CAPTURING CPG AND RETAIL GROWTH IN 2020 AND 2021 AMID A COVID-19- ALTERED WORLD - COVID-19 and Navigating the Path Ahead - IRI
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COVID-19 and Navigating the Path Ahead CAPTURING CPG AND RETAIL GROWTH IN 2020 AND 2021 AMID A COVID-19- ALTERED WORLD July 9, 2020
SECTION 1
Level Setting
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2
Online and Food and Beverages Stores are the Bright
Greater increases in
Spots in U.S. Retail; Foodservice Recovering in May spend for younger
generations
U.S. Retail Sales $B by Store Type, February - May 2020 (Millennials, Gen Z)
vs. Boomers in early
-7%
$557 B -15% +17% May vs. reopened states2
Feb. Index
$516 B $513 B
$439 B
269 Pent up demand for cars,
All Other Retail1 219
(48%)
(43%)
228 85 furniture, apparel, etc.
(45%)
176
(40%) Online sales continue
Health & Personal 32 (6%) to rise despite store
30 (5%) 27 (5%) 90
Care Stores
69 72 27 (6%) re-openings
Non-Store Retailers 86
(e.g., Online) (12%) (14%) 79 125
(17%)
Gen Merch Retailers 60 65 (18%) Foodservice is at 60%
60
(11%) (13%)
56 (13%) (12%) 99 of February level
Food Service & 65 46 (9%) and accounts for 35%
Drinking Places (12%) 30 (7%) 39 (8%) 59
64 82 71 73 of food retail sales
F&B Stores
(12%) (16%) (16%) (14%) 113 vs. 50% in February
February March April May
Source: U.S. Census Retail Trade advanced estimates seasonally adjusted. IRI Consulting analysis.
1.Includes Auto, Gas, Furniture, Building Materials, Clothing, Electronics, and Sporting retailers. 2. JP Morgan Chase Consumer Card Spending Tracker.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 3
At-Home Edible Sales Continue to Grow in Double-Digits,
Along with Accelerating Price / Mix Across CPG
U.S. CPG Retail Sales Growth in Measured Channels (MULO+C)
Total Store – 2020 Edible – 2020 Nonedible – 2020
32.4 36.6
Dollar Sales % 13.6 13.3 10.6 19.5 17.9 13.9 25.3
Change vs. YA 2.3 1.7 2.6 2.0 1.8 1.4 3.4 5.4 5.0
Price / Vol1 % Change
vs. YA 2.5 2.3 1.7 4.0 4.9 5.2 1.8 1.7 1.1 3.6 4.6 5.0 3.7 3.4 2.9 4.7 5.3 5.4
Price / Unit % Change
2.8% 2.4% 3.1% 6.3% 6.8% 6.5% 2.6% 2.5% 5.0% 9.8% 9.6% 8.6% 3.6% 2.3% 2.3% 3.4% 4.7% 4.7%
vs. YA
30.2 35.1
Volume1 Sales % 15.4 12.7 21.8
Change vs. YA
9.3 8.0 5.2 0.8 0.3 8.4 0.1
-0.2 -0.6 -1.8 -2.0 -1.3 -0.4
Unit Sales %
Change vs. YA -0.4% -0.6% 28.4% 6.8% 6.0% 3.9% -0.1% -0.5% 30.2% 8.8% 7.6% 4.9% -1.7% -1.0% 22.5% 0.0% 0.7% 0.3%
CY Jan + CY Jan + CY Jan +
Mar Apr May June Mar Apr May June Mar Apr May June
2019 Feb 2019 Feb 2019 Feb
1. Dollar-weighted average change across categories. Source: IRI POS data Total U.S. MULO+C ending 6/28/20.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 4
Consumer Shift to Larger Pantry-Stock Trips Continues; Online,
Dollar and Grocery Channels are the Winners
IRI CPG Demand Index: Total Store
4 WE 1/26/20 4 WE 2/23/20 4 WE 3/22/20 4 WE 4/19/20 4 WE 5/17/20 4 WE 6/14/20
Total US - All Outlets 101 105 125 95 101 98
Total US – GroceryX 100 105 133 102 103 100
Total US - Drug 96 94 111 80 82 87
Total US - MassX 88 94 111 72 79 82
Trips
Total US - Club 104 106 127 94 104 100
Total US - Dollar 103 105 136 99 105 100
Total US - Walmart Total 103 106 115 86 90 89
Total US - Dollar General 115 117 157 127 127 115
Total US - All Outlets 99 99 109 122 121 116
Total US - GroceryX 99 98 109 126 124 118
Total US - Drug 104 106 112 115 116 111
$ per Trip
Total US - MassX 105 93 112 118 112 112
Total US - Club 96 97 106 119 119 112
Total US - Dollar 100 100 117 127 123 114
Total US - Walmart Total 99 98 109 121 123 118
Total US - Dollar General 99 99 113 118 121 113
eCommerce 134 127 155 185 189 175
$
Source: IRI Consumer Network Panel , IRI eMarketing Insights data ending 6/14/20.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 5
In the U.S., Higher Price / Mix Is Partly Driven by Larger Packs, United
While Volume Drives Majority of Increase vs. Pre-COVID-19 States
U.S. Inflation Index (Price/Unit), Price/Volume, Unit Growth, Volume Growth – Index vs. YA
Pre-COVID 06.14 vs. pre-
Department Measure 4 WE 03.22 4 WE 04.19 4 WE 05.17 WE 05.24 WE 05.31 WE 06.07 WE 06.14
8 WE 2.23 COVID-19
Edible Price/Unit Index
+6
(Inflation Index) 102 103 107 109 108 108 108 108
Positive delta Price/Volume Index 102 102 104 105 105 105 106 105 +3
signifies consumers
Price Index Delta 1 1 3 4 3 3 2 3 +2
buying larger pack
sizes Unit Growth Index 99 135 114 115 110 108 106 106 +7
Volume Growth
Index 100 136 117 119 113 111 108 108 +8
Price/Unit Index
(Inflation Index) 102 102 102 104 104 105 105 105 +3
Price/Volume Index 103 103 104 107 106 106 106 106 +3
Nonedible Price Index Delta -1 -1 -2 -3 -2 -1 -1 -1 -
Unit Growth Index 99 129 100 104 102 99 97 100 +1
Volume Growth
Index 98 129 98 102 100 98 96 100 +2
Example / Cookies Pre-COVID-19 Post-COVID-19 WE 06.14
Cookies price per unit increased at a faster rate than Price/Unit Index (Inflation Index) 103 109 108
price per volume post-COVID-19, indicating a shift to Price/Volume Index 102 102 103
large pack sizes. Shift decelerates slightly in recent Price Index Delta 1 7 5
periods, while price per volume has risen slightly. Unit Growth Index 98 103 97
Volume Growth Index 99 111 101
Source: IRI Inflation Tracker MULO+C, IRI POS Data week ending 6/14/20. IRI Consulting Analysis
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 6
In the U.S., Increased Demand Is Benefiting Smaller
Manufacturers More as They Pick Up Distribution Smaller manufacturers
are gaining distribution
% Share of Total Store Sales by CPG Manufacturer Size / and velocity as larger
Total U.S. Measured Channels (MULO+C) manufacturers face
supply constraints
vs. YA vs. YA vs. YA vs. YA and/or focus on
Private Label 15.6 +0.3 16.1 16.7 16.0
core lines in the face
+0.3 +1.1 +0.7
of high demand.
Extra Small 8.6 +0.1 8.6 +0.1 8.3 -0.2 9.2 +0.5
Small 12.6 +0.1 12.6 +0.1 12.7 +0.1 13.2 +0.7 Large manufacturers
see growth as they gain
Medium 16.0 +0.1 16.0 -0.1 15.9 -0.1 16.1 +0.1 velocity, with a
slight decline in
distribution points.
Large 47.1 -0.7 46.7 -0.4 46.4 -0.9 45.5 -2.0
Greater growth seen for
small and medium
manufacturers in edible
2019 2020 Pre-Peak 2020 Peak 2020 Post-Peak vs. nonedible categories.
Note: Large is $5.5B+ in L52W, Medium $1-$5.5B, Small $100M-$1B and Extra Small
SECTION 2
Where We Are Now
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 8
The U.S. Has Not Entered the Rapid-Recovery Phase
That Other Countries Have Experienced
Trajectory of World COVID-19 Confirmed Cases (2020-06-24)
Some countries with rapid declines recently experienced small bounce-backs in new cases (HK, Australia,
S. Korea, China). New cases in the U.S. have now put the country in a new phase of re-acceleration.
Source: RBC Biotechnology Equity Research, Dr. Aatish Bhatia
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 9
Across U.S. States, CPG Demand Is Growing at a High United
Rate Even in States Where Consumers Are More Mobile States
CPG Demand Index vs. Change in Mobility by State / 4 WE June 14, 2020
17%
16% Arizona
New Mexico
15%
Michigan
CPG Demand Index vs. YA
14%
South Carolina Rhode Island Kentucky
Indiana Pennsylvania
13% Arkansas
North Carolina Ohio California
Virginia West Virginia New Hampshire
12% Maryland
Georgia Wisconsin Oregon
11% Alabama Louisiana Vermont Oklahoma
Missouri
Washington Nevada
Massachusetts Connecticut Tennessee
10% Colorado Texas
Utah Minnesota
9% New York
Florida Maine
8% Illinois South Dakota
7%
6%
5% Wyoming
4%
-12.5% -12.0% -11.5% -11.0% -10.5% -10.0% -9.5% -9.0% -8.5% -8.0% -7.5% -7.0% -6.5% -6.0% -5.5% -5.0% -4.5%
Average Change in Mobility1 (June vs. Pre-COVID-19 baseline)
Indicates more mobility
1. Google Mobility Report -1*Residential (time spent at home) % Chg. from pre-COVID-19 baseline (Jan 3-Feb 6, 2020). Source: Google Mobility data, IRI Demand Index. IRI Consulting analysis.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 10Around 30 States Are Seeing
Increasing Case Counts
WA
In some states, the ME
MT ND
increases are moderate VT
OR
(Colorado, Delaware, MN
WI
NH
ID SD NY MA
Michigan), but most MI CT RI
WY
states, especially those
IA PA NJ
in the south, including NE
OH
NV IN MD
Texas, Florida, Arizona, UT
IL
WV
DE
CO
Louisiana, Nevada, CA
KS MO
VA
KY
Mississippi, South
NC
Carolina, Arkansas, are AZ
TN
OK
seeing surges. NM AR
SC
MS AL GA
TX LA
FL
DECREASE FLAT INCREASE
Source: New York Times, RBC Capital Markets
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 11Situations Vary By State
Several states in the South, Southeast, and Southwest have alarmingly high test positive rates, indicating
the states are either testing only the sickest patients (testing constrained) and/or high incidence of infection.
The combined population of
these states is over 80MM
people, representing about
a quarter of the U.S.
Source: The COVID Tracking Project, RBC Capital Markets
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 12Several States Have Paused Reopening Plans or
Begun Reversing Them
WA
Texas and Florida have ME
MT ND
re-closed bars after VT
OR
cases surged; California MN
WI
NH
ID SD NY MA
ordered bars closed in MI CT RI
WY
LA and seven other
IA PA NJ
counties, with more than NE
OH
NV IN MD
a handful of others UT
IL
WV
DE
CO
being watched for CA
KS MO
VA
KY
possible re-closure.
NC
TN
AZ OK
NM AR
SC
MS AL GA
TX LA
FL
REOPENED /
PAUSING RE-CLOSING
REOPENING
Source: New York Times, RBC Capital Markets
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 13As Cases Surge, Some Grocery Stores Are Putting
Product Limits Back in Place to Discourage Panic Buying
HEB in Texas is putting limits back in place for certain items, including paper
products and disinfectant wipes. Similar measures have happened in Australia,
where a second wave has sparked panic buying of toilet paper again.
Food Item Limits (all H-E-B Stores)
• Brisket – limit 2
Nonedible Item Limits (all H-E-B Stores)
• Bath Tissue Multi-Pack – limit 2 • Trial and Travel Size Disinfecting and
• Bath Tissue Singles – limit 2 Antibacterial Sprays / Wipes – 2 items
• Paper Towels • Hand Sanitizer – 4 items
• Acetaminophen – 2 items total (includes • Hand Soap – 2 items
baby, trial, travel sizes, OTC) • Hydrogen Peroxide – 2 items
• H-E-B Acid Controller / Famotidine and • Rubbing (Isopropyl) Alcohol / Swabs –
Pepcid 50ct and Larger – Limit 1 2 items
• H-E-B Acid Controller / Famotidine and • First Aid and Cleaning Gloves – 2 items
Pepcid Smaller than 50ct – Limit 1
• Disinfecting & Antibacterial Sprays – 2 items
Source: HEB
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 14SECTION 3
Where We Stand
On a Vaccine
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 15Upcoming Clinical Trial
Readouts For COVID-19
Treatments / Vaccines
Source: RBC Capital Markets; Biomedtracker; Clinicaltrials.gov
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 16Vaccines in Development for COVID-19
Source: RBC Capital Markets; Biomedtracker; Clinicaltrials.gov
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 17Experts Say We Are One Third of the Way
to a Widely Available COVID-19 Vaccine
Source: USA Today
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 185-Layer Framework on Go-Forward CPG Consumption
History would suggest that changes in the way we work, live and play have the single-biggest impact on how we
SOCIETAL behave and interact with food. Our study takes a look at the evolution of eating patterns going back to the 1920s to
provide some context on how changes occurring due to COVID-19 could impact future behaviors.
A global survey found that almost half of all respondents chose ready-to-eat meals versus preparing a meal from
scratch due to not knowing how to cook, lack of confidence in cooking skills, or a dislike for cooking—on par with a lack
EDUCATION of time. Even schools have substantially scaled back student access to “home economics” where cooking was a central
part of the curriculum. We believe the proliferation of “education centers” for food preparation (Facebook, Instagram,
Google, YouTube, etc.) over the past 10 years has eliminated one of the biggest barriers to cooking at home.
Interestingly, economic downturns of the past have not created a significant surge in demand for package food
RECESSIONARY categories. We believe future recessions will have a more positive impact on package food consumption. Importantly,
EFFECTS we believe the purchasing patterns over the past several weeks have provided: 1) some transparency into how much it
costs to make a meal at home versus eating out; and 2) practice in preparing meals.
Pantry loading and more at-home consumption have created a trial surge that most observers thought we would never
UNPRECEDENTED see. Importantly, big brands have fared very well due to a combination of supply-chain strength, brand recognition and
TRIAL consumers migrating to comfort/things with which they are familiar. Importantly, many packaged food companies have
“leaned into” trial, which should create a decent amount of repeat.
We believe the ramp in online grocery shopping over the past 3 months has created an advantage for “Big Food”. In
ONLINE many instances, the largest brands tend to dominate on the first page of any e-commerce portal. Importantly,
MIGRATION Numerator data suggests consumers that purchase online tend to be more brand loyal than consumers shopping in a
brick-and-mortar environment.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 19SECTION 4
What Happens When
Things Start to Re-Open
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 20Expect Measured Channels CPG Sales
to Remain Elevated Through 2021, Driven Key Factors
by Lingering Stay-at-Home Behaviors Localized containment if the virus spikes again;
no national shutdown
CPG $ Sales % Chg. vs. YA Actual & Forecast – Fatigued by quarantine, consumers are going out again;
Multi-Outlet (MULO) out-of-home consumption occasions begin to recover
• Retail and recreation mobility improved to -17% vs.
pre-COVID-19 vs. -50% at height of pandemic1
Actual Forecast
EDIBLE • Restaurant spending improved to -33% vs. ~-70% at peak2
NONEDIBLE • In-home cooking weariness
15.1 • Foodservice reshape with more delivery, take-out,
~12-14
drive throughs and outdoor eating
~9 to 11
• Businesses and schools reopen
7.3
~4-6 As economic stimulus and extra unemployment support run out /
~3 to 5
2.3 2.5 2.6 1.8 decrease, value seeking and in-home consumption increases
Work-from-home will be the norm for higher-risk and
~0 to -2 conscious segments and many white-collar workers (at least
~-4 to -6
a few days / week)
2020-21 Sales Growth (2-Year CAGR)
2015-2018 2019 2020 2020 2020 2021
CAGR YTD Rest of Full Year Exceeds 2019 growth due to elevated in-home consumption
Year
1. Google Mobility Report Total U.S. retail and recreation mobility as of June 12, 2020. 2. JP Morgan Chase Consumer Card Spending as of June 12, 2020.
Assumes no major national quarantine event after March –May 2020 / Source: IRI Strategic Analytics proprietary forecasting models, IRI Growth Consulting analysis..
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 21Grocery Growth Should Continue to Outpace
Other Channels in 2020 as Consumers
Additional Factors
Continue Large, Edible-Centered Trips
CPG $ Sales % Chg. vs. YA Actual & Forecast – Grocery Continued preference for
“one-stop-shop” (larger
Edible baskets and more
frequent purchasing of
Actual Forecast Nonedibles) to limit
EDIBLE exposure when shopping
NONEDIBLE 20.6 will benefit Grocery
18.2 ~16-18
~11 to 15
~10-12 2020-21 Sales Growth
~6 to 8 (2-Year CAGR)
1.3 1.3 1.7 1.2 Exceeds 2019 growth due
to elevated in-home
consumption
~-4 to -6
~-7 to -9
2015-2018 2019 2020 2020 2020 2021
CAGR YTD Rest of Full Year
Year
Assumes no major national quarantine event after March –May 2020 / Source: IRI Strategic Analytics proprietary forecasting models, IRI Growth Consulting analysis..
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 22Expect More Muted CPG Growth in
Mass Even as Traffic Holds with
Additional Factors
Value-Seeking Shoppers
Increasing need for value
CPG $ Sales % Chg. vs. YA Actual & Forecast – Mass as stimulus lessens over
time will drive trips to Mass
However, Edible
EDIBLE
Actual Forecast purchases shifting
NONEDIBLE more to Grocery and
Dollar in
13.4 one-stop-shop pantry
stocking habits
~9-10
6.8 ~6 to 8
4.1 4.6 ~4 to 6 ~5-6
3.7 3.8
2020-21 Sales Growth
(2-Year CAGR)
~-0.5 to -1.5
Lags 2019 growth due to
~-3 to -4
likely shifts to Grocery and
Dollar channels
2015-2018 2019 2020 2020 2020 2021
CAGR YTD Rest of Full Year
Year
Assumes no major national quarantine event after March –May 2020 / Source: IRI Strategic Analytics proprietary forecasting models, IRI Growth Consulting analysis..
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 23Convenience is Likely to See Mild
Recovery as Mobility Returns, But
Additional Factors
Weak Income May Limit Growth
People driving more
CPG $ Sales % Chg. vs. YA Actual & Forecast – Convenience starting to increase
demand for gas; also,
preference for car travel
Actual Forecast vs. air travel post
EDIBLE COVID-19
NONEDIBLE
Construction recovery and
increased demand for
home improvement
projects will help sales
3.9 2.8 ~2.5 to 3.5 ~2.5-3 ~3.5 ~3 growth
3.6 3.5 2.6 ~2 to 3 ~1-2
0.4 Yet, higher unemployment
and lower disposable
income growth will limit
Convenience store
traffic and sales
2015-2018 2019 2020 2020 2020 2021
CAGR YTD Rest of Full Year
Year
Assumes no major national quarantine event after March –May 2020 / Source: IRI Strategic Analytics proprietary forecasting models, IRI Growth Consulting analysis..
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 24Thinking Past the Pandemic
RBC Imagine 2025 Framework
Calibrated & Augmented Self The Artificial Intelligence Race In Cloud We Trust
Collective Action Escalating Uncertainties Agility Imperative
Source: Sterling Rice Group, RBC Capital Markets
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 25The Latest COVID-19 Reports and Insights from IRI
LESSONS FROM THE GREAT RECESSION THE CHANGING SHAPE OF THE CPG DEMAND CURVE
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 26Insights and Strategic
Guidance for Better Decisions
IRI’s Online Resources Include Real-Time
Updates and Weekly Reports That Track
the Impact of the Virus on CPG and Retail
The IRI COVID-19 Portal
Includes COVID-19 impact analyses, dashboards
and the latest thought leadership on supply chain,
consumer behavior and channel shifts for the U.S.
AND international markets.
IRI CPG Economic Indicators, Including
the IRI CPG Demand Index™, IRI CPG
Supply Index™ and IRI CPG Inflation
Tracker™
Accessible through the insights portal
to track the daily impact of COVID-19.
This includes top-selling and out-of-stock
categories across the country and
consumer sentiment on social media.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 27Your Feedback is Important
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© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 28© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 29
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