creating - home | coffee association of canada · would buy foods that include superfood...

Connections And

Communities

Creating

November 8, 2017 Conference

UNDERSTANDING THE CHANGING CONSUMER

In 2017, Canadians will spend…

$155 Billion on food

3 NPD Eating Patterns in Canada 2017

IF YOU REMEMBER NOTHING ELSE….

Annual Per Capita Paid Food Visits to Grocery and Restaurants

287

NPD Eating Patterns in Canada 2017

THE FRAGMENTED PATH TO PURCHASE

PURCHASE DEMAND PRE-STORE IN-STORE DIGITAL

A shopper journey with many opportunities to intersect and change their direction

Order from anywhere,

Eat anywhere

72,000 Restaurants

Chef In home Services

Subscription Meal Services

Meal Kits

Farm to Consumers Grocery Stores Pick Up

Virtual Restaurants

Grocery HMR

Call Center

Tablet/Mobile

Website Online Ordering

Alexia and Goggle Home

Food Trucks

The food distribution channel is changing at a fast pace.

ACCESSING FOOD EVERYWHERE

TRENDS IMPACTING PATH TO PURCHASE

CONNECT REACH ENGAGE

Online and Digital is creating new and exciting touch points along the shopper journey

CONNECT

THE DIGITAL FUTURE IS HERE AND NOW

CPG online sales are projected to grow

+20% year over year Margin by which retail

e-commerce sales growth will outpace brick & mortar sales growth by

2020

7:1 Online shopping for CPG is forecasted to almost

triple by 2020

2.0% 5.3%

Source: Nielsen, Cross Outlet Facts, 52 weeks ending July 1, 2017 VAPs – E-Commerce Share

CLICKS VS BRICKS: ONLINE TRIPS ARE UP WHILE VISITS TO PHYSICAL STORES ARE IN DECLINE

TOTL FMCG TRIPS

Source: Nielsen Homescan Channel Watch 52 weeks ending July 1, 2017

2,270.7 Million

-2%

BRICKS & MORTAR

E-COMMERCE

2,242.7 Million

-2%

28.0 Million

+11%

VS.

REACH More consumers are shifting their purchase destinations to non-traditional retailers

CONSUMER SAVING STRATEGIES ARE SHAPING RETAIL FORMAT TRENDS

Source: Homescan Panel View Survey 2017

CANADA

71%

% TRYING TO SPEND LESS ON FMCG

TOP SAVING STRATEGIES

Stock-up

Buy on Sale

Coupons

Switch Stores

Store Brands

Large Sizes

80%

68%

57%

55%

52%

50%

OVER THE PAST 5 YEARS, $4.1 BILLION HAS SHIFTED TO ONLINE, DOLLAR STORE AND WAREHOUSE CLUBS

9.7% 12.1%

1.1%

1.5%

1.2%

2.0%

Total sales $ $12.5B $16.6B

THE OPPORTUNITY

+$4.1

+33%

248

+17%

Billion Increase $ growth since 2013

million trips in 2017

trip increase since 2013

Online Dollar Stores

Warehouse Clubs

12.1%

15.6%

Source: Nielsen, Cross Outlet Facts, 52 weeks ending July 1, 2017 – VAPs adjusted

2013 2017

$ Share of Market

ENGAGE Health and Wellness is influencing and changing purchase decisions

FACTORS HEIGHTENING FOCUS ON CLEAN EATING

FOOD AS MEDICINE CHRONICALLY AILING CANADA GRAYING EVOLVING HEALTH &

WELLNESS

of consumers eating healthy is a vital part of their lives… 65%

Agree that it is challenging to eat right 64%

BUT

Source: Nielsen

CONSUMERS ARE PUTTING THEIR MONEY WHERE THEIR MOUTH IS

Source: Nielsen Global Health and Ingredient Sentiment Survey Q1 2016 – Canadian respondents

54% O F C A N A D I A N S

S AY T H E Y ’ R E W I L L I N G T O PAY M O R E F O R F O O D S A N D

D R I N K S T H AT D O N ’ T C O N TA I N U N D E S I R A B L E

I N G R E D I E N T S .

DRIVEN BY:

47%

28%

Enlighten Eating % who follow a specific diet which limits specific foods and ingredients

Sensitive Stomachs % of households with a food allergy or intolerance

PLANT BASED MILKS GAINING MOMENTUM

What’s trending in Dairy Case Beverages?

Almond Milk $174M +4

Coconut Milk $18M +20

Cashew Milk $14M +46

Dollars Chg Sales %

Milk

$2.5 Billion $ % Chg +0%

L % Chg -2%

Fat Content $ Share L % Chg

2% 46.3% +0

1% 27.6% -7

Homogenized 15.7% +6

Skim 7.5% -11

Source: Nielsen MarkeTrack; National All Channels: 52 weeks to September 16, 2017

CONSUMERS ARE USING FOOD AS MEDICINE

The power of Superfoods

69%

64%

60%

Would buy foods that include superfood ingredients

Superfoods provide a natural way to treat and prevent aliments

Would like to learn about ways to include superfoods in their diet

• Source: Nielsen Global Survey – Q3 2016- Canada respondents

Superfoods used for Health Condition

To Treat To Prevent % of users

28% Maca Powder

15% Turmeric

14% Chia Seeds

14% Coconut Oil

13% Acai Berries

55% Coconut Oil

54% Hemp Seeds

50% Black Garlic

50% Turmeric

49% Chia Seeds

OPPORTUNITIES ALONG THE PATH TO PURCHASE

Online and Digital is creating new and exciting touch points

along the shopper journey

Health and Wellness is changing and influencing in-

store purchase decisions

More consumers are shifting their purchase

destinations to non-traditional retailers

CONNECT REACH ENGAGE

Coffee In Canada

21

Past-day day coffee penetration stable, indicating a healthy market overall.

66 67 64 63 65 63 65 63 62 65 64 65 65 63 67 67

71

0

10

20

30

40

50

60

70

80

90

100

'98 '99 '01 '03 '05 '06 '07 '08 '09 '10 '11 '12 '13 14 '15 '16 '17

Percent Drinking Any Coffee Past-day

Telephone data collection Online data collection

Source: Coffee Association of Canada annual beverage tracking.

In-home coffee preparation declines in 2017.


79

37

81

38

79

37

80

37

77

40

In Home (NET) Out Of Home (NET)

Percent Drinking Past Day By Place Of Preparation

2013 2014 2015 2016 2017

Foodservice coffee volume is stable

2.6 Billion coffee servings

Source: The NPD Group / CREST® YE August 2016

35%

Share of Foodservice Occasions that

include a coffee.

NPD Group/CREST® Total Foodservice YE Sep 2017

Taste, convenience, unique beverages and the quality of the experience key to choosing to drink more coffee out of home.


53

53

47

45

43

41

41

41

35

35

35

35

33

30

28

27

26

24

23

23

21

14

Tastes great

To give myself a treat

Convenient

Can make drinks that I can't make at home

To give myself a break, me-time

Energy boost

Makes me feel good

A chance to relax

Helps me to focus

Warms me up

Makes my commute more enjoyable

A chance to socialize

A ritual in my day

A place to work/have meetings

Had a lifestyle change

Satisfies my thirst

I want coffee as part of a meal or with food

A cool/trendy thing to do

Helps to pass the time

Free Wi-Fi

Affordable

Healthy

% Major Reason For Drinking More In Restaurants Or Cafes

Taste, convenience, affordability, ritual and the quality of the experience key to choosing to drink more coffee in home.


53

52

50

48

36

34

34

31

31

29

28

27

25

24

24

24

21

20

18

18

15

15

12

10

Tastes great

A ritual in my day

Convenient

Affordable

A chance to relax

Energy boost

Makes me feel good

Had a lifestyle change (started working, started…

To give myself a break, me-time

Warms me up

Helps me to focus

To give myself a treat

I make coffee at home to take with me while…

Something to drink while using the computer

To offer hospitality to my guests

I want coffee as part of a meal or with food

Satisfies my thirst

Helps to pass the time

Something to drink while watching TV

I've learned to make more kinds of coffee drinks

A chance to socialize

I work/have meetings from home

Healthy

A cool/trendy thing to do

% Major Reason For Drinking More At Home

Out Of Home: Breakfast dominates coffee consumption. After breakfast, between meal snacking occasions are key.


78

43

22

30

11 17

Breakfast Morning Lunch Afternoon Dinner Evening

Percent Drinking Coffee By Daypart Among Past Day Drinkers - 2017

What we are drinking

Shifts are occurring in terms of what coffee beverages consumers are choosing.


65

55

13

63

53

14

67

55

16

67

53

17

7

71

52

23

8

Total Coffee Traditional Coffee Espresso-based Beverages(EBB)*

Non-Espresso-BasedBeverages (N-EBB)**

Percent Drinking Past-day

2013 2014 2015 2016 2017

Espresso-based beverages growing

Traditional coffee flat

Emergence of new formats

EBB beverage growth driven by espresso, latte and flat white.


13

3 4 4 4

1

4

14

3 5 4 4

1 2 3

16

4 6

4 4 1 2

4

17

3 5

5 5

1 3

1

7

3 3 1

23

3 5 6 6

2 4

2

8

4 4 1


2013 2014 2015 2016 2017

Espresso-based Beverages (EBB)

Cafe Mocha Cappuccino Espresso Latte Macchiato Caffe Americano

Flat White Non-Espresso-Based Beverages (N-EBB)

Frozen Blended Coffee

Cold brew coffee

Nitro coffee

Out Of Home Specialty coffee is growing

23 23

24

25 25

2013 2014 2015 2016 2017

Share of Specialty Coffee


Consumers are reducing their use of cream in coffee.


72

26 27

7 5 9

4

69

23 24

8 5

10 4

67

19

27

8 3 3

9 4

70

16

29

7 4 5

12

3

Half andHalf/Milk/Creamer

(NET)

Half and half Reduced fat milk Whole milk Fat free/skim milk Milk alternatives(NET)

Liquid Creamer Powdered creamer

Percent Adding To Coffee

2014 2015 2016 2017

Half and half use consistently declining

Milk alternatives niche but growing

Sweetening in general and white sugar specifically declining.


49

39 39

8

51

41 41

7 4 3

50

38 34

8 3

6 5 1

44

31

26

8

2

8 3

1

Sweetening (NET) Sugar/Raw Sugar(NET)

White Sugar Artificial sweetener Stevia Raw sugar Honey Other naturalsweetener

Percent Adding To Coffee

2014 2015 2016 2017

White sugar declining

Raw sugar niche but growing

Out Of Home Specialty beverages are sustaining the coffee category

14%

10%

Coffee Share by Type

Cold Specialty

Hot Specialty

Source: The NPD Group / CREST® YE August 2016

+10M servings (since 2013)

+40M servings (since 2013)


Coffee Preparation and Consumption

Shifts are also occurring in how coffee is prepared, with drip eroding and single-cup plateauing.


53

25

15

8 4

50

28

14 11

2

49

27

13 10

3 2

47

29

14 11

3 1

41

25

10 11 12

3 1

Drip Single-cup Bean-to-cup Instant Espressomachine

RTD Cold brewing

Percent Using Coffee Preparation Method

2013 2014 2015 2016 2017

Single-cup plateaus

Drip erodes

New brewer type – which might be confused with single-cup

Instant erodes

SINGLE SERVE PENETRATION FLAT

2010 2011 2012 2013 2014 2015 2016 2017

Single Serve Penetration 34.1

2016 Conference INNOVATION: Design for the Future Source: Nielsen Homescan – National All Channels – L52 Weeks PE Sept 30, 2017

ON DEMAND STILL REPRESENTS OVER 43% OF THE COFFEE CATEGORY SALES

• 108 different on demand items sold in stores on average*

• $1.46 billion dollars in total coffee retail sales

Source: Nielsen MarketTrack, Nat all channels, L52 weeks ending Sept 30, 2017 vs YA

*Nielsen MarketTrack, Nat GDM,L52 weeks ending Sept 30, 2017

R&G 46% (+1) On

Demand 43% (-1)

Inst 11% (+0)

Inflation Item Chg*

+1 +5.7

-2 +0.9

+0 +2.6

R&G

Instant

On Demand

Breakfast trends Out Of Home

Breakfast sandwiches are the fastest growing food

item in all of foodservice.

65% OOH breakfast occasions

include coffee


36% of all coffee foodservice occasions at breakfast

include a breakfast sandwich

= + $

Coffee on-the-go is growing

CONSUMED AT HOME

(15% SHARE)

DRIVE THRU (30% SHARE)

+42M (5-year)

+54M (5-year)

CONSUMED IN CAR

(25% SHARE)

+46M (5-year)


Ethnic Analysis

Past-day coffee penetration similar across ethnicities. Some other beverages see clear ethnic skews.


71 66

44 44 43 31

46

32

67 75

46 55

75

35 26

21

70 69

44 37

64

33 34

14

Total

Coffee

Tap Water Bottled

Water

Milk/Milk

Beverages

Tea Juice/Juice

Beverages

Alcohol Pop/Soft

Drinks

Caucasian (A) South Asian (B) East/Southeast Asian (C)


Traditional coffee stronger among Caucasians. Gourmet stronger among Asian-Canadians.


71

56

21

7

67

39 30

20

70

41 31

7

Total Coffee Traditional Coffee Espresso-Based

Beverages (EBB)*

Non-Espresso-Based

Beverages

Caucasian (A) South Asian (B) East/Southeast Asian (C)


Net Gourmet Coffee Beverages (GCB) Caucasians: 40%

South Asians: 54%

East/Southeast Asians: 51%

Caucasians tend to be heavier coffee drinkers.


3.2

2.4 2.1

Caucasian South Asian East/Southeast Asian

Mean Number Of Cups Among Past-day Coffee Drinkers 18+

Caucasians are more likely to be in-home only drinkers.


60

34

40

20

38

44

20

28

16

Caucasian

South Asian

East/Southeast Asian

In-Home ONLY Out-of-Home ONLY Both In-Home and Out-of-Home


Trends Affecting Coffee

46

Morning Meal is stealing share in foodservice

CREST® YE Aug 2017

1,202,060 1,284,653

1,452,124 1,557,210 1,626,594

2013 2014 2015 2016 2017

Traffic by Daypart (Millions)

Lunch

Breakfast

Supper

Afternoon Snack

Morning Snack

Evening Snack


Breakfast Innovation

Digital Door

126M

Total Digital Orders (+19% since 2016) 17M

Digital Coffee Orders

32M Mobile Payments


CREST® YE Aug 2017

-49M -14 M -5 M

+204M

45 - 64 years old

65+ years old

< 18 years old

35 - 44 years old

18 - 34 years old

+9M

Demographics are shifting


Change in visits since 2013

45 - 64 years old

65+ years old

< 18 years old

35 - 44 years old

18 - 34 years old

And coffee is shifting too….


Change in coffee servings since 2013

+12 M +102 M +3 M

-45 M -75 M

52

The Future OF Coffee…..Innovation, Health, Distribution

Questions?

creating - home | coffee association of canada · would buy foods that include superfood...

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