Brand Growth: A Playbook for 2023 and Beyond - Discovering Pockets of Demand November 2022 - IRI
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Discovering Pockets of Demand
Brand Growth:
A Playbook for
2023 and Beyond
November 2022
© 2022 Information Resources Inc. (IRI). Confidential and proprietary.
Food and Beverage At-Home Consumption Remains
Resilient in Aggregate, Despite Rising Inflation
Total U.S. Omnichannel Retail Sales Trends / % Change vs. YA
At Home F&B (incl. fresh) Nonedible CPG (excl. Tobacco)
2019 2020 2021 2022 YTD
14.1 16.1
7.8 8.7 9.2
2.9 4.7 3.6
DOLLAR SALES
10.8 8.8
3.6 3.2 4.2 4.9 4.6
1.8
PRICE PER VOLUME / MIX
10.5 11.4
1.1 1.1 3.1
0.4
-1.3 -2.0
ESTIMATED VOLUME SALES
Unit Sales +1.0 +0.7 +8.2 +9.9 -1.0 +1.2 -2.9 -2.1
Note: Omnichannel based on POS data for majority of sales (MULO+C), and estimated panel-based data for non-reporting retailers
primarily consisting of Amazon.com, Costco, direct-to-consumer and specialty retailers. Price/mix and estimated volume
is dollar-weighted change across categories. Source: IRI Omnichannel data ending 10/30/22. IRI Client Engagement. 2
2023 is Likely to See More Shift to At-Home Food, While Prices May
Hold In Healthy Economic Conditions or Increase Further Next Year
Expected Conditions in 2023 Driving CPG Outlook
Macro Environment
• A range of economic scenarios with potential for low-moderate economic growth
• Potential downside scenarios (e.g., persistent high inflation) with greater impact on
increasing consumer price elasticity
Price / Mix
• Continued volatility in commodity prices due to climate and trade issues
• “Stickiness” in price increases due to built-up cost pressures and
unwillingness to reduce prices due to uncertainty ahead
• Consumer trade-down may drive increasing promotion
Volume Consumption
• Greater recovery of away-from-home breakfast and lunch due to reduction in
at-home work as more employers demand office presence
• High inflation pushes more meals at-home
• Trading down to more value products, lower-priced retailers, etc.
• Compression in total food as consumers use more leftovers, cut back, etc.
Source: IRI perspectives. 3
Retail F&B is Likely to Drive Less, But Still Strong Growth
in 2023 from Price / Mix, While Volumes Should Decline Further
Retail F&B Forecast / Omnichannel
Historical
Baseline 2020 2021 2022 2023 F
13.3
8.7
5 – 7%
2.0 – 3.0 3.1
DOLLAR SALES
11.0
7 – 9%
3.7 4.8
1.5 – 2.5
PRICE PER VOLUME / MIX
9.3
0.4 - 0.6
-1.7 -2.0 0 – -3%
EST. VOLUME SALES
Note: Historical baseline based on 2010-2019. 2022 based on data ending 10/30/22. Source: IRI Client Engagement. 4
Billion Dollar Brands Have Been Losing Share Over the Past
Decade to the Benefit of Small and Private Label Brands
F&B Share by Brand Size | Dollar Sales, MULO+C
Dollar Sales % Share
Change Change
Brand Size $459B $499B $514B $525B $537B $608B $623B $664B
’12-’21 L52 v
’12-’21
19.2% 19.4% CAGR YA
$1B+ 20.6% -0.5 20.0% +0.2 20.2% -0.4 19.9% -0.2 19.7% -0.5 +0.3 19.5% -0.1
2.7% 7.7% -1.2%
$400MM 21.3% 21.4% 20.9% 20.3% 20.2% 20.1%
21.1% +0.2 +0.5 21.8% -0.4 -0.5 -0.5 -0.1 -0.1
-$1B
2.7% 7.5% -1.0%
$100- 22.6% 22.3% 21.8% 21.6%
21.5% +0.7 22.1% +1.0 23.1% -0.1 23.0% -0.3 -0.4 -0.4 -0.3
$400MM
3.2% 6.4% 0.1%
Unique Challenges of Recent Years Spurred Brands to Respond
and Adapt to Large-Scale Shifts in Consumer and Retailer Needs
Timeline of Pre-COVID-19 to Present
PRE-COVID-19 PRE-STOCK-UP / LOCKDOWN REOPENING INFLATION / RECESSION
• Threat of OOH occasions • Overnight e-comm shift • Prolonged supply chain • Rising COGS
• Competitive pressures within • Distribution issues due to issues • Consumers switching to
each category supply chain constraints • Channel switching away large format channels
• Social media and the rise of • Unpredictable consumer from convenience & drug • Wallet tightening as
Gen Z purchase power behavior recession looms
Shopper Patterns Shopper Patterns Shopper Patterns Shopper Patterns
Pre-COVID-19, with a booming During stock-up period, With the country reopening, As inflation worsened, shoppers
economy, shoppers were using shoppers were cooking more shoppers couldn’t find many of noticed rising prices of products
their extra income to dine out and therefore buying more their usual brands in store, they frequently buy, creating
more often, spending less on supplies they didn’t ordinarily forcing them to switch brands decisions on where to cutback
groceries use, to keep from boredom and order from Amazon
Source: IRI Consulting Analysis. 6
THE KEY QUESTION
What is the playbook for
brand growth in 2023+?
7
Key Strategies Helped Propel Success Among the Top 40 Brands
IDENTIFY LEVERAGE FILTER PRIORITIZE
the thousands POS and Panel out the 112 the top 40 that
of Food and to calculate brands that drove growth
Beverage year-over-year saw growth in in total Food
brands with dollar share both metrics and Beverage
>$100,000 and penetration during all four
in annual growth for each time periods
dollar Sales brand during
each of the four
time periods
8
Smaller, More Agile Brands Gained Share and
Penetration Throughout Challenging Times
Top 40 Brands Gaining Share and Penetration by L52 Size
Small – Mid-Sized Brands Large Brands
$1B in L52
Source: IRI Consulting Analysis. Total US – MULO+C POS Data Ending 09/04/2022. Agile Brands are defined as brands that outperformed Edible in Dollar Sales and grew penetration, across all relevant time periods. 9
Building Equity via Experience or Wellness
Resulted in Price Leverage Against Rising Costs
Commonalities Among Top 40 Brands
EXPERIENCE WELLNESS
FLAVOR BFY
ETHNIC PROTEIN
INDULGENT CO-OP
Source: IRI Consulting Analysis. Agile Brands are defined as brands that outperformed Edible in Dollar Sales and grew penetration, across all relevant time periods. 10Specific Tactics Employed, Both in the U.S. and Internationally, Spurred Success
Brands Selected for Case Studies
TOP PERFORMERS IN THE U.S. TOP PERFORMERS INTERNATIONALLY
Mid-Sized
Brands
Mid-Sized Large
Brands Brands
LESSONS BEYOND FOOD & BEVERAGE
Large OTC
Brands Brands
Source: IRI Consulting Analysis. Top performers are defined as brands that outperformed Edible in Dollar Sales and grew penetration, across all relevant time periods. 11MID-SIZE BRAND | TOP PERFORMER
Celsius Differentiated Itself From Competitors by Becoming More Than
an Energy Drink, Highlighting Overall Wellness Benefits Like Fat Burning
Celsius Overview | Dollar Sales, L52 Ending 09/04/2022, Total U.S. – MULO+C
Unlike most other energy brands, Celsius is marketed as an exercise / healthy lifestyle drink.
It also highlights metabolism and fat burn benefits.
Celsius has an extensive list of H&W claims, lending itself
as a healthy lifestyle focused brand.
Pre-COVID-19 Growth: +66% When some consumers wanted to
Inflation / Recession Growth: +174% exercise while gyms were closed for
Founded in 2004, Celsius’ corporate lockdowns, they found the “Sweat with
mission is to become a global leader with Celsius” Instagram series and became
products that offer significant health benefits. loyal consumers of the brand.
Source: IRI Consulting Analysis. Total US – MULO+C POS Data Ending 09/04/2022. 12MID-SIZE BRAND | TOP PERFORMER
Consumers Were Willing to Pay More for
C4’s Products Featuring Mars Candy Flavors
C4 Case Study | Dollar Sales, L52 Ending 09/04/2022, Total U.S. – MULO+C
C4 offers pre-workout health
benefits aimed at consumers
focused on weight lifting,
which is also pronounced in
its popular Whey Protein
products
Top C4 flavors are based
on popular candies:
Frozen Bombsicle Starburst Strawberry Skittles Original
Zero Sugar 16 oz. No Sugar 16 oz. Zero Sugar 16 oz.
Pre-COVID-19 Growth: +735% Before a workout, many look for extra
Inflation / Recession Growth: +164% energy, and if a product also allows a
Founded 15 years ago, C4’s corporate consumer to enjoy the flavors of his
mission is to become the “best sports favorite candy without an additional
nutrition brand in the world.” candy purchase, it will greatly enhance
the value during inflationary periods.
Source: IRI Consulting Analysis. Total US – MULO+C POS Data Ending 09/04/2022. 13LARGE BRANDS | TOP PERFORMER
Red Baron’s More Indulgent Offerings Ensured Families
Could Still Enjoy Pizza Night During the Pandemic
Red Baron Case Study | Dollar Sales, Average Weekly Items, L52 Ending 0d, Total U.S. – MULO+C
20
Red Baron took advantage
Avg Weekly Items
15
of competitive OOS issues
during COVID-19, and has 10
continued to steal shelf 5
Red Baron Competitor PL
space since 0
2019 2020 2021 2022
Red Baron’s main offerings
have little differentiation to
other top frozen pizza brands, L52 Sales:
L52 Sales:
L52 Sales:
highlighting how their $428M
$202M
$70M
17-19 CTG: 4%
distribution advantage drove 17-19 CTG: 56%
L52 CTG: 28%
17-19 CTG: 5%
growth for the brand L52 CTG: 23% L52 CTG: 29%
Pre-COVID-19 Growth: +11% When “stay-at-home” orders closed
Inflation / Recession Growth: +20% their favorite pizzerias, many families
In 2018, Red Baron was acquired by S. Korean were able to maintain their pizza night
Company CJ Foods, expanding the company’s with Red Baron’s consistent shelf
reach in the US. Despite its large jump during presence and wide variety of flavors to
COVID-19, it was able to maintain its growth. give their children their favorite toppings
Source: IRI Consulting Analysis. Total US – MULO+C POS Data Ending 09/04/2022. 14LARGE BRANDS | TOP PERFORMER
Tillamook Edges Out BFY Brands With a Focus on Ingredient
Quality and a Strong Presence in Dairy Categories
Tillamook Case Study | Dollar Sales, L52 Ending 09/04/2022, Total US – MULO+C
Although Tillamook’s cheese Tillamook takes pride in its
is its largest category, ice mission to “Do right by the
cream drives growth (49%), land, our farmer families,
while only making up 22% and the communities in
of the portfolio. which we serve.”
By offering free tours (including virtual tours)
at its creamery in Oregon, Tillamook builds
transparency and integrity with consumers.
Pre-COVID-19 Growth: +9% While many families could not take their
Inflation / Recession Growth: +11% kids to their local ice cream shop during
Tillamook is a BFY/premium dairy co-operative, lockdowns, they wanted to at least give
available in several dairy categories. Additionally, their children a high-quality, almost
they recently became a B-Corp, signifying its luxurious, snack they enjoyed, and
devotion to environmental sustainability. they were willing to pay more for it.
Source: IRI Consulting Analysis. Total US – MULO+C POS Data Ending 09/04/2022. 15MID-SIZE BRAND | TOP PERFORMER
Jarritos Continues to Win Through Flavor-Forward Sodas, Providing
Ethnic and Tropical Variety, as Well as Low Shelf Prices Through Singles
Jarritos Case Study | Dollar Sales, L52 Ending 09/04/2022, Total U.S. – MULO+C
Jarritos is flavor forward including unique
flavors like Tamarind, Guava, Mango,
Jamaica, Mexican Cola and its assorted
pack. These flavors account for 23% of
sales, but 28% of growth in the last year.
Jarritos assorted pack is driving growth for
the brand. Variety pack flavors vary by the
season to give the consumer a more
specialized experience.
Pre-COVID-19 Growth: +16% With shoppers having to make
Inflation / Recession Growth: +34% decisions where to cutback, rather than
Jarritos originated in Mexico and did not buying a six-pack of Coca-Cola or
come to the U.S. until 1988. The brand did Pepsi, a single bottle of Jarritos was
not label its original bottles, letting the color enough to meet their needs at a
of drinks inform the consumers on flavor. reasonable price.
Source: IRI Consulting Analysis. Total US – MULO+C POS Data Ending 09/04/2022. 16MID-SIZE BRAND | AUSTRALIA
To Offset Recent Inflationary Price Increases, PepsiCo’s Premium Red
Rock Deli is ‘Elevating-the-Ordinary’ Through Its New Flavor Profiles
Red Rock Deli – Australia Case Study | Dollar Sales, % Households Buying
RRD has successfully entered RRD’s largest, best-selling SKUs RRD launched a super-premium
adjacent-to-core categories, are also recording out-sized “Chef Series” with a celebrity chef
most recently dips, with growth, as new lines complement tie-in, proving incremental to brand.
secondary locations. existing flavor profiles.
L52 Sales: $239MM During lockdown, when many
L52 vs. YA: +19% were getting tired of the same
In Australia, Red Rock Deli (RRD) is PepsiCo’s snacks; Red Rock Deli gave
premium chip brand, with dollar sales growth 6x+ consumers the opportunity to
higher than the AU packaged grocery average, try a variety of new flavors with
and 3 successive years of HH Penetration gains. its releases.
Source: IRI Australia POS data ending 03/07/22 and IRI Australia Shopper Panel, MAT To 14/08/22 17LARGE BRAND | EUROPE
Lindt and Sprungli Leverages Innovations, Seasonal Launches
and Media Campaigns to Create Deeper Consumer Connections
Lindt – Europe Case Study | Dollar Sales, E-Commerce Lifts
Lindt has been able to
capitalize on seasonal
offerings, driving
incrementality and they Made from all Vegan and
are adapting to changing parts of sugar-reduced
consumer needs. cocoa fruit options
By developing its online trade
with SEO campaigns during 200%
201.18%
holidays, Lindt has improved its Increase in revenue across all users
revenue and traffic. 100%
222.92%
0% Increase in revenue from organic traffic
CHF Revenue: $5B Lindt & Sprüngli had 14% value sales
Operating Profit Margin: 15% growth thru 2021 in UK, GER & ITALY
Lindt Chocolate’s Santas have become a by adapting products to meet evolving
holiday staple, and, despite price increases, consumer needs, launching new
tradition drives continued consumption. products, developing online trade and
executing on leader products.
Source: IRI Consulting Analysis. 18LARGE BRAND | NON F&B
Mucinex is a Strong Example of Building Brand Equity
in Nonedibles Outside of Traditional Channels
Mucinex Case Study | Dollar Sales, PPU, L52 Ending 09/04/2022, Total U.S. – MULO+C
PPU: PPU: PPU:
Most of Mucinex’s packs $14 $16 $25
have higher tablet counts,
leading to higher prices.
However, the company
recently created a 7-count
pack, allowing the brand to
enter the Dollar Store and
reach a new consumer type.
Pre-COVID-19 Growth: +2% Shopping for deals, visits to the the
Inflation / Recession Growth: +39% local dollar store grew more frequent
Mucinex has been able to extend reach during inflation, and Mucinex provided
of its cough and sinus release products a newer, lower-priced, single
through different pack sizes, leading to incidence pack to meet the specific
growth for the brand. needs of that shopping occasion.
Source: IRI Consulting Analysis. Total US – MULO+C POS Data Ending 09/04/2022. 19Manufacturers Must Continually Strengthen Brand Equity
and Leverage Their Distribution to Succeed
Key Learnings from Case Studies
Large brands should leverage
TO-DO’S
supply chain advantages to Remain focused only
maintain a consistent shelf presence on the core, limiting
expansion opportunities
Maintain ingredient
transparency and integrity Simply take price without
strengthening the brand equity
Take advantage of current wellness of the product / brand
NOT TO-DO’S
trends through BFY claims
Stay focused on the brand
Leverage well known brands / legacy when the market and
flavors (e.g., Skittles, Starburst) consumer evolves
to attract consumers
Use appropriate external
Oversaturate retail shelves
influences (e.g., celebrity
without building the underlying
chefs, seasonal holidays) to
demand
strengthen brand equity
Source: IRI Consulting Analysis. Top performers are defined as brands that outperformed Edible in Dollar Sales and grew penetration, across all relevant time periods. 20Three Steps to Propel Manufacturer Success
ACTION 1 – Create Leverage
1 Build brand equity when taking price
ACTION 2 – Drive Broader Appeal
2 Expand into adjacent-to-core categories,
complementing top flavors
ACTION 3 – Leverage Smaller Umbrella Brands
3 Demonstrate ingredient and source transparency
when appropriate
21IRI’s Growth Consulting Team Can Help Manufacturers Put These
Recommendations into Action Through Three of Our Main Offerings
Continually strengthen and
capitalize upon brand equity via
Portfolio price, promo, pack architecture,
Profitability position, and product innovation.
Prioritize the strongest growth
opportunities, de-risking
Growth expansion into adjacencies,
Planning physical spaces, and flavors.
Shore up gaps in the
offering set when organic
M&A growth is less feasible or too
Strategy slow to meet objectives.
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