THE IMPACT OF CONSUMER TRENDS ON THE PRODUCE INDUSTRY

Transcription

1 THE IMPACT OF CONSUMER TRENDS ON THE PRODUCE INDUSTRY Nielsen Perishables Group June 10, 2015

2 Copyright 2014 The Nielsen Company. Confidential and proprietary. WHO WE ARE: WE KNOW FRESH Nielsen Perishables Group provides its partners with the who, what, where, when and why behind fresh food purchases A HOLISTIC APPROACH INDUSTRY LEADERS PASSION FOR FRESH Providing a view of the store as consumers see it enabling a complete view of all departments, categories and items, even non-upc 15 plus years of expertise and trusted partnerships with retailers and suppliers spanning the industry, combined with Nielsen s unique solutions As industry partners, inquisitive analysts and avid food fans, we live and breathe fresh. And, above all, we drive outcomes for our clients 2

3 Copyright 2013 The Nielsen Company. Confidential and proprietary. OUR FRESH PERSPECTIVE ON PRODUCE: ALL EYES ON FRESH GROWTH ENGINE & DIFFERENTIATOR EVOLUTION BRINGS EXPECTATIONS AND OPPORTUNITIES SHOPPERS DEMAND DIFFERENT THINGS UNDERSTAND THEM, CONNECT WITH THEM, WIN THEM PRODUCE IS IN THE DRIVERS SEAT BREAKTHROUGH SUCCESS MEANS REDEFINING HOW YOU COMPETE 3

4 Copyright 2013 The Nielsen Company. Confidential and proprietary. PRODUCE SALES HAVE CONSISTENTLY GROWN +5% Annual dollar growth SIX OF THE TOP TEN FASTEST GROWING CATEGORIES ACROSS THE ENTIRE STORE SINCE 2009 ARE PRODUCE CATEGORIES Value-Added Vegetables Value-Added Fruits Cooking Greens Specialty Fruit Avocados Pineapple Source: Nielsen Perishables Group FreshFacts Historical Projected Database ending 12/27/2014 4

5 Copyright 2013 The Nielsen Company. Confidential and proprietary. PRODUCE SALES CONTINUE TO GROW FRESH DEPARTMENTS CENTER STORE FOOD DEPARTMENTS 7% 4% 2% 9% 6% 4% 3% 5% 0% 1% 4% -1% -2% MEAT PRODUCE DELI BAKERY SEAFOOD $46.4 BILLION Total Produce Sales -1% -1% -3% FROZEN GROCERY DAIRY Source: Nielsen Perishables Group FreshFacts Total U.S. (FCA does not include convenience, drug or dollar), 52 Weeks Ending 3/28/15; Total U.S. All Outlets Combined plus Convenience), 52 Weeks Ending 4/25/15, UPC Only 5

6 Annual Household Spend Copyright 2013 The Nielsen Company. Confidential and proprietary. HOUSEHOLDS SHOP MOST FREQUENTLY AND SPEND THE MOST ON FRESH PRODUCE $338 $299 $232 $124 $49 SEAFOOD MEAT BAKERY DELI Annual Purchase Frequency PRODUCE Source: Nielsen Homescan TSV

7 Copyright 2013 The Nielsen Company. Confidential and proprietary. GROCERY LEVERAGING FRESH FOR INNOVATION PRODUCE INSPIRED PRODUCTS PRODUCE AS INGREDIENTS Source: Internet Images 7

8 Copyright 2013 The Nielsen Company. Confidential and proprietary. CONSUMER PRIORITIES DRIVING TRENDS Across the store, connecting with shopper needs is common key to growth QUALITY/VALUE CONVENIENCE HEALTH PORTABILITY 49% of shoppers rate COST as the most important consideration when deciding between items at the grocery store** 47% of consumers decide what to cook for dinner based on how much time they have, and 38% cook whatever is quickest/easiest to make* 87% of Americans say they are making an effort to eat healthy*** $127 billion annually spent on snacks in the U.S. Source: Nielsen What s Cooking Survey 8

9 Copyright 2014 The Nielsen Company. Confidential and proprietary. PRODUCE REMAINS CONSISTENTLY RELEVANT Since 2009, produce department total dollar sales have increased nearly 25% FROM 2009 TO 2013 CONVENIENCE PORTABLE OPTIONS QUALITY THROUGH LOCAL Fresh produce now available year-round with 26% of fresh fruit purchased imported Produce Beverages $1.1 B; +12% 330M; +15% SKU; +24 HEALTHY ISN T HEALTHY ENOUGH ANYMORE ORGANIC FRUITS have grown 95% ORGANIC VEGETABLES have grown 62% Worth an estimated $1 billion in 2005, local food sales grew to nearly $7 billion in USDA QUALITY THROUGH TRUSTED BRANDS 40% BRANDED SHARE of total PRODUCE +8% points since 2009 Source: Nielsen Perishables Group FreshFacts ; historical database projected to total FCA universe (except where noted) 9

10 Copyright 2013 The Nielsen Company. Confidential and proprietary. VALUE-ADD PRODUCE DRIVES MORE PURCHASES FOR PRODUCE DEPARTMENT Many whole commodities growing in addition to value-add counterparts Between 2014 vs VALUE-ADDED VEGETABLES grew +65% For a total of $1.5 Billion Between 2014 vs VALUE-ADDED FRUIT grew +49% For a total of $2 Billion Source: Nielsen Perishables Group FreshFacts Historical Projected Sales,

11 Copyright 2014 The Nielsen Company. Confidential and proprietary. ONCE COMMODITY DRIVEN, THE APPLE INDUSTRY SHIFTING FOCUS TO MEET CONSUMER NEEDS APPLES 8.2% Compound annual growth rate Value-added apple volume growth outpaced value-added fruit growth by 5.6 percentage points over the last 5 years MARKETING TO KIDS: PACKAGING, SMALLER FRUIT SIZE, NEW FLAVOR PROFILES SNACKING: ON-THE-GO AND ACCOMPANIMENTS CONVENIENCE: NEW PACKAGING, SMALLER FRUIT Understand consumer needs in order to drive innovation, evolve the category and drive sales Source: Nielsen Perishables Group FreshFacts Historical Projected Sales,

12 Copyright 2014 The Nielsen Company. Confidential and proprietary. EVEN MATURE CATEGORIES CAN EVOLVE TO STAY RELEVANT PACKAGED SALAD COMPLETES/KITS $3.4 BILLION $700 MILLION +3% Average volume growth +29% Average volume growth Despite the higher price tags, salad completes/kits have revolutionized the packaged salad category and DOUBLED share since 2010 Source: Nielsen Perishables Group FreshFacts 52 weeks ending 3/28/2015; Historical Stable Sales , Total U.S. 12

13 Copyright 2013 The Nielsen Company. Confidential and proprietary. HOW PEOPLE ARE CONSUMING FRUITS AND VEGETABLES CONTINUES TO EVOLVE Produce smoothies and fruit juices $874 Million 11% Source: Datassentials 2014 Breakfast Survey 13

14 UNDERSTANDING THE CONSUMER TO CONTINUE WINNING

15 Copyright 2013 The Nielsen Company. Confidential and proprietary. INDUSTRY NEEDS TO CONTINUE EVOLVING TO FOCUS ON THE SHOPPER INNOVATION MARKETING/MESSAGING CATEGORY SHOPPER GO-TO-MARKET MERCHANDISING/ ASSORTMENT PAST Source: Nielsen Perishables Group PRICING/ PROMOTION FUTURE 15

16 Copyright 2014 The Nielsen Company. Confidential and proprietary. THE PRODUCE SHOPPER BRINGS VALUE TO RETAIL 100% of households purchase produce 45 trips each year $327 spent on produce each year Basket size with Produce: $56 Average basket size: $35* 57% of trips to the grocery store do not contain fresh produce *Average basket size for Total Store Source: Nielsen Perishables Group Nielsen Homescan Total Shopper View Specialty Panel 12/28/14 Nielsen Perishables Group FreshFacts Shopper Insights powered by Spire 16

17 LEAST AFFLUENT Less than $20,000 per year MOST AFFLUENT Income greater than $100,000 Copyright 2013 The Nielsen Company. Confidential and proprietary. SHOPPER-CENTRIC CASE STUDY: POLARIZED INCOME CONSUMERS Single member households (57% of income group) 3+ member households (51% of income group) No kids under age of 18 (84% of income group) Not in workforce or unemployed (69% of income group) 55 and older (40% of income group) Kids under age of 18 (37% of income group) Employed or college graduate (48% of income group) 35 to 65 years old (62% of income group) Majority white (78%) but over index with African American Majority white (76%) but over index with Asian 2013 income gap widest on record -> Consumers are more polarized and so is their purchasing behavior Source: Nielsen Perishables Group via Homescan TSV Specialty Panel 52 weeks ending 12/27/14 17

18 Copyright 2013 The Nielsen Company. Confidential and proprietary. BUT GAPS EXIST WHEN LOOKING AT DIFFERENT INCOME LEVELS 2014 SHARE OF FRESH DOLLARS BY HOUSEHOLD GROUP 4% 5% SEAFOOD 12% 9% BAKERY 19% 20% DELI 24% PRODUCE 31% 42% MEAT 35% LEAST AFFLUENT MOST AFFLUENT Source: Nielsen Homescan TSV 2014, Most Affluent households with $100,000+ annual income; Least Affluent households with $20,000 or less annual income 18

19 Copyright 2013 The Nielsen Company. Confidential and proprietary. BOTH GROUPS BUY- BUT SPEND AND SHOP DIFFERENTLY Annual Trip Frequency Annual HH Spend Average Shopper 47 $338 Most Affluent Least Affluent $454 $221 Affluent consumers purchase produce on 9 more occasions than lowincome consumers, but that difference combined with their spend per trip amounts to $7.4 BILLION more spent each year Source: Nielsen Homescan TSV 2014, Most Affluent households with $100,000+ annual income; Least Affluent households with $20,000 or less annual income 19

20 Copyright 2014 The Nielsen Company. Confidential and proprietary. PRODUCE CATEGORY IMPORTANCE DIFFERS AMONG INCOME DIVIDE ABOVE THE LINE = GREATER IMPORTANCE TO (i.e. higher share of spend) LEAST AFFLUENT CORN MELONS BANANAS POTATOES ONIONS CITRUS GRAPES $0.49/lb Categories not as price sensitive (inelastic) Categories more price sensitive (slightly elastic) $2.98/lb ONIONS CITRUS GRAPES APPLES COOKING GREENS PACKAGED SALAD BERRIES BELOW THE LINE = GREATER IMPORTANCE (i.e. higher share of spend) TO MOST AFFLUENT Source: Nielsen Homescan TSV

21 Copyright 2015 The Nielsen Company. Confidential and proprietary. MORE EXPENSIVE, PRICE SENSITIVE CATEGORIES STRUGGLE AT TRADITIONAL GROCERY But opportunities exist for categories to appeal to both groups through differentiation strategies Average annual trip frequency BERRIES Least Affluent Most Affluent Least Affluent All Outlets Mass/Super Traditional Grocery All Outlets Mass/Super Traditional Grocery PACKAGED SALAD Most Affluent Source: Nielsen Homescan TSV

22 Copyright 2013 The Nielsen Company. Confidential and proprietary. EVEN THESE CATEGORIES CAN STILL WIN WITH BOTH GROUPS BY OFFERING THE RIGHT MIX The demographics of each group show different needs beyond price PACKAGE SIZES BRANDS PRICE TIERS ½ lb 1 lb Branded AND Private Label/Unbranded Organic and Conventional Source: Nielsen Perishables Group 22

23 Copyright 2014 The Nielsen Company. Confidential and proprietary. PRODUCE IN THE DRIVER S SEAT FOR SUCCESS PRODUCE IS TOO IMPORTANT NOT TO MANAGE STRATEGICALLY SHIFT FROM COMMODITY FOCUS EVOLVE TO STAY RELEVANT UNDERSTAND CONSUMER NEEDS Source: Nielsen Perishables Group 23

24 QUESTIONS Nielsen Perishables Group NIELSEN PERISHABLES GROUP JONNA PARKER CLIENT DIRECTOR