2021 TRENDS AND EMERGING GROWTH POCKETS - IRI
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Part June
Discovering Pockets of Demand 28
2021
2021 TRENDS
AND EMERGING
GROWTH POCKETS
EXECUTIVE SUMMARY
Consumers are resuming active lifestyles while maintaining at-home habits (e.g., more meals at home). While CPG demand has remained
elevated in the first half of 2021, we anticipate that demand patterns will shift as the economy reopens and there is more competition for the
consumers’ wallets. This report highlights key 2021 trends and identifies emerging growth pockets for CPG manufacturers and retailers.
CHANGING SHAPE OF THE CPG DEMAND CURVE
• Consumers are becoming more comfortable shopping in stores, reverting to multiple channels (i.e., non-grocery, small format),
while at the same time, many shoppers will stick with online options – behavior that will continue to drive omnichannel sales.
• Younger and higher-income households drive increasing, smaller trips; low-income households represent the highest
growth opportunity as they continue to spend more for home consumption.
• CPG demand continues to be idiosyncratic, with highly elevated consumption of frozen foods and baking ingredients reverting
but still above the norm, while consumption of sports drinks, sleep remedies and kitchen storage and plastic drinkware remains high.
Depressed categories such as cosmetics recover, yet remain below pre-pandemic sales levels.
• Consumers continue to buy premium products while shelf price increases continue to take effect. Expect increasing trade-off
vs. product value as prices creep up. Store brands, which lagged or decelerated vs. national brands in the 1H 2021, are likely to
gain share in 2H as national brands raise prices.
• Holiday celebrations are shifting back to larger events.
• 28% of the top 100 brands gained significant penetration in 2020, and retained >50% of gains in 2021. Manufacturers and retailers
will compete to win or retain penetration acquired in the last few quarters.
EMERGING OPPORTUNITIES
• Be adept at detecting shifts in consumer needs and preferences, and react with agility as demand patterns shift.
• As significant shelf price increases occur, manufacturers and retailers will have to resort to granular revenue management
strategies to drive profitable growth (e.g., net price realization, truly incremental promotions, price-pack-channel range architecture).
• CPG companies cutting media budgets to offset cost inflation should optimize media ROI real time and focus on the right products,
vehicles (e.g., digital, social) and right segments and audiences that are most responsive to media to minimize share loss.
• Simplify the shelf set with the right placement and tailor assortment to digital and omnichannel shoppers.
• Communicate and innovate on attributes and benefits that matter to shoppers and ensure that innovation is incremental.
• CPG retailers and manufacturers must continue to invest in online platforms to retain omnichannel shoppers and carefully curate
the online vs. in-store experiences.
• Focus on winning retailers, categories, brands and channels (including on-the-go, food service) for growth.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 2
Post-Pandemic Lifestyles
Balance Out-of-Home Activity Work and School
With Ongoing At-Home Return to on-location jobs, at least
part-time for office workers. Full-time
Tendencies at school expected for most by fall.
Home
New household formation Consumption
(especially in suburbs) continues. Return to away-from-
Ongoing enhancement of home consumption while
Self- and maintaining some at-
home environment. Societal Care home habits. Intense
Convenience home cleaning and stock-
Indulgence up behaviors ease.
Leisure, Entertainment & Holidays
Resumption of pro-sports events; Shopping
movie theaters re-open; larger E-commerce usage sticks.
celebrations return vs. pandemic. Shoppers gain comfort
in-store, quick trips increase.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 3
Household Spending Increases for Transportation and Recreation,
But At-Home Consumption Remains Elevated for Now
U.S. Household Consumer Spending % Change vs. 2019
2020 Post-
Peak Decline COVID-19 Max Beginning 2021 Latest
% of Apr ’20 Oct ’20 Jan ’21 Apr ’21
L52 vs. Apr ’19 vs. Oct ’19 vs. Jan ’19 vs. Apr ’19
Total Household Spend spend -19% -1% 5% 8%
Opportunities
Health 22% -26% 0% 5% 5% Spending on household furniture
also remains elevated, and clothing
Housing & Utilities 20% 4% 4% 8% 8%
expenditures are ramping up.
Recreation 9% -29% -3% 6% 12%
Foodservice spend is
Financial Services 9% 0% 3% 8% 9%
starting to recover.
Transportation 9% -44% -10% 0% 12%
Food & Bev for At-Home 8% 9% 10% 16% 16%
From a very high rate in March
and April, home improvement
Foodservices (Away From Home) 5% -46% -9% -5% 4% and car sales begin to soften
HH Furniture & Maintenance 5% -12% 11% 22% 24% from their peaks in May.
Clothing 3% -47% -3% 4% 8%
Anticipate ongoing inflation in most
Education 2% -10% -9% -6% -5% areas – CPI All Items +5% May
Communication 2% -4% 2% 6% 6% 2021 vs. YA, +0.6 vs. April –
Accommodations 0.5% -83% -55% -55% -43% particularly in transportation, clothing
Other Goods 6% -27% -7% -1% 2%
and household maintenance.
Source: BEA, Personal Consumption Expenditures by Major Type / Type of Product, 5/28/21. BLS CPI for May 2021. US Census Retail Trade advanced estimates for May 2021. IRI analysis.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 4
Leading Indicators Signal Decreasing
At-Home CPG Demand in 2H 2021
U.S. Consumer Mobility vs. F&B At-Home Volume / % Change from Pre-COVID-19 Leading Indicators
(Jan. to Mid-Feb. 2020) Base, 4 Week Rolling Average, Est. Total Omnichannel of At-Home CPG Demand
CPG Shopping Behaviors
40 2020 F&B volume ~+8% Store trips
~+10-12% vs. vs. Jan.- +6% In-store quick trips increasing
30 Jan.-Feb. 2020
Feb. 2020
vs. Jan.- +3% Impact on
Feb. 2020 vs. Jan.- +3% In-Home CPG Key cohort growth
Feb. 2020 vs. Jan.- Consumption Millennials and lower income driving CPG growth
20 Feb. 2020
Median
Forecast
Current Level Away-From-Home Activity
10
F&B Volume Strong
positive
On-the-Go / Convenience Store Visits
Boosted with Memorial Day yet remain negative vs.
0 pre-COVID-19 and skewed toward evening activity.
Workplace Mild
10/1/2020
10/1/2021
1/1/2020
4/1/2020
7/1/2020
1/1/2021
4/1/2021
7/1/2021
Mobility positive Rising gas prices, +~$1/gal since start of year.
-10 Restaurant Sales
Restaurant sales improving, yet below normal
Mild levels in Northeast & Great Lakes; seated dining
-20 Forecast
negative and fine-dining improving. Dining out remains
skewed toward dinner while many consumers
Strong
negative
continue to work from home.
-30
Other Household Spend
Rising inflation across all items +5% vs. YA,
Q2 ‘21
Q1 ‘21
Q4 ‘21
Q3 ‘21
-40 highest growth since 2008. Transportation costs
rising most. Significant increase in entertainment
activity in last month, including pro-sports events
-50 and movie theaters.
Omnichannel = MULO+C + Costco + E-commerce – Overlap. Source: Google Mobility – Workplace. IRI POS data. IRI Strategic Analytics models. IRI analysis.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 5
On-Site Dining Improves, While Take-Out March 2021 % chg. vs. March 2019
and Delivery Hold High Demand Rates May 2021 % chg. vs. May 2019
Full-Service Restaurant Recovery Indicators
Strongest restaurant recovery in Southern U.S.; lagging trends in the Northeast are expected to improve as they reopen.
ON-SITE TAKE-OUT DELIVERY
Driven by 190
21 19
increasing prices
154
140
126
116 113
108
91
77
-3 59
-12
10
-19
-3
-27
Dollars Trips $ / Trip Dollars Trips $ / Trip Dollars Trips $ / Trip
Note: Includes casual and fine dining full-service restaurants. Based on sample set of restaurants selling in 2019 and 2021 (excludes closed restaurants). Excludes limited-service restaurants. Dwell time based on minutes order-receipt.
Source: IRI On Premise.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 6
In 1H 2021, CPG Demand Remains Edible excl Perishables
Elevated; Price / Mix is Increasing Nonedible
CPG Trends % Change vs. 2YA / Total Omnichannel
Not Shown: Greatest Q2 Price Acceleration in Fresh Meat (+14% vs. Q1) & Produce (+8% vs. Q1)
2019 2020 Q1 2021 Q2 2021
24.7 26.1
18.9 20.8
17.7 17.9
12.2
5.9
D O L L A R S
7.9 7.5 7.2 8.3
3.3 5.7 5.3 5.7
P R I C E / M I X * *Price / Mix based on MULOC
15.6 16.5
12.9 11.4 12.4 10.0
6.2
2.4
E S T I M A T E D V O L U M E 1
1.Estimated average omnichannel volume change across categories based on price/mix trends in MULO+C. Based on 205 Tracked Categories.
Omnichannel includes MULO+C, Costco, eCommerce , excluding MULO+C-eCommerce overlap.
Source: IRI data ending 06/13/21 Omnichannel Model.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 7
Retailers and Brands Will Continue to Fight to Retain or Improve Market Share
Retailers Will Be Fighting for Market Share Even as Brands Will Strive
Some In-Home Consumption Switches to Out-of-Home to Retain 2020 Share Gains
Comparable Sales Growth Largest Share Gainers in 2020 with Continued Gains in 2021*
Latest Fiscal Year Latest Quarter Quarter Ending Largest Share Share Gain in
Gainers in 2020 2021 vs YA
14.1% 22.9% May 1, 2021
5.9 5.9
9.2% 15.2% May 9,2021
5.4 1.0
16.9% 11.8% February 27, 2021 2.4 3.5
2.0 1.2
11.8% 7.2% April 30, 2021
1.8 1.5
8.6% 6.0% April 30, 2021
1.7 3.7
14.4% 1.7% March 31, 2021
1.5
1.6
14.1% -4.1% May 22, 2021 1.4 1.2
1.3 1.8
16.3% -4.6% April 30, 2021
1.0 4.4
*12 weeks ending 05/16/21
Source: Earnings Reports. US Comparable Sales Growth excludes Fuel for most Retailers, comparison vs same period in 2020 overlaps COVID surge in 2020 for some retailers.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 8
Increasing, Smaller Trips to Non-Grocery Channels As Mobility Increases
Q2 2021 vs. Prior Quarter CPG Trip Trends
Trips Q2 2021 % Change vs. Q1 2021 Trip Types / Q2 2021 % of Trips
Ppt. ∆ vs. Q1 2021
“ “We are also
seeing
customers
2 All Outlets shopping
All Outlets
Grocery retailer A more
Grocery -1 2.3 frequently as
COVID-19
Walmart 4 0.8 restrictions
0.4
0.1 ease.”
MassX 1 -0.1
-0.9 -0.8 -Kroger FQ1
Club 4 -1.8 Earnings,
Pantry Stocking Fill-In Special Quick Trip FQ1 6/17/21
”
Drug 5 % of trips Purpose
Q2 ’21,
All Outlets
Dollar 3 15.5% 15.5% 17.6% 51.4%
Note: Grocery trips remain higher than 2019, but below 2020 levels. While accelerating, quick trips remain lower than pre-COVID (54% of trips in Q2 2019). Data through 6/13/21
Source: IRI Consumer Panel, All Outlets. IRI retailer gateway.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 9
Younger and Higher-Income Cohorts Increase Trip Activity Most;
Largest Sales Growth Among Low-Income Households
Total CPG Dollar Sales & Trips % Change vs. 2YA by Demographic
22 22
Low Income $
20 Millennial $ 20
18 Gen X $ 18
High Income $
16 16
Boomer $
14 14 Mid Income $
12 12
10 10
Gen X Trips High Income Trips
8 8
Millennial Trips
6 6
Mid Income Trips
4 Boomer Trips 4
Low Income Trips
2 2
0 0
13 WE 13 WE 13 WE 13 WE 13 WE 13 WE
12/13/20 3/14/21 6/13/21 12/13/20 3/14/21 6/13/21
Source: IRI Consumer Panel, All Outlets.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 10Some Categories (e.g., Frozen, Sports Drinks) Maintain Elevated Consumption
Levels, Some Begin to Improve (e.g., Bakery) While Others Revert
Latest 4 Weeks Category Volume Elevation vs. 2020 Volume Elevation, MULO CATEGORY TYPE
Perimeter Edible Nonedible
High Consumption Holding Reverting Consumption Minimal Impact Improving Consumption
Category 2020 L4 Category 2020 L4 Category 2020 L4 Category 2020 L4
Drinkware 22 18 Frozen Vegetables 15 -1 Pain Relief 0 0 Perimeter Bakery -21 3
Fresh Seafood 28 16 Flour 31 0 Pet Food -1 0 Eye Cosmetics -14 3
Frozen Seafood 35 13 Paper Towels 20 1 Laundry Detergent 0 -3 Chocolate Candy 0 3
Frozen Fruit 29 12 Pasta 20 1 Water 2 0 Snack Bars -6 0
Sports Drinks 12 9 HH Cleaner 27 3 Skin Lotion 2 2 Prepared Deli -20 -4
Sleeping Remedies 13 7 Vitamins 17 3 Skin Care -2 -3 Deodorant -11 -4
RTD Tea/Coffee 13 6 Soap 32 4
Facial Cosmetics -25 -7
Frozen Dinners 11 6 Baking Mixes 23 4
Gum -27 -12
Baby Formula/ Baking Needs 25 6
4 9
Electrolytes Prepared Salads -21 -14
Fresh Vegetables 14 6
2020 Volume Elevation: ppt difference 52 WE 2/21/21 Growth Rate – 3 Year CAGR; L4 Volume Elevation: ppt difference L4W vs 2019 – 3 Year CAGR.
Source: IRI data for MULO (multi-outlet) / ending 6/13/21 / IRI analysis / Note: Includes top categories by size
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 11Memorial Day Behavior Indicates the Return of Large Summer Celebrations
Memorial Day Performance Indicators
Memorial Day Week Saw Overall Growth, Out-of-Home Behaviors Increased During the Holiday
Especially Edible for At-Home Consumption Weekend and Show Positive Signs for Summer
Memorial Day Week Lift, MULO 2021 17-’19 Avg. Open Table Rolling 7-day Average, % Change vs 2019
5.5% 1/1/2021 3/1/2021 5/1/2021 7/1/2021
0
4.5%
Memorial Day
2.3% 2.7% 2.5% -20
1.6%
-40 Spend on other entertainment increased vs pre-
COVID-19, but not to pre-COVID-19 holiday levels
Total Store Edible Nonedible -60 Pro sports: -20% vs -80% 2 wks. prior
Movie Theaters: -60% from -90% before Memorial Day
Category Lift, MULO -80 TSA Airport travelers: -30% vs -40% wk. prior
Edible Nonedible Lift Δ ’17-’19 Avg.
Beer/Ale/Alcoholic Cider 24% -1.2 Convenience, Memorial Day Week Lift 2021 17-’19 Avg.
Contribution to Total Store Lift
Carbonated Beverages 12% +1.6
Salty Snacks 9% +1.2 3.1%
2.7%
Fresh Bread & Rolls 11% +1.1 2.1% 2.2%
1.6%
Bottled Water 8% +3.2 1.0%
Suntan Products 48% -2.6
Frankfurters 37% -6.1
Cups & Plates 12% +0.7 Total Store Edible Nonedible
Note: Lift versus 2 weeks prior to Memorial Day week. Source: IRI POS data ending 6/6/21. JPMorgan. Google Mobility. OpenTable.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 12Consumers Revert to Multiple Channels in Recent Months, Spending Less
in Grocery than During COVID-19 and Continuing E-Commerce Usage
Retailer Contribution to Omnichannel (MULO+C + Costco + E-Commerce) Index >120
CPG Sales Q2 2021 vs. 2YA Index < 80
% $ Share % contrib. to growth Fair Share $ CAGR Trend
Channel
of F&B vs. 2019 Index 2019-2021 vs. 2020
Grocery
22 70
contributed 44%,
Grocery 31% 6%
1.4x its fair share
to growth in 2020
With Retailer for B&M Retailers
In-Store and E-Comm Included
Mass 23% 22 94 8%
Club 9% 11 123 11%
Front-end drug
2 68
channel sales
Discount 3% 6%
benefited from
9 57 vaccination trips
C-store 15% 5%
Drug 4% 1 15 1%
Total e-comm
37 298 (including digital
Pure Play E-com 13% 37%
sales from B&M
All other 3% -2 -86 -6%
retailers)
contributed ~50%
Omnichannel 100% 100 9% to growth in this
period vs. 2YA
Note: Brick & Mortar channels include Pickup and Delivery E-comm sales. Pure play e-com includes Total eCommerce excluding Click and Collect. All other includes Military, Specialty Stores.
Source: IRI POS, Panel. eMarket Insights data ending 06/13/21. Q2=12 weeks ending 06/13/21
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 13Accelerated Premiumization is Holding; We Expect this
Trend to Reverse as Consumers Increase Spend Elsewhere
Price Tiers, $ Share Ppt. Chg. vs YA
EDIBLE NONEDIBLE
vs. YA vs. YA vs. YA vs. 2YA vs. YA vs. YA vs. YA vs. 2YA
Super Premium 13.6% 0.4 14.0% 0.8 15.1% 1.2 1.4
23.7% 0.5 24.5% 1.3 26.1% 1.5 2.3
8.6% 0.1 8.4% 0.0 8.5% 0.2 0.1
Premium
9.6% 0.0 9.8% 0.1
9.9% 0.3 0.2
52.6% -0.3 53.7% 0.2 52.9% -0.5 0.1 34.9% -1.0
Mainstream 34.4% -1.1 33.3% -0.4 -1.8
12.4% -0.3 12.2% -0.2 11.6% -0.7 -0.8
Value 8.7% -0.1 8.1% -0.3 8.3% -0.2 -0.7
19.4% 0.7 19.0% -0.2 19.1% -0.7 0.1
Store Brands 16.4% 0.0 15.9% -0.6 15.2% -0.7 -0.9
Pre-COVID-19 Post Stock-Up Current Pre-COVID-19 Post Stock-Up Current
52 WE 2-23-20 Q3 ’20 Q2 ’21 52 WE 2-23-20 Q3 ’20 Q2 ’21
Note: Price Tiers calculated at Brand Level from Subcategory Price/Vol as Premium > 1.25*Avg, Value < .75*Avg in Grocery Channel. Store Brands includes all private label brands across retailers and price levels.
Source: IRI POS, MULO, data ending 6/13/21
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 14Shelf-Price Increases Begin to Manifest in Some Categories
With Rising Costs Expected to Flow Through the Remainder of 2021
Decomposition of Price per Volume % Change vs. Prior 8 Weeks in Leading Accelerating Price / Mix Categories
Grocery Channel / 8 WE 5/16/21 Mix Shift/ Change in Increased Tot Price/
EDIBLE / NONEDIBLE Premiumization Promotion Everyday Price Vol chg. Though some early
indications of increased shelf
Eggs -2.0% 0.7% 2.4% 1.1%
price, most price increase
Salty Snacks 1.5% 1.0% 0.9% 3.3%
announcements by
Carbonated Beverages -0.5% 1.4% 0.8% 1.6%
manufacturers and retailers
Beer/Ale/Alcoholic Cider 0.9% 0.3% 0.6% 1.7%
are yet to be fully realized
Fresh Bread & Rolls 0.0% 1.4% 0.5% 1.8%
RTD Tea/Coffee -0.7% 3.1% 0.3% 2.8%
Fz Dinners/Entrées 0.7% 0.7% 0.3% 1.8% Kroger reported inflation
Luncheon Meats 2.0% 0.5% 0.3% 2.8% rates around 1% –
Hot Cereal 1.2% 2.3% 0.3% 3.8% particularly short-term
Toothpaste 1.6% 1.6% 0.3% 3.5% volatility in meat, produce –
Food & Trash Bags Mix shift driven 1.0% 0.5% 0.3% 1.7% with increasing costs
Rfg Juice & Drinks by growth of 1.0% 0.6% 0.2% 1.8% starting to flow through
Vitamins more premium 1.6% 0.6% 0.2% 2.5%
Cookies brands and 2.6% 0.7% 0.2% 3.6%
Crackers products; also 3.1% 1.0% 0.2% 4.3%
Breakfast Meats some recovery of 2.0% 0.7% 0.1% 2.8%
Snack Bars/ Granola Bars smaller packs 1.0% 1.1% 0.1% 2.2%
Fz/Rfg Poultry 3.3% 2.5% 0.1% 5.8%
Shelf Stable Seafood 3.4% 3.1% 0.0% 6.5%
Note: Everyday price at item level. Promos include promotion frequency and depth (driven by freq.). Mix shift refers to difference in product mix vs. YA, driven by shifts to more premium brands (positive effect) countering shift to larger pack sizes (negative effect).
Source: IRI POS 8 weeks ending 5/16/21, Grocery channel. Kroger Q2 2021 earnings call commentary.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 15Rodney McMullen, Kroger Chairman & CEO
Managing “Typically, our business operates best when inflation is 3% to 4% and we have a meaningful amount of fixed costs.
[At this rate], customers don't overly react to that inflationary environment.” FQ1 2021 earnings call, 6/17/21
Inflation Richard Galanti, Costco Executive VP & CFO
“There are a variety of inflationary pressures that we and others are seeing. There has been a lot of CPG
IRI estimates companies that have announced increases. And many of them are sticking because we and other retailers
that many are aware of the underlying costs associated with it.” FQ3 2021 earnings call, 5/27/21
Retailers
CPGs are Vivek Sankaran, Albertsons Cos. President & CEO
“We expect a rational competitive environment to prevail, driven by tight supply, promotion management and
planning more digital promotions. If it goes beyond 3% to 4%, we are going to have difficult conversations on how much
scenarios of up we can accept, because we are not going to pass through all of it.” FQ4 2020 earnings call, 4/16/21
to ~5% shelf Retailers expect to pass along 3-4% inflation in response to rising costs in labor, freight, container
price increases; shortages and port delays, higher commodity prices, and higher import and F/X costs.
this could lead
up to a 7-10% Mark Clouse, Campbell’s Soup Company President & CEO
growth in price / “[Pronounced cost inflation] partially offset by productivity improvements reflect about a third of gross margin
Manufacturers
erosion. We expect to benefit from pricing actions and our productivity plans to mitigate this inflation
mix vs. YAG. pressure [starting in second half of 2021]. We're being very thoughtful on how we're reflecting critical price
thresholds.” FQ3 earnings call, 6/9/21
Carlos Abrams-Rivera, Kraft-Heinz U.S. Zone President
“We will make sure we continue to renovate our portfolio to drive better value, improve the creative content
of our marketing and strengthen and diversify our media impressions. We will return to supporting the key
[holiday] promotional window – ensuring we show up in those moments.” FQ1 Earnings call, 4/29/21
Besides passing on some of the costs to consumers via price increases, manufacturers balance
other costs and implement revenue management strategies to manage rising costs.
Source: CPG retailer and manufacturer earnings reports.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 16Large Manufacturers Lead in Price Acceleration, Particularly in Edible; Others Will
Likely Follow; Invest in Granular Revenue Management to Drive Pricing Effectiveness
Price Growth by Manufacturer Size
Price per Volume % Change L8 Weeks vs. Q1, Grocery
Total Store
Large Medium Small Opportunities
Grocery Brands
1.9
Smaller CPGs are likely to
1.5 follow price increases due to
0.9 1.0 universal rising costs.
Balance shelf price
increases across
channels, brand tiers.
-0.1 Private label
growth continues to Ensure adequate opening
Edible accelerate along with price points and value
national brands, products, while driving sales
1.8 though PL sees
1.4 more price / mix of premium products.
1.3
0.9 growth in nonedible.
Continuously monitor
0.5 price and promotional
effectiveness at retailer,
shopper-segment levels to
Nonedible drive maximum return and
Note: Manufacturer Size calculated with MULOC 2020 Sales as XS$100M, Medium>$1B, Large>$6B. drive truly incremental sales.
Extra Small manufacturers with higher price/mix growth not shown. Dollar-weighted price per volume change across categories.
Source: IRI POS, 8 weeks ending 5/16/21, Q1 12 weeks ending 3/21/21.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 17Store Brands Growth Lagged or Decelerated vs. National Brands in 1H 2021;
Store Brands Likely to Gain Share in 2H as National Brands Raise Prices
Store Brand Trends: % Change vs. 2YA MULO National Brands Store Brands
EDIBLE NONEDIBLE
2019 2020 Q1 2021 8 WE 5/16/21 2019 2020 Q1 2021 8 WE 5/16/21
17.1 18.4 15.1 13.6 15.2 11.3 12.5 15.4
8.3 7.6 7.7 9.8 10.5
Dollars 3.2 1.2 4.1
PL $ Share 18.8% 18.8% 18.8% 18.0% 18.8% 19.1% 19.0% 18.6%
$ Share PPT +0.7 +0.2 -0.2 -0.5 +1.6 +1.1 +0.5 0.0
Change vs. 2YA
7.2 7.7 7.7 8.5 9.8 7.0 11.1
4.6 6.3 3.4 6.2 3.7 4.9 4.7 6.8
Price / Mix*
-0.3
14.5
8.6 10.2 8.4 9.6 7.4 6.2 7.5 6.3
Volume 2.6
-1.4 -0.1 -2.5 -1.9 -0.6
-6.0
“If we have inflation that is not driven by true cost changes, Our Brands gain share at the expense of national brand players.”
Kroger FQ1 earnings, 6/17/21
*Dollar-weighted price per volume change across categories. Source: IRI data ending 5/16/21.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 18Most Top Brands Compete 28%
to Retain 2020’s Buyer Gains of Top 100 Brands
CPG Brands Gaining and Retaining Buyer Growth in
Gained Significant
2020 and 2021 / Among Top 100 CPG Brand Franchises Penetration in 2020
and Retained
100
>50%
of Gains in 2021
74
53
11 Continued to grow buyers
9 75-100% retained
8 50-75% retained
16 25-50% retained
9 0-25% retained
Top 100 CPG # Brands that # of Brands that
Brand Franchises gained >+0.5ppts. 29 HH
retained 2020
HH Pen. In 2020 Pen Gains in 2021
Source: IRI Consumer Panel.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 19It Is Critical to Optimize Media ROI
Real-Time, Even as Some Consider
Reducing Spend to Maintain Profitability Optimize
Marketing Spend
Implications of Reducing Media Spend
Maintain focus on the right
Typical CPG Brand – IRI Benchmarks products, right vehicles,
and right segments and
7.5% audiences that are most
Media A cut in media
responsive to media.
Trade & investment can help
17.5% Invest in higher ROI media
Promotions achieve near-term
to minimize losses. Monitor
profit targets, media ROI real time to
but is likely to be optimize investments across
detrimental in the messages and properties
long term as even in- to drive sales and share.
home demand wanes. Leverage analytic
Core Drivers models to maintain
(Distribution, 75.0%
Price, E.g., a 10% reduction effectiveness while
Competition) in media investments optimizing for efficiency.
could cut ~1% volume Invest in digital and
in the short term, and social media that continue
~2% in the long term. to maintain strong ROIs
and retailer media that fits
with brand objectives.
Short-Term Drivers Typical CPG Brand
Source: IRI Marketing Mix & Trade Promotion models.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 20Promotion Frequency Increases Slightly, But Depth of Discounts
Shrinks, Leading to Lower Overall Promotion Investments
Promotion Investment, Frequency, and Depth Index to 2019 Average / Grocery Channel
FREQUENCY INVESTMENT
Weeks & items on promotion (as measured by % base sales on Merch) % of dollar sales invested in promo markdown
Index to 2019 Average Index to 2019 Average
2019 Edible
Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 L8
Average 91
78 84 80 77
Edible 29% 86 62 90 95 92 93 67
Nonedible 19% 88 52 77 83 85 87
Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 L8
DEPTH 2019 Average: 10%
Weighted average % price reduction on any merchandising condition
93 Nonedible
Index to 2019 Average
64 72 72 69
2019
Average Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 L8 51
Edible 21% 100 106 94 92 92 89
Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 L8
Nonedible 18% 98 99 92 93 95 89
2019 Average: 6%
Note: Investment = (Base price – promoted price) * promoted volume. Frequency = % of base sales sold on Any Merch. Source: IRI data ending 5/16/21 POS, Grocery.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 21At the Same Time, Promotional ROI is Almost as Effective as Pre-COVID-19 Levels;
Use Promotions Strategically to Drive Highest Return and Truly Incremental Sales
Promotion Effectiveness Index vs. 2019
Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 L8
110 103
85 87 95 96
Opportunities
2019
Avg. Analyze promotional
1.45 1.59 1.23 1.27 1.49 1.38 1.40 effectiveness to identify
E D I B L E micro opportunities at
account, shopper-segment
117
90 94 100 91 96 levels to reduce discount
while maintaining lift.
2019
Avg. Assess return by event and
1.84 2.14 1.65 1.72 1.84 1.68 1.77 direct investment to
N O N E D I B L E highest ROI events.
Indicates 1.8x return from incremental
sales over promotional markdown costs
Promo Effectiveness Index Calculated as: ((Dollars Invested in Promo markdown/ total Dollar Sales) in Current Time Period / 2019 Average)*100. Source: IRI data ending 5/16/21 POS, Grocery.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 22Reduced Assortment During COVID-19 is Mostly Recovered; Retailers
and Manufacturers Will Likely Continue to Seek Reduced Complexity
% Change in Avg. Weighted Wkly Assort. Selling vs. 2YA MULO
COVID-19 2020 Post COVID L4 Weeks
Liquor +12% +8%
Stock-Up
Snacks -2% +4%
Period
CSD -4% -2%
5
Fz. Fruit -10% -2% Opportunities
Edible Work with retailers
0 that are simplifying the
shelf set and ensure that
your portfolio gets the
Nonedible
-5 right placement.
Ensure innovation
2020 Post COVID L4 Weeks
-10 Nutrition +2% +8% is incremental to
Health Remedies -11% -4%
HH Cleaning -16% -6%
the category and
Paper Products -39% -19% brand portfolio.
-15
Tailor assortment to
01-26-20
02-23-20
03-22-20
04-19-20
05-17-20
06-14-20
07-12-20
08-09-20
09-06-20
10-04-20
11-01-20
11-29-20
12-27-20
01-24-21
02-21-21
03-21-21
04-18-21
05-16-21
new digital and
omnichannel shoppers.
Note: Dollar-weighted average change across categories for edible / non-edible. Source: IRI POS data ending 5/16/21. IRI PTA engagements.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 23Communicate and Innovate on Relevant Attributes +/- 0 to 10 ppts
and Benefits that Matter to Consumers +/- 10 ppts or more
Accelerating Product Claims in Edible and Example Innovations – F&B L52 Size
Immune Support Organic Antioxidant Plant Protein Ketogenic
Δ % chg. vs YA
L8 vs. Prior Period
$521MM $14.6B $2.9B $65.8B $66.2B
Example Innovation
Mountain Dew Rise Annie’s Peel-A-Parts Bai Boost Beyond Sausage Wonderworks Keto
Friendly Cereal
Electrolyte Whole Grain Low Sugar Pre / Probiotic Gluten Free
Δ % chg. vs YA $5.2B $6.3B $19.9B $2.5B $240.9B
L8 vs. Prior Period
Example Innovation
Reign belVita Rebel Ice Cream Bragg Refresher Hu Grain-Free
Total Body Fuel Lemon Poppyseed Cookies
To learn more about Innovations, read New Product Pacesetters 2020. Note: Innovations launched within the last 52 weeks.
Source: IRI POS data ending 5/16/21, Prior Period 8 weeks ending 3/21/21, MULO. Label Insights Attributes, Health and Wellness Claims.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 24As E-Commerce’s Presence Sticks, CPGs Must
Continue to Invest in the Increased Role of Digital
Dollar % Share of E-Commerce in Omnichannel
34.4 ~35.0
33.1 33.5
31.2
Opportunities
23.8
After gaining significant new
omnichannel buyers during
COVID-19 peaks, one grocery
~12.0
9.5
10.7 11.2 10.7 retailer continues to see a high
6.1 rate of retention among
converted omnichannel buyers
2019 2020 Q4 Q1 Q2 H2 2021 2019 2020 Q4 Q1 Q2 H2 2021
while new buyers trying digital
2020 2021 2021 (F) 2020 2021 2021 (F) shopping returns to
Edible CPG Nonedible CPG pre-COVID-19 levels.
“We pulled forward demand by 3-4 years based on the way that customers already engaged in digital over
CPG retailers and manufacturers
the last 12 months. There is going to be some normalization this year. From there, we're building to the must continue to invest in online
commitment of doubling the business over the next few years. In [FQ1 2021], we reduced the amount platforms to retain omnichannel
of time taken to pick a digital order by 5% and increased media revenue per digital basket by 33%.”
shoppers and carefully curate the
-- Kroger FQ1 earnings call, 6/17/21
online vs. in-store experiences.
Note: Based on 205 CPG categories currently tracked in e-commerce. Estimated 2020 e-commerce share for all CPG categories is 7.8% for edible and 22.3% for nonedible, accounting for $175B total CPG
ecommerce sales. E-commerce data is based on projected receipt-based sample and reported data with varying levels of granularity and accuracy available. Source: IRI Omnichannel, data ending 06/13/21
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 25Implications for CPG Manufacturers and Retailers
• Be adept at detecting shifts in consumer needs and preferences and leverage information, including unconscious and
Consumer unarticulated needs, in addition to search, social media and purchase data.
• Segment omnichannel users to target products, solutions and services to meet a variety of consumer needs.
• Build unique in-store and online experiences to drive traffic, encourage discovery and impulse and increase occasion-
based purchases.
Pricing & • Monitor price elasticity at a granular level with high frequency to capitalize on pricing opportunities as demand and supply evolve.
Promotion • Continuously track promotional effectiveness and direct investments to efforts that deliver the highest returns.
• Understand channel and consumer price-pack opportunities and assess potential evolution, especially with e-commerce vs. in-store.
• Ensure adequate opening price points and value products, while driving sales of premium and super-premium products.
• Understand the effect of pricing and promotion on specific shopper segments, and tailor strategies to different cohorts to
drive penetration and incremental revenue.
Assortment & • Understand brand trust, emotional connection and brand experiences and build on key strengths.
Innovation • Determine which preferences are must-haves using advanced analytics and algorithms from actual purchases of millions
of shoppers across broad demand spaces to ensure that innovation is incremental to the category and brand portfolio.
• Innovate on trends that last and cater to different occasions and price points.
• Work with retailers that are simplifying the shelf set to ensure that products get the right placement.
• Maintain focus on the right products, right vehicles, and right segments and audiences that are most responsive to media.
Marketing • Invest in digital and social media that continue to maintain strong ROIs and retailer media that fits with brand objectives.
• Articulate product attributes, so consumers understand benefits and are willing to pay the right price. Leverage trade-off
models to understand which benefits matter to consumers.
• Build baskets for holidays and events, in partnership with retailers, to cater to store- and omnichannel shoppers.
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 26Mark Clouse Stuart Aitken Vivek Sankaran
President and CEO, Campbell Soup Company Chief Merchant & Marketing Officer, The Kroger Co. President & CEO, Albertsons Companies
November 10, 2020 September 3, 2020 August 25, 2020
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 27IRI’s Latest CPG and Retail Insights Reports to Manage the Impact of COVID-19
Discovering Pockets The Changing Shape of COVID-19 Emerging Recession Proof IRI COVID-19 Impact
of Demand the CPG Demand Curve Point of View Your Business Assessment Reports
5. Revenue Growth in an 15. Opportunities to Attract SNAP 5. COVID-19 Vaccine Update: 7. Defending and Recapturing 5. Anticipating Life After
Inflationary Environment Shoppers Impact on CPG Industry the Shelf COVID-19
4. Winning in CPG E-Commerce 14. Vitamins, Minerals, Supplements 4. Anticipated Vaccine Adoption & 6. Innovation Lessons From the 4. Consumers Provide a Pessimistic
3. Innovation for a Post- 13. America Is Ready for Football Impact on the CPG Industry Great Recession to Apply Today View of Coming Months
Pandemic World 12. Revenue Management 3. Potential Impact of Reduced 5. Building Brands During 3. Tracking the Dramatic Pivot
2. Harness Growth in 2021 Opportunities in a Pandemic Unemployment Benefit Changes Recessionary Times of U.S. Consumer and
on F&B Spending 4. Recessionary Lessons to Shopper Behavior
1. The Premium Opportunity 11. Home for the Holidays
2. Consumer Stimulus, Apply to Private Label Today 2. Then and Now: Consumer
10. Powering the Future of Unemployment Benefit Spending CPG Behavior During Economic
Convenience Retail 3. How Big Brands Performed
IRI Leaderboard & Shopping Behavior During the Great Recession Downturns
9. Reignite In-Store 1. The Impact of a Second Round 1. COVID-19: Impact on CPG
Merchandising in Grocery 2. Maintaining Pricing Discipline
of Stimulus on the CPG Demand During a Recession and Retail
8. SNAP Benefits Curve
7. U.S. CPG Growth Leaders 1. How the Great Recession
Reshaped CPG Demand Curve
6. E-Commerce
5. Boomers
4. A Global Perspective
2. Q1 2021 Emerging Growth 3. Tracking Transformation
1. Year-End 2020 Trends, 2021 2. Meat and Millennials
Emerging Growth Pockets
1. Anticipate the Future
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 28CPG Economic Indicators
Access IRI’s industry-standard metrics for consumer product demand and supply
during the pandemic, our CPG inflation tracker and the latest data on category
trends, out-of-stock levels, consumer sentiment and more.
U.S. Demand Channel Shift E-Commerce
Demand Index™
Index™ Forecasts Index™ Demand Index™
Inflation Out-of-Stock Levels U.S. Topics from
Supply Index™
Tracker™ for Subcategories IRI Social Pulse™
The IRI CPG Demand Index™ provides a standard metric for tracking
changes in spending on consumer packaged goods.
U.S. Demand Index™ Forecasts are delivered through a proprietary,
fully automated forecasting solution that anticipates consumer demand.
Channel Shift Index™ provides a standard metric for tracking changes (migration)
in spending on consumer packaged goods across select channels.
The IRI E-Commerce Demand Index™ provides a standard metric for tracking changes
in spending on consumer packaged goods purchased online.
Inflation Tracker™ provides the well-known price per unit metric for tracking changes in pricing of consumer packaged goods.
Supply Index™ provides a standard metric for tracking changes in product availability (i.e., in-stock rates) in stores for consumer packaged goods.
Out-of-Stock Levels for Top-Selling Subcategories by Market Area in the U.S.
Top U.S. Topics from IRI Social Pulse™
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 29Want to Be the First to Know?
www.iriworldwide.com/en-US/Insights/Subscribe
Registered Users Get New Thought Leadership
from IRI’s Research, Data & Analytics Experts
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 30IRI Global Headquarters
CONTACT US 203 N. LaSalle St., Suite 1500
Chicago, IL 60601
FOR MORE IRI@IRIworldwide.com
+1 312.726.1221
INFORMATION Follow IRI on Twitter: @IRIworldwide
© 2021 Information Resources Inc. (IRI).
© 2021 Information Resources Inc. (IRI). Confidential and Proprietary. 31 31You can also read
