fresh perspectives on bakery consumersdeli and bakery for dinner tonight. 22 create a...

2016

Prepared for the 2016 International Baking Industry Exposition

FRESH PERSPECTIVES ON BAKERY CONSUMERS

HEALTH & WELLNESS DRIVES SHOPPING

BEHAVIOR

BUSY LIFESTYLES DEMAND

CONVENIENCE

DELIVERY, ONLINE PURCHASES, OTHER DISRUPTORS MAKE

WAVES

CHANNEL COMPETITION

HEATS UP

THE CURRENT LANDSCAPE FOR BAKERY:

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CENTER PERIMETER

SHR. PT. CHG. VS YA

2015

2014

2013

36.8%

36.5%

35.6%

63.2%

63.5%

64.4%

(+0.3)

(+0.9)

DOLLAR % SHARE

$12.4B Growth

$8.7B Growth

Source: Nielsen Perishables Group Advanced Fresh Perspective; Total U.S., 2015.

THE FRESH PERIMETER CONTINUES TO GROW

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1 2 3 4 5 6 7

HAND-IN-HAND: TOTAL STORE AND FRESH SUCCESSTop-performing fresh retailers have top-performing sales across the whole store

Source: Nielsen Advanced Fresh Perspective, 52 Weeks Ending 12/26/15

1 2 3 4 5 6 7HIGH FRESH VELOCITY RETAILERS LOW FRESH VELOCITY RETAILERS

Tota

l fo

od

$

sale

s p

er s

tore

50%

30%

Half of total food sales are freshat top-performing fresh retailers

-6%

Total food sales at top-performing fresh

retailers are growing+10%

9%

7%

9% of total fresh sales are from bakeryat top-performing fresh retailers

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BAKERY DOLLARS GREW CONSISTENTLYBakery volume was relatively flat over the last 7 years

Source: Nielsen Perishables Group FreshFacts® - History – Projected Stores 2011-2015

BAKERY PERFORMANCE

Breads and Rolls28%

Other Miscellaneous Bakery2%

Desserts49%

Breakfast Bakery

21%

$13.0B $13.6B $14.3B $14.8B$15.7B

2011 2012 2013 2014 2015

DOLLAR CONTRIBUTION TO IN-STORE BAKERY

BAKERY DEPARTMENT SALES 2011 - 2015

2011 – 2015, CAGR

DOLLARS +3.8%

VOLUME +2.5

AVERAGE RETAIL PRICE +1.6%

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IN STORE BAKERY IS COMPENSATING FOR ITS STRUGGLING COUNTERPARTS IN CENTER-STORE

Source: Nielsen Perishables Group FreshFacts®, 2015 vs YAGO; Nielsen Advanced Fresh Perspective, 52 weeks ending 12/26/2015 vs YAGO

DOLLARS CATEGORY DOLLARS

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7Nielsen Advanced Fresh Perspective, 52 weeks ending 12/26/2015 vs YAGO

Health-focused center store bakery brands are driving growth in stagnant categories

CAKE MIX -9%

MUFFIN MIX

GLUTEN FREENO CLAIM$ % Change

-4%

$ % Change

GMO FREE$ % Change

ORGANIC

GROCERY COOKIES +1% +13%+9% +8%

-2%+2% +31%

+11%+45% +57%

$ % Change

HEALTH CLAIMS ARE DRIVING POCKETS OF GROWTH IN CENTER STORE BAKERY

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FRESH HAS ROOM TO GROW

Source: Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending 07/02/16

69%63%

28%

95% 93%

49%

BREADS COOKIES MUFFINS

Fresh

Center Store

CATEGORY HOUSEHOLD PENETRATION

Breads, cookies and muffins have the largest penetration gap of in-store bakery categories

HOW CAN BAKERIES IMPROVETO BE MORE RELEVANT,

AND ATTRACT NEW SHOPPERS?

Source: Nielsen Homescan Total Shopper View Specialty Panel, 52 weeks ending 07/02/16

SENIOR AND EMPTY NEST COUPLES28% of Bakery Sales

5+ MEMBER HOUSEHOLDS15% of Bakery Sales

KIDS AGE 13-1718% of Bakery Sales

INCOME >$100K26% of Bakery Sales

OLDER BUSTLING FAMILIES13% of Bakery Sales

BAKERY SHOPPERS ARE FAMILIES, OLDER COUPLES99% of households purchase bakery items

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EMPTY NEST AND SENIOR COUPLESQuick trip convenient options that fit the needs of smaller households

INCOME >$100KThe right assortment of premium options, such as

artisan breads, to pair with other premium categories

OLDER BUSTLING FAMILIESHealthy options for families looking for healthier alternatives that meet the needs of all family members

MUST WIN BY TAILORING TO DIFFERENT CONSUMER GROUPS

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WINNING WITH DIFFERENT CONSUMER GROUPS

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Source: Nielsen Perishables Group FreshFacts® FY2015, Nielsen Syndicated, Total US, YE2015 vs YE2014; Center Store Bakery (CSB) Includes Baked Bread, Baking Mixes, Cookies, Fresh Desserts, Frozen Baked Goods, Refrigerated Baked Goods, Pancake Mix

MARKET HEALTH/WELLNESS IN THE IN-STORE BAKERY:

Product Merchandising

Signage, Stickers

Employee expertise

HEALTH DECLARATION% CHG IN-STORE BAKERY DOLLAR SALES VS. YAGO

% CHG CENTER OF STORE DOLLAR SALES

VS. YAGO

NO TRANS FAT 1% 1%

GLUTEN FREE 5% 9%

NO ARTIFICIAL INGREDIENTS 0% 4%

CONTAINS FRUITS/VEGETABLES 0% 2%

ORGANIC 220% 14%

PROTEIN 0% 13%

NO SUGAR ADDED 1% 3%

WHOLE GRAIN 1% -2%

TODAY’S BAKERY ISN’T RELEVANT TO THE HEALTH-CONSCIOUS CONSUMEROf all in-store bakery sales, 95% of items have no declared health benefit

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OPPORTUNITY FOR BRANDS TO THRIVE IN THE HEALTH & WELLNESS WHITESPACE IN ISB

SHARE OF ISB SALES WITH HEALTH CLAIMS

Bakery sales onlySource: Nielsen Answers on Demand, Nielsen Fresh Facts

No Health Claims95%

Brands80%

…OF THE 5% WITH HEALTH CLAIMS, SHARE FROM BRANDS

Brands can provide consumers with trusted names, reliable to meet diet needs

CONSUMERS WANT THEIR CAKE… AND KALE TOONo veggie is off-limits for creative bakers

Source: Pinterest.com, tastingtable.com

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THE TREND: THE RESPONSE: THE AIM:

GOURMET BAKED GOODS AND SPECIALTIES MAKING AN IMPACT AT ALL TYPES OF RETAILERS

Source: Nielsen Perishables Group

TO CREATE A DESTINATION OR EXPERIENCE’ FOR CONSUMERS IN ISB

AVAILABILITY OF MORE ‘PREMIUM FOODS’ IN FRESH AT RETAIL LIKE…• HIGH-QUALITY BAKED

PRODUCTS (BREADS) • RICH-DECADENT ITEMS

(FILLED DOUGHNUTS)

THE GOURMET-IZATION’ OF PRODUCTS…

CREATING HYPE FOR THE BAKERY ONLINE

Source: Nielsen Perishables Group FreshFacts® August 2015 – January 2016, Google Trends, “Cronut” January 2013 – June 2016

While not expecting it to be a long-term bakery staple, carry the hot item at the peak of its fame to get people into the store and drive interest

+

In only 4 months, James Wright’s sweet potato pie review became an internet sensation boasting millions of views andtens of thousands of positive ratings

Viral marketing on Pinterest, Instagram, Facebook, Buzzfeed, and YouTube pique interest in baked goods

Patti LaBelle’s Sweet Potato Pie

Walmart dollar sales8/15-1/16

“Cronut”Google Search

Trends Index1/13-6/15

Ever since the Cronut’s successin 2013, bakers have been trying to use social media to drive interest in new bakery Hybrids.

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GRAB THE COAT TAILS OF THE DELI DEPARTMENTDeli dollar sales are growing faster than any other department in the store, driven by deli prepared foods

Source: Nielsen Perishables Group FreshFacts® Total U.S. (FCA does not include convenience, drug or dollar), 52 Weeks Ending 12/26/15

DINE-INDINNER TO-GO PARTY TIME

Prepared Foods

Meat

Cheese

Other

Deli $ Sales

58%

21%

17%

IN-STORE BAKERY AND DELI SHARE…

PROXIMITYUtilize these departments’ adjacent locations tocross-promote and cross-merchandise

CONVENIENCEDrive connections between the bakery and deli preparedfoods to meet the growing consumer need for convenience

Activate cross-department connections for these occasions:

DOLLAR SALES: +7%

VOLUME SALES: +5%

DELI PERFORMANCE

Source: Nielsen Total Store Connectivity Study, 2015

17%

49%

Fill-in trips

BAKERY BREAD & DELI SOUPS AND SANDWICHES

BAKERY BREAD

Stock-Up trips

Quicktrips

70%

24%

7%

34%

IN THE BASKET:

Drive more quick trips across deli & bakery

LEVERAGE THE STRONG CONNECTION BETWEEN DELI AND BAKERY FOR DINNER TONIGHT

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CREATE A NO-WORK-ENTERTAINING DESTINATIONConvenient, prepared products from the bakery and deli are connected to other prepared offerings in the fresh departments

Source: Nielsen Total Store Connectivity Study, 2015

DELI PLATTERS

DELI APPS/ SIDES/ DESSERTS

BAKERY CAKES

BAKERY COOKIES/

BROWNIES/ DESSERT BARS

Make no-work entertaining even easier with displays of deli, bakery

and produce platters together,

and offer “build your own” options

Package bakery products in

attractive trays and dishes so

consumers can just “pop-off” the top and focus on their guests instead of working in the kitchen

VALUE-ADDED VEGETABLES

DELI ENTREES

DELI PREPARED CHICKEN

DELI DIPS/ SPREADS/ TOPPINGS

No-Work Entertaining categories’ common

connections:

WHAT IS THE FUTURE OF BAKERY?

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FUTURE: DISRUPTIONS TO WATCH FOREmbrace new consumer and retail trends to stay relevant

Source: Company Websites

EXOTIC

PROTEIN

ON-DEMAND

EXPERIENCE

WHAT IS THE HEALTH AND WELLNESS FUTURE FOR ISB?

Source: Company websites

INSECT PROTEINS!People's approach to life-long

health will become

anticipatory and aspirational.

Food and beverages will be expected to

go beyond general health claims

and make commitments to helping people

achieve their near and long term goals.

E-COMMERCE DELIVERING BAKED GOODSAmazonFresh delivering local bakery and farmers market products


CAPITALIZE WITH E-COMM

• Create consistency in marketing visuals through product branding

• Partner with complementary products (i.e. jam, meat, party supplies) for “add-on” purchases

• Use geo-tagging to promote local bakeries and Farmers Markets

• Ensure product packaging maintains highest quality of freshness

• Generate buzz and WOM with exciting shipping packaging

FRESH, MADE-TO-ORDER ITEMS CREATE BAKERY THEATERRetailers showcase how fresh their bakery items are with ‘live’, customizable offerings


MADE-TO-ORDER DONUTS – WINN DIXIE

CUSTOMIZABLE DIPPED FRUIT – MARIANO’S

FRESH FUDGE, MADE DAILY –STANDARD MARKET

HOW DO YOU MEET THE DEMOGRPHIC NEED?

Convenient Solutions Help Older Couples

Health & Freshness Matters

to Families

PROVIDE THE RIGHT HEALTHY OPTIONS

Top claims in Center Store, such as Gluten Free, No Artificial Colors of

Flavors and Organic have the opportunity to grown in ISB

Brands have opportunity differentiate in Health and drive growth

CAPITALIZE ON CONVENIENCE

Deli and ISB have many strong sales correlations to each other, and together can cater to this quick, convenient shoppers needs for a

variety of occasions

E-commerce and alternative means of getting ISB products, such as vending machines are emerging

Premium Shoppers Want Premium

Bakery

CONNECT ACROSS STORE WITH PREMIUM

BAKERY

Shoppers are intrigued with gourmet, unique and ethnic options to try and

explore in ISB

Trends offer opportunities for sales growth, even though they might not

be long standing

QUESTIONS?

NIELSEN FRESH│ SARAH SCHMANKSY│ [email protected]

Sarah SchmanskyNielsen Fresh773.929.7013

fresh perspectives on bakery consumersdeli and bakery for dinner tonight. 22 create a...

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