innovation and trends in dairy, deli, & bakery · 18/7/2018 · consumer media including...

John Crawford, VP, Client Insights, Dairy

Melissa Rodriguez, Consultant, Client Insights, Dairy

Jonna Parker, Principal, Fresh COE

July 18, 2018

INNOVATION AND TRENDS IN DAIRY, DELI, & BAKERY

IDDBA and Beyond

© 2018 Information Resources Inc. (IRI). Confidential and Proprietary. 2

John CrawfordVice President

Client Insights-Dairy

• With 20+ years of CPG industry

experience, John heads up the Dairy

Region for IRI. Prior to joining the Dairy

Team, John led a handful of clients in

Protein Vertical

• Career encompasses extensive

combination of marketing leadership,

innovation, new product development,

market research, client service, and

category management

• Prior to IRI, John led marketing for Crystal

Farms, led innovation efforts at Michael

Foods, and had roles in marketing,

consumer insights and category

management at Land O’Lakes.

Jonna ParkerPrincipal

Fresh Center of Excellence

• Jonna recently returned to lead the new

IRI Fresh COE focusing on client

consultation in Produce, Bakery and Deli

• An innovator in the fresh foods space for

two decades, she has continually

advocated for consumer-driven decision

making and big data analytics as a leader

at an ISB/Deli manufacturer and the

Perishables Group

• Her insights have been cited across the

industry associations, including past

IDDBA webinars and What’s In Store

publications, as well as the trade and

consumer media including Grocery

Headquarters, NPR and USA Today

Melissa RodriguezConsultant

Client Insights-Dairy

• Melissa has been with IRI for 13 years,

with a heavy focus on the Dairy Vertical.

• Extensive knowledge base in Dairy

Thought Leadership, with a focus on New

Products and Innovation, as well as M&A

work.

• Strong background in base business team

management, driving growth across

Clients through analytics and consumer

research

• Currently leading committee for Twin

Cities region of NEW (Network of

Executive Women)

Meet The IRI Team


IRI has a dedicated, experienced dairy and fresh practice focused on helping retailers and suppliers

GROW through integrated fresh insights on market performance and consumer behavior

IRI For Dairy, Deli and Bakery

Solution

Enhancements

Thought

Leadership

Fresh

Expertise Client

Consultation

Retailer,

Supplier,

Industry

Ecosystem

Tailored for

Perimeter


IRI Data Defined for Dairy, Deli and Bakery Departments

IRI Market AdvantageTotal U.S. MULO+C

Retailer sales data for packaged

and random-weight/non-UPC

IRI Consumer and Shopper

Insights Advantage Total U.S. All Outlet

100k Household Panel

IRI Shopper Loyalty Network of Supermarket Grocery

30 Million Households,

100k Weekly Transactions down to the item

level, including fresh


TODAY’S

DISCUSSION

State of the Perimeter

Growth Drivers

Key Takeaways


We Are Changing When We Consume…

7%

22%

51%

44%

24%23%

36%

67%

58%

45%

Early Morning Morning Afternoon Evening Late Evening

2010

2017

Source: IRI 2018 Snacking Survey


Dairy, Deli and Bakery Departments Make Up 18% of Total Food and

Beverage Sales across Total US Multi-Outlet

Source: Dollar Sales, IRI Total Store View + Perimeter Market Advantage, 52 week ending 06/17/18 vs. YA

DELI

$20.7B

BAKERY & ISB

$29.0B

DAIRY

$55.6B

SEAFOOD

$4.4B

MEAT

$49.8B

$4.4BFLORAL

PRODUCE

$59.6B

TOTAL F&B

$565BFROZEN

$54.0B

GENERAL FOOD

$157.4B

BEVERAGE & LIQUOR

$95.7B


6.4%

-0.7%

6.1%

2.4%

3.1%

2.5%

-3.0%

-3.0%

0.8%

-2.9%

0.8%

-2.6%

7.2%

1.4%

12.8%

Dairy growth is driven by multiple categories but key areas

such as Milk and Yogurt are facing headwinds

Dollar Sales % Chg.Dollar Sales

$3.1B Butter/Blends

$1.1B Cottage Cheese

$3.6B Cream

$1.7B Cream Cheese

$4.3B Frozen Novelties

$6.4B Ice Cream

$1.3B Margarine/Spreads

$13.9B Milk

$12.8B Natural Cheese

$2.9B Processed Cheese

$1.2B Sour Cream

$7.2B Yogurt

$1.0B Whipped Toppings

$0.7B RFG Desserts

$1.0B RFG Dips

Source: IRI Market Advantage Total Store View + Perimeter, Total US MULO, 52 weeks ending 6/17/18


Source: IRI Market Advantage Total Store View + Perimeter, Total US MULO, 52 weeks ending 6/17/18 Deli meat and cheese includes random-weight only, excludes pre-packaged

Deli MeatService & Grab/Go

$5.82B Dollar Sales

1.2% 3 Year CAGR

-0.3% vs Year Ago

Deli CheeseService, Grab/Go and Specialty

$2.52B Dollar Sales

1.8% 3 Year CAGR

-0.4% vs Year Ago

Deli PreparedAll other deli items

$12.4B Dollar Sales

3.5% 3 Yr CAGR

1.6% vs YAG

Deli Total Department Sales Growth Driven by Prepared Foods

as Traditional Service Case Struggles


Fresh Bakery

$6.3B

-0.5%

Packaged Bakery

$22.8B

+1.2%

Cakes & Pies, $2,199

Pastries & Donuts, $1,437

Breads, Rolls and Bagels, $1,178

Desserts & Snacks, $675

Bakery Trays & Misc., $578

Dollar Sales ($MM)

Breads, Rolls and Bagels, $14,753

Pastries & Donuts, $3,526

Desserts & Snacks, $2,569

Cakes & Pies, $1,913

Dollar Sales ($MM)

Source: IRI Market Advantage Total Store View + Perimeter, Total US MULO, 52 weeks ending 6/17/18 Fresh Bakery consists of non-UPC (PLU/System 2) items

Fresh In-Store Bakery Items Seeing Sales Decline Driven by Struggling

Breads and Morning Goods, Previously ISB Outpaced Similar Packaged Items


Solving for Eating Occasions in Our Fast-Paced World

CONVENIENCE


Daily Snacking Remains Consistent at a Little More than 2.5 Per Day;

However there is an Uptick in Snacking 5+ Times Per Day



Top Snacking Choices Vary Throughout the Day



Indulgent Snacks have Grown Against Healthier Ones

Source: IRI Market Advantage, MULO+C, 52 weeks ending 6/17/2018


Growing Indulgent Snacking Items are Making Appearances in Snack Kits

Source: IRI Market Advantage, Total US MULO+C, 52 weeks ending 6/17/2018

+1.5% +1.0% +3.7% +1.9% +2.7% +1.1% +2.2% +1.9% +3.0% +0.9%

+4.7% +3.0% +11.8% +8.2% +0.3% -0.6% +0.9% +1.0% +0.9% +0.9%

Yogurt Drinks


Snacking Solutions Seen at the IDDBA Show

Source: IRI Images captured at June 2018 IDDBA Show


Convenient and Unique Permissible Indulgent Snacking


© 2018 Information Resources Inc. (IRI). Confidential and Proprietary. 18Source: IRI Market Advantage, Total US MULO, 52 weeks ending 4/22/18, Pre-sliced Meats includes Pepperoni

Deli Convenience

/Entertaining

$6.5B

% Dollar Change

3.5%

$2.9B

+0.3%

Hummus/

Spreads

$801MM

+4.8%

Pre-Sliced

Meat

$800MM

+4.4%

Dips/Sauces

$1B

+11.3%

$383MM

+3.0%

Trays Artisan

Cheese

$580MM

+4.7%

Pre-sliced

Cheese

Convenient Deli Growth Driven by Pre-Sliced Meats, Trays & Dips


Entertaining and Party-Ready Innovations were Prevalent at IDDBA



RFG Meal Space Growth is Driven by Entrees, Lunches and Soups

Source: IRI Market Advantage, Total US MULO+C, 52 weeks ending 6/17/2018

RFG Meals

$9.2B

% Dollar Change

8.6%$2.9B

+4.8%

RFG Dinner

Entrees

$558MM

+16.9%

RFG Breakfast

Entrees

$934MM

+9.7%

RFG Lunches

$2.5B

+12.8%

$415MM

+5.2%

RFG Fresh

SoupRFG Sides

$356MM

+22.3%

RFG Pasta


In Fresh Prepared, Entrees Dominate with Growth Coming from

Entrees and Appetizers

Total Fresh Prepared

$12.3B

% Dollar Change

1.9%$1.6B+5.4%

Appetizers

$5.5B+3.0%

Entrees*

Sandwiches

$1.8B0.0%

Salads

$1.8B-1.4%

Source: IRI Market Advantage, Total US MULO, 52 weeks ending 4/22/18, growth rate versus year-ago. *Includes Rotisserie Chicken (whole, half, parts): $1.5B, 1.0%


Ideas for New Ways to Make the Trip More Convenient



Meal Kits – Not Just What’s for Dinner and is Much More than Rotisserie



The Power of Smart Food

HOLISTIC HEALTH


New Consumer-Based

Definitions of Health

and Wellness that

Drive Growth

Source: Business Insider, IRI Staff Images


HEALTH & WELLNESS

as a SHOPPING

in 2018 vs. 2017

MOTIVATOR HAS BECOME

MORE IMPORTANT

65%

Consumers are Eating Fresh Foods for Certain Health Benefits

Source: IRI 2018 Health Survey


Foods that provide

medicinal properties

Foods recognized as

home remedies

50% 45% 53%

Like to buy foods rich

in micronutrients

Source: IRI 2018 Health Survey

Consumers are Eating Fresh Foods for Certain Health Benefits


Consumers’ Inclination to Eat Better is Evidenced by the Growth

Across Several Health and Wellness Claims

Edibles Dollar Sales & % Chg vs. YA

Source: IRI Market Advantage w Spins Attribution, Total US MULO+C, 52 weeks ending 5/20/2018

$23.3B

+8%

$8.0B

+10%

Source of

Protein

Gluten Free

GMO Free

$10.8B

+28%

Prebiotics &

Probiotics

$2.3B

+9%

Energy Claim

$3.0B

+10%

$6.8B

+8%

No Dairy

$3.4B

+6%

$5.0B

+10%

No Antibiotics

Lactose Free

Organic

$11.5B

+10%

$24.3B

+5%

No

Preservatives


“Smart” Foods are Outpacing Traditional Brands

20.6%Of total store edibles dollar sales have natural,

specialty or wellness positioning

3-Year Growth L-52 vs. Year Ago

Natural Positioned Brands +31.8% +7.3%

Specialty & Wellness Brands +13.6% +2.3%

Conventional -1.0% 0.0%

Source: IRI Market Advantage with SPINS attribution, 2015-2017 and 52 wks ending 5-20-18


In-Store Resources and Signage Educate Consumers Along their Journey



Holistic Health Offerings at IDDBA



Health Front and Center



How Dairy, Deli and Bakery can Bring the WOW

Back to Store Traffic

CART-STOPPING SHOPPING


Retail’s Greatest Change Since the Advent of the Automobile

36% of consumers

would buy fresh

foods online if fast

delivery was offered

45% of Millennials

33% of consumers

want fresh foods as

part of their grocery

store pick-up

44% of Millennials

Source: IRI Fresh Foods Shopping Survey, Dec 2017


Retailers are Experimenting with New Formats

… and all include Fresh Dairy, Deli and Bakery

Source: Business Insider, IRI Staff Images

Openings include some Fresh

Perimeter items


Protein Drinks have sales from wide variety

of channels with growth coming from all

Changing Format - Increasing Pressure to Win Trips

Food, 30.4%

Walmart, 24.8%

Convenience, 17.7%

Dollar, 0.4%

Club, 10.0%

E-Commerce, 10.0%

Source: IRI NCP Total US All Outlets, 52 weeks ending 6/17/2018

Deli convenience items (grab & go cheese,

meat, prep foods) are growing much faster at

mass, specialty drug and c-stores than grocery


Retailers who win the war for foot-traffic will do so in fresh departments with new, unique & personalized

solutions for shoppers

Prime Perimeter Position Make Deli, Dairy, Bakery Essential

$595M potential for one major national grocery chain by raising all division delis to MULO average velocity

Source: IRI RMA Deli Performance Analysis, June 2018


Dairy, Deli and Bakery Drive Trips & Basket Value for the Store

Source: IRI Shopper Loyalty, Total Store View + Perimeter hierarchy 52 weeks ending 6/17/2018

DELI CHEESE DAIRY

BA

KE

RY

AIS

LED

EL

I

ME

AT

63 Avg trips per buyer

FR

ES

H

PR

EP

AR

ED F

RE

SH

BA

KE

RY59%

of store baskets

2.5 x

Average total store

transaction is

Larger when dairy,

deli and bakery

are in the basket

1.7 pts

Increase in share

of all baskets

Higher than prior

year for baskets

with dairy, deli and

bakery


Baskets with these Dairy, Deli and Bakery items are more likely to also include…

Key is Connecting Dairy, Deli and Bakery to the Bigger Basket

Source: IRI Shopper Loyalty transaction data, ranked on trip co-purchase index with at least 1% of trips,

Total Store View + Perimeter hierarchy 52 weeks ending 6/17/2018

Snack Cheese

RFG Baked Goods

RFG Desserts

Frozen Snacks

Frankfurters

SS Fruit

Lunch Meats

Shaving

RFG Condiments

Baby Food

Non-Fruit Drinks

Ethnic Foods

Skin Care

Grooming Supplies

Personal Care To

tal S

tore

Reple

nis

h

Deli Prepared

Entrees & Meat

Sto

p B

efo

re D

inn

er ISB Breads & Rolls

RFG Meals

ISB Desserts

ISB Morning Goods

Deli Cheese

Deli Meat

RFG Desserts

RFG Condiments

Fresh Seafood

Fresh Fruit

Frozen Fruit & Veg

SS Fruit & Veg

Fresh Veg

Coffee & Tea

Essential Across Trips: More than 40% of each of these different trips include Dairy

In-Store Bakery

Cakes

Ge

ttin

g R

eady t

o P

art

y

ISB Breads

General Merchandise

RFG Desserts

Deli Prepared Foods

Disposable Tableware

Frozen Desserts

RFG Meals

ISB Donuts

Deli Cheese

Frozen Baked Goods

Carbonated Beverages

Fresh Seafood

RFG Beverages

Fresh Beef


Examples of Innovations to Stop Carts & Connect the Store



What Role Will You Play in Making Your Dairy, Deli & Bakery Depts

or Products Cart-Stopping Shopping Worthy?

Dairy, Deli & Bakery are at an impasse –

what got us here, won’t get us there

2.3%

5.3%

-0.9%-1.1%

0.1%

-0.9%

6.0%

7.3%

8.2%

4.2%

1.8%1.6%

1.9%

3.7%

7.0%

1.5%

0.5%

-1.1%

-0.6%

4.4%4.7%

1.2%

-0.3% -0.5%

1.1%

2.7%3.0%

2.2%

0.9% 1.1%

4.7%

0.7%

3.4%

1.7%

0.1%-0.2%

2013 2014 2015 2016 2017 YTD 2018

Sales Change vs. Prior Year

Dairy (ex Eggs) Deli Prepared Deli Meat Deli Cheese Packaged Bakery Fresh Bakery

Growth rates are slowing

Assortment, distribution stagnant

Source: IR Market Advantage, Total Store View + Perimeter, MULO, data period ending 6/17/18


Key Takeaways: Dairy, Deli and Bakery

It’s not just about meals anymore;

snacking continues to drive demand

for convenient and innovation

product offerings

There is an opportunity to educate

consumers around what your

products have to offer and where

they are in the store to drive them to

dairy, deli, and bakery

Sales of Dairy, Deli and Bakery are slowing

as assortment, incremental space and new

items are not evolving as fast as center of

store and frozen aisles

Retailers are looking to the future to meet

the evolving consumer; dairy, deli and

bakery have great ideas to help connect

Innovation should continue to be

rooted in consumer priorities;

Convenience and Holistic Health

are macro themes with many

intriguing facets

We saw creativity and growth-driving ideas

across the IDDBA show; opportunity to

overcome challenges and get new exciting

items on shelf and in front of consumers

As indulgent snacking

categories are growing, items

are being introduced in single

serve and as part of

snack/meal kits


QUESTIONS


John CrawfordVice President, Dairy Client Insights

[email protected]

Jonna ParkerPrincipal, Fresh COE

[email protected]

Melissa RodriguezConsultant, Client Insights

[email protected]

Thank You!

mailto:[email protected]



innovation and trends in dairy, deli, & bakery · 18/7/2018 · consumer media including...

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