAILERS
WIN ON INNOVATIVE EXECUTION AND EXPERIENCE
Successful retailers are nailing jobs
Same-Store Sales: Average Growth, latest 52 weeks
10
5
0
-10
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
-15
jcpenney
Kmart
Rite Aid
Kohl's
Walmart
Target
Sam's Club
Safeway
CVS
Walgreens
Macy's
Dollar Tree
Lowe's
Family Dollar
Nordstrom
Kroger
Petsmart
Dollar General
Costco
Whole Foods
Home Depot
-5
-20
-25
Strong affluent shopper attraction
Strong lower income attraction
No strong attraction
Source: Company press releases; monthly or quarterly news releases – excluding gas
58
WHAT WE BUY
PRIORITY AREAS IMPACT MEAL
OCCASIONS ACROSS THE STORE: BREAKFAST
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
FRESH BREAKFAST
CATEGORIES
DOLLAR %
GROWTH
VS YAGO
VOLUME %
GROWTH VS
YAGO
6-Count Muffins
+94%
+76%
Deli Breakfast Eggs
+49%
+22%
Strudel
+47%
+31%
Mini Bagels
+26%
+18%
Deli Breakfast Sandwiches
+22%
+13%
French Toast/Pancakes/Waffles
+15%
+21%
Breakfast
heating up
outside store
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
59
WHAT WE BUY
PRIORITY AREAS IMPACT RETAILERS: THE
MOST HEALTH-ENGAGED SHOP AND SPEND
Concern
Towards
Health &
Wellness Shopping Trips per Household
WELL BEINGS
157
FOOD ACTIVES
153
MAGIC BULLETS
Copyright ©2014 The Nielsen Company. Confidential and proprietary.
FENCE SITTERS
EAT, DRINK & BE
MERRYS
151
142
137
Across All Outlets Combined
Basket Ring $ Per Household
WELL BEINGS
$7,754
Basket Ring $ per Trip
WELL BEINGS
FOOD ACTIVES
$7,021
FOOD ACTIVES
MAGIC BULLETS
$7,047
MAGIC BULLETS
FENCE SITTERS
$6,827
FENCE SITTERS
EAT, DRINK & BE
MERRYS
$6,210
EAT, DRINK & BE MERRYS
$49.40
$45.80
$46.72
$48.01
$45.38
WELL BEINGS are active shoppers & spend
the most annually
Source: Natural Marketing Institute (NMI), Health & Wellness Segmentation, Nielsen Homescan for Total U.S. – 52 weeks ending 12/28/2013; segment definitions in appendix
60
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
THESE CONCEPTS GO BEYOND FRESH
Health, convenience, quality/value and global are driving trends:
Inside the Store
And Beyond
61
While a category may be growing or declining overall, performance within segments
varies signaling where focus should be to grow the category
Dollar Growth by Segment:
Fresh
Chicken
Total
Fresh
Focused
Fresh
Enthusiasts
Moderates
Center Store Center Store
Enthusiasts
Focused
Wine
Canned
Soup
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
WHO’S DRIVING YOUR GROWTH?
Source: Nielsen Homescan Panel, 52 weeks ending 03/29/2014 & YAGO
62
WHO BUYS WHAT
THEY SHOP DIFFERENTLY- BUT EACH SEGMENT HAS AN IMPACT
ACROSS AISLES AND OUTLETS
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
Avg Store Trip
$36.85
$37.35
$35.15
$33.22
$32.16
Store Visits
125 trips
138 trips
162 trips
189 trips
197 trips
Avg Fresh Trip
$21.13
$17.87
$14.69
$11.88
$8.84
Avg Center Trip
$23.31
$25.36
$25.39
$24.64
$23.25
Convenience/Gas
Drug
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
Index to
Total Panel
>120
<80
Channel Trips
Index
Channel:
$2MM+ Grocery
Mass/Super
Warehouse
63
Source: Fresh Segmentation, Nielsen Homescan Total Shopper View Panel, 52 weeks ending 03/29/2014
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
BUT IT’S STILL ALL CONNECTED AND STEADY– BEYOND
DEPARTMENT AND AISLE BORDERS
Meat
Deli
Dairy
Seafood
Dry Grocery
Beverage
Center
HBC
Florist
Rx
Non-Food
Frozen
Produce
Cafe
Bakery
= size indicates % of trip dollars
Source: Nielsen Perishables Group Total Shopper Study, Homescan Total Shopper View Specialty Panel, 52 weeks ending 3/29/14
64
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
EVOLUTION OF FOOD RETAIL
PAST
PRESENT
Retailer: grocery
dominated
Retailer: more &
more competition
Center store:
brands, innovation
Center store:
disparate growth
Fresh:
commodity driven
Fresh: growing
more savvy
FUTURE
SHOPPER
Put shoppers at the
center, take a holistic
approach
65
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
CONVENIENT OPTIONS BECOMING MORE POPULAR;
CONSUMERS PAY MORE FOR A DIFFERENT KIND OF VALUE
VALUE-ADDED FRUIT
Fresh Cut Fruit
Jars and Cups
Overwrap
VALUE-ADDED VEGETABLES
Meal Prep
Side Dish
Snacking
Trays
HOUSEHOLD PENETRATION +0.8%
HOUSEHOLD PENETRATION +2.0%
PURCHASE FREQUENCY +2.1%
PURCHASE FREQUENCY +4.0%
DOLLAR SALES +11.9%
DOLLAR SALES +13.5%
Frozen buyers are decreasing purchase of similar product
Source: Nielsen Perishables Group FreshFacts®, 52 Weeks Ending 12/28/13; Total U.S. FCA
Nielsen Perishables Group FreshFacts® Shopper Insights powered by Spire, 52 Weeks ending 12/28/13
66
EXOTIC FLAVORS AND NEW CONSUMER EXPERIENCES
SPECIALTY FRUITS
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
DOLLAR SALES +14.9%
SPEND PER TRIP +3.1%
MANGO SALES +17.0%
POMEGRANATE SALES +34.7%
PAPAYA SALES +21.3%
Old products deliver a new experience
Milennialls pay a premium for a unique eating
experience
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
67
HEALTHY ISN’T HEALTHY ENOUGH
These commodities didn’t actually become healthier did they?
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
SUPERFOODS
CALORIE COUNTING
Opportunity for messaging of health benefits in produce
Source: PMA 2013 trade show, brand websites
68
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
CONNECTING TO A SPECIFIC EATING OCCASION
RISE OF SNACKING
STRONG GROWTH IN BRANDED OPTIONS
Opportunities exist for premium-priced offerings
Source: PMA 2013 trade show, brand websites
69
EXAMPLE OF CONNECTIVITY FINDINGS
Correlations and household in common can confirm and surprise with the strength of
what’s connected
Fresh meat sales
connections strongest
outside of fresh while the
fresh departments are
most tied to each other
BEEF
ANCHOR
=
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
Growth in INDEPENDENTS
like deli prepared foods
indicate a retailer is
winning a unique buyer, a
unique trip or both
INDEPENDENT
=
Highly connected
categories – critical
to everyone’s
success
.42
Average correlation between
beef and any other category
Source: Nielsen Perishables Group Total Store Connectivity Study
Low number of
touch points across
the store –
incremental
opportunities
.32
Average correlation between
any two categories
.17
Average correlation between deli
prepared categories and others
70
Copyright ©2012 The Nielsen Company. Confidential and proprietary.
EXAMPLE CONNECTIVITY STUDY FINDINGS
Demographics and behavioral factors also play a vital role in understanding which
consumers drive category connections across the store
Ground beef
Macaroni
and cheese
Chicken
breasts
Macaroni
and cheese
Pork chops
Macaroni
and cheese
Purchase pairing
indexes high for…
Purchase pairing
indexes high for…
Purchase pairing
indexes high for…
Convenience and value
focused
Low – middle income
Families with children inhome
Health-focused
Middle – affluent income
Families with young
children or
Couples without children
Price-focused
Families with children
Couples without children
The Power of Sales + Shopper in Connectivity
Demographics and behavioral factors also play a vital role in
understanding which consumers drive category connections
Source: Nielsen Perishables - The Full Article At http://www.perishablesgroup.com/dnn/Newsletter/CurrentNewsletter.aspx
71
INITIAL FINDING: AN “ANCHOR” LIKE FRESH BEEF
CONNECTS IN DIFFERENT WAYS TO DIFFERENT BUYERS
Each connection reveals a unique buyer profileshowing opportunity for different solutions even in
similar categories
SIDE DISHES1:
Potatoes 0.71
Canned goods: 0.68
FZ vegetables: 0.62
SWEETS/DESSERTS1:
Frozen dessert: 0.69
Fresh cakes: 0.68
Grocery cookies: 0.56
Highest Indexing Demographics/Fresh Segment for Beef And Side Dishes:
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
Canned
Veg2
Empty Nesters
Less Educated
Couples
Hispanic-skew
Fresh/Center
Moderates
Frozen Veg
BEEF
Gen X to Boomers
Affluent
Higher Education
HH with older children
Fresh Enthusiasts
Fresh
Potatoes
Boomers and older
Lower education levels
Couples
Hispanic-skew
(Similar to Canned Veg)
Rural
Fresh Focused
Highest Indexing Demographics/Fresh Segment for Beef And Sweets:
Frozen
Desserts2
Empty Nesters and
HH w older children
Affluent
Comfortable country
Fresh Enthusiast
Grocery
Cookies
BEEF
Gen X
Less educated
Young families
Mid-income
Hispanic
Fresh
Cakes
Small and young families
Mid-income to affluent
Hispanic
Fresh Enthusiasts
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
72