THE PREMIUM OPPORTUNITY - Demand Pockets
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Part November
Discovering Pockets of Demand 10
2020
THE PREMIUM
OPPORTUNITY
Executive Summary
The pandemic-induced economic slump presents as an atypical K-shaped recovery, with many consumers enjoying healthy incomes while others struggle
to make ends meet. For consumers across all income levels, spending patterns have shifted as stay-at-home behaviors continue – spending more on
food-at-home and spending less on discretionary purchases of foodservice, professional services (e.g., spa, medical / dental), travel and entertainment.
While CPG growth during the pandemic has been robust, CPG manufacturers must Discover Pockets of Demand to ensure growth into 2021 and
beyond. We start this new series of reports by highlighting one such growth pocket: premium and super premium demand pockets. Beyond Pelotons and
backyard living spaces, consumers of all income levels look to find joy and elevated experiences with premium CPG products.
Observations Implications
• Despite ongoing economic uncertainty, anticipated • Manufacturers and retailers need to ensure they drive sales of premium and
recessionary spending behaviors, including an increase in super premium products, even in lower income trading areas.
spending on private label and value brands, as well as a shift • Tailor messaging for premium products: For Millennials, for example, promote
to value channels, hasn’t occurred to date. the “experience” of premium products. Low-income households might define
• Consumption has shifted to at-home; lower-income households special occasions as associated with specific premium products, an opportunity
have maintained higher growth in at-home CPG consumption to expand the occasion with different premium products.
than other income levels throughout the pandemic. • Know which attributes resonate with your most valuable shoppers and promote
• Shoppers are trading up in grocery and other large format relevant attributes that mark a product as premium, e.g., health and wellness,
channels, with premium / super premium products gaining immunity, hygiene, indulgence and convenience. With increase in e-commerce
share at the expense of value tier and private label. Both high- adoption, marketers will have to use the right search words to draw attention to
and low-income shoppers are trading up in many categories, premium offerings.
including food and beverage, cleaning and personal care. • Tailor price-range architecture, assortment to meet the unique needs of your
• With increase in e-commerce adoption, e-commerce is seeing shoppers by channel.
more growth in mainstream products, despite generally being • Target and tailor messages to purchase-based premium audiences
skewed to more premium sales. (e.g., premium brand, non-price sensitive, non-promotion sensitive).
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2
Attractive Demand Pockets Emerge Due to the
Pandemic-Induced Changes in CPG and Retail
Lifestyle / Consumption Shifts
Meet new consumer needs across in-home consumption
occasions (e.g., prepared meals, new flavors / variety)
Economic Bifurcation
Capture both premium / super premium and value
opportunities in the K-shaped economic recovery
Valuable Cohorts
Focus on attractive lifetime-value cohorts (e.g., upper income,
Millennials, Gen X) via targeted messaging, products and promotions
Special Occasions
Identify and activate on new opportunities (e.g., gifts, messaging,
nostalgia) as holiday and celebration patterns shift
Channel Shifting
Hone price-pack-assortment and channel architecture as online,
grocery, club and dollar channels gain share of wallet
Shopping Behavioral Shifts
Customize in-store execution (e.g., displays, promotions,
assortment, in-store media) as shoppers buy larger baskets,
spend less time in store and assortments shrink
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 3
Unlike Past Recessions, Low Wage Earners Are More Impacted by
Unemployment, Yet Low-Income Households Have Reduced Spending Less
Job Growth / Loss Since Recession Start
1990 Recession 2001 Recession 2008 Recession 2020 Coronavirus Crisis
In the 2020 COVID-19 pandemic,
workers from hardest hit industries
(e.g., travel, hospitality, foodservice,
entertainment) were among both
the lowest-earning households and
are also the most likely to have lost
jobs due to the pandemic.
Since the onset of the 2020
COVID-19 pandemic, lowest earners
returned to pre-COVID-19 spending
levels, while higher income
households reduced spending.
Source: Washington Post “The COVID-19 recession is the most unequal in modern U.S. history” based on Labor Department via
UIPUS. Tracktherecovery.org based on consumer credit and debit card spending from Affinity Solutions. Updated as of 10/20/20.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 4
Overall Household Expenses Are Lower During COVID-19, With Greater
Spend on At-Home Consumption, While Other Expenses Are Reduced
U.S. Personal Consumption Expenditures ($B Change vs. YA) by Major Type of Product
December – February vs. YA April – June vs. YA July – September vs. YA
% of low-income growth trend vs. growth trend vs.
spend share of wallet prior quarter prior quarter
vs. avg. HH
Health 542 21% ↑ -1,298 -126
Housing, Utilities & Fuels 296 18% ↑ 326 311
Recreation 229 9% ↓ Higher 663 145
Transportation 201 9% ↔
share of
spend on 1,160 412
non-
Financial Services & Insurance 157 8% - discretion- 40 83
ary areas
Food Services & Accommodations 135 7% ↔ for low- 1,146 547
income
HH Furnishing, Equipment, Maintenance 85 4% - 15 158
Food & Bev. Purchased for Off-Premise 81 7% ↑ 341 323
Clothing, Footwear, Related Services 37 3% ↔ 362 102
Education 35 2% ↔ 87 70
Communication 11 2% - 23 7
All Other 155 9% - 153 231
SUM 1,964 -4,200 -752
TOTAL % CHANGE VS. YA +5% -10% -2%
Source: BEA, based on seasonally adjusted monthly figures through Sept 2020. Low-Income share of spend based on BLS Consumer Expenditure Survey 2019.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 5
After the Initial COVID-19 Surge, Low-Income Households Are Maintaining
Higher Growth in At-Home CPG Consumption than Other Cohorts
Grocery Channel Total Store Spending by Income Level / % Change vs. YA
Frequent Shopper Income Tiers – Grocery Channel / Based on 6.5M Regular Grocery Shoppers
High-income households were able to Low-income
STOCK UP more in the initial COVID-19 surge Middle-Income
-6 25 High-Income
23
19 20 20
19 Low-income growth is less variable,
17 17 17 and likely less impacted by switching
to away-from-home consumption
13 12 +1
11 12 12
10 11 10
9 9
8 8 8
6 7
1 1
1
52 WE 4 WE 4 WE 4 WE 4 WE 4 WE 4 WE 4 WE 4 WE
2/23/20 3/22/20 4/19/20 5/17/20 6/14/20 7/12/20 8/9/20 9/6/20 10/4/20
Post COVID-19 surge, EDIBLE accounts for 94% of low-income
growth vs. YA and 97% of high-income growth (vs. 85% of sales)
Source:. IRI Shopper Loyalty database, Grocery channel based on 65M household sample, and 6.5 static households. Total store including edible, random weight edible and nonedible categories.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 6
Similar to Higher Income, Low-Income HHs Have
E-commerce
Reduced Share of Wallet in Mass, Favoring is driving
Channels with Contactless Pay, Wide Food Variety growth in
Channel Trends by Income Cohort / Share of Total Store Dollar Sales other
Ppt. Chg. Ppt. Chg. Ppt. Chg. Ppt. Chg.
channels
vs. YA vs. YA vs. YA vs. YA
All Other 17.5% +0.3 18.7% +1.4 17.2% 0.0 17.5% +0.5
Dollar 1.0% 1.1%
4.9% +0.4 5.1% +0.3 +0.1 0.0
Club 7.3% +0.1 7.9% +0.4 15.9% 16.1% +0.3
Grocery is
+0.1
attracting
Mass 32.6% -2.4 21.9% 19.4% -2.8 more trips as
+0.2 30.2% -0.2
a one-stop
shop with
greater CPG
+0.2 44.0% +0.1
45.9% +2.0 variety
Grocery 37.7% -1.0 38.1%
Trend vs. Trend vs.
52 WE 52 WE
2/23 2/23
52 WE 26 WE 52 WE 26 WE
2/23/20 10/4/20 2/23/20 10/4/20
LOW HIGH
Note: Low-income per Capita =70k 1P + $30k all others; All other = Drug, e-commerce, specialty, other CPG retailers; Source: IRI Consumer Panel data ending 10/4/20.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 7
Now Spending More at Home, Consumers
Are Shifting More Growth to Super-Premium
Brands Both in and Outside Grocery
CPG Price Tier Growth by Channel / Dollar Share in Largest Categories1
Ppt. Chg. Ppt. Chg. Ppt. Chg. Ppt. Chg.
vs. YA vs. YA vs. YA vs. YA
Super 13.3% +0.6 13.8% +1.0
Premium 16.3% +0.5 17.0% +1.0
10.2% 0.0 10.9% +0.7
Premium 10.2% +0.3 10.7% +0.3
46.6% -1.2 45.9%
Mainstream 47.9% -0.4 -0.2 -1.2
47.9%
10.7% -0.2 9.9% -0.5
Value 9.0% -0.3 8.6% -0.4
Private 16.6% -0.2 -0.6 19.3% 19.4% +0.1
Label 15.8% +0.8
Pre-COVID-19 26 WE Pre-COVID-19 26 WE
52 WE 2/23/20 10/4/20 52 WE 2/23/20 10/4/20
GROCERY MULO xGROCERY
1. Top 100 edible & nonedible Grocery CPG categories, top 40 categories for MULO xGrocery. Price tier = avg price per volume vs. subcategory. Super Premium =
>+50S% above subcategory avg, Premium = +25% to +50%, Mainstream = -25% to +25%, Value =
The Shift to More Premium Brands Is Occurring
Low Household
Even Among Low-Income Households Income Is Not
a Barrier
CPG Price Tier Growth by Income Cohort; Based on 6.5M Regular to Indulgent
Grocery Shoppers; Dollar Share in Largest Grocery Channel Categories1 Purchases
Ppt. Chg. vs. YA Ppt. Chg. vs. YA Ppt. Chg. vs. YA
Super Premium 12.0% 0.6 14.1% 0.6 17.8%
0.3
Premium 11.0% 0.1 0.0
12.1%
13.2% -0.2
Mainstream 48.8% 0.5 Low-Income
47.5% 0.2
45.7% 0.1 Households
Report Making
Small
Indulgence
Value 9.9% -0.3 8.7% -0.1 Purchases at
7.1% 0.1
Private Label a Similar Rate
18.4% -1.0 17.6% -0.7 16.1% -0.3 as Other
Households2
LOW MIDDLE HIGH
1. Based on 40 largest edible & nonedible categories. Price tier defined as avg price per volume vs. subcategory. Super Premium = >+50S% above subcategory
average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value =
Buying more Buying more Buying more Buying more meal
Despite Economic premium wine / premium / specialty premium or kits (box of items to
beer / liquor coffee items to try specialty food cook a pre-defined
Struggles, Some Low- to create coffee at items to create recipe at home)
home that I used to restaurant-style
Income Households get at a coffee shop meals at home
Spend to Have Premium
Experiences at Home
Start-Ups Are Most Likely to Seek
Premium Items and to Replace the
Restaurant Experience with Quality
At-Home Meals
Among IRI’s EconoLink segments, Start-
Ups’ financial situations are largely the
same as YAG, but they’re still struggling.
They are focused on cutting back, but
with positive expectations for future 13.4% 15.5% 11.8% 13.0%
improvement in their financial situations. Start-Ups Start-Ups Start-Ups Start-Ups
(213 Index) (272 Index) (227 Index) (277 Index)
6.3% 5.7% 5.2% 4.7%
Skews:
Gen Z / Millennials | African American,
Asian | Blue Collar | Lower Income Total Respondents Total Respondents Total Respondents Total Respondents
10/16-10/18 10/16-10/18 10/16-10/18 10/16-10/18
IRI EconoLink Survey fielded 3/20-3/22/20 among IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers; Grocery Shopping Changes Due to Restaurant/Bar/Cafe Usage Changes (P2_1)
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 10In the Same Way, Regardless of Area Income
Level, Stores Exhibit Similar Premiumization Trends
CPG Price Tier Growth by Store Income Area /
Dollar Share in Largest Categories1
Ppt. Chg. Ppt. Chg. Ppt. Chg. Ppt. Chg.
vs. YA vs. YA vs. YA vs. YA
Super +0.6 +1.1
Premium 12.3% 13.1% 16.9% +0.8 17.4% +1.0
Premium 10.0% +0.2 10.8% +0.7
11.6% +0.2 12.3% +0.5
Mainstream 46.5% -1.1 46.1% -0.9
45.7% -1.2 45.2% -1.0
Value 10.7% -0.3 9.9% -0.6
8.3% -0.2 7.9% -0.3
Private 20.5% +0.6 20.1% -0.3
Label 17.5% +0.4 17.2% -0.2
Pre-COVID-19 26 WE Pre-COVID-19 26 WE
52 WE 2/23/20 10/4/20 52 WE 2/23/20 10/4/20
LOWER INCOME AREA STORES HIGHER INCOME AREA STORES
1. Top 40 edible and nonedible CPG categories. Price tier defined as avg price per volume vs. subcategory. 2. Lower income area stores are $50k. Super Premium = >+50S% above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value =Premiumization Is Contributing to
Price Growth in Many Categories ILLUSTRATIVE EXAMPLES
Decomposition of Price per Volume % Change vs. YA
Grocery Channel / 26 WE 10/4/20
Increased Reduction Total Price /
Shelf Price in Promotion Mix Shift / Premiumization Volume Change
Spices / Seasonings 2.3% 1.4% 11.4% 15.1%
Dish Detergent 1.6% 5.0% 6.3% 12.9%
Luncheon Meats 2.8% 4.7% 4.2% 11.6%
Fz Meats 2.5% 4.4% 4.7% 11.5%
Rice 2.9% 3.7% 4.9% 11.5%
BBQ Sauce 1.8% 5.6% 4.0% 11.4%
Spaghetti Sauce 0.6% 5.1% 5.3% 11.0%
Cups and Plates 1.2% 4.3% 4.4% 9.9%
Sports Drinks 1.4% 4.0% 3.6% 9.0%
Ice Cream 1.6% 3.9% 2.9% 8.4%
Bottled Water 1.1% 2.1% 3.6% 6.8%
Note: Shelf Price refers to changes in everyday price at item level. Promotions includes promotion frequency and depth (driven by frequency). 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 data ending 10/4/20. IRI Strategic Analytics
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 12Many Categories Experienced Acceleration
Large shifts in
of Premium Brands Growth…
TREND VS.
PRE-COVID-19
Accelerated
some cleaning
Top Categories Experiencing Premiumization1 After Onset of COVID-19 Similar and paper
Decelerated products
Grocery Channel, 12 WE 10/4/20
driven by
EDIBLE Premium2 Premium Share NONEDIBLE Premium2 Premium Share supply
Category Share Ppt. vs. YA Category Share Ppt. vs. YA constraints
Spaghetti/Italian Sauce 26.1% 5.2 Soap 32.9% 10.1 and COVID-19
Spirits/Liquor 45.0% 4.6 Household Cleaner Cloths 15.7% 8.8
Frankfurters 39.7% 3.6 Facial Tissue 38.2% 7.5 demand (e.g.,
Frozen Meat 30.5% 3.5 Household Cleaner 37.2% 6.5 ingredients
Beer/Ale/Alcoholic Cider 35.0% 3.2 Paper Towels 45.4% 6.1
Mexican Foods 53.6% 3.1 Fabric Softener 11.6% 5.2
that are more
Sports Drinks 12.1% 3.0 Laundry Care 36.1% 4.4 effective
Energy Drinks 37.8% 2.9 Candles 69.1% 3.9 against germs)
Wine 51.6% 2.7 Hair Conditioner 47.5% 3.5
Coffee 29.6% 2.2 Shampoo 37.8% 3.1
Processed Cheese 26.8% 2.1 Toothpaste 48.4% 3.0
Ready-to-Drink Tea/Coffee 35.4% 2.0 Cleaning Tools/Mops/Brooms 41.1% 2.8
Frozen Breakfast Food 22.9% 2.0 Pet Food 48.8% 1.9
Yogurt 22.7% 1.7 Dish Detergent 55.5% 1.9
Non-Chocolate Candy 24.2% 1.7 Diapers 25.5% 1.8
1. Highest share growth of Super Premium & Premium price tiers among top 60 largest edible and top 40 largest nonedible CPG categories. Price tier = avg price per volume vs. subcategory. Super Premium = >+50%
above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value =TREND VS.
…With Low-Income Households Following Similar Category Trends PRE-COVID-19
Accelerated
Similar
Top Categories Experiencing Premium & Super Premium1 Acceleration During COVID-19 Decelerated
Grocery Channel, 12 WE 9/6/20; Based on 6.5M Regular Grocery Shoppers
Low-Income High-Income Low-Income High-Income
Premium2 Ppt Premium2 Ppt Premium2 Ppt Premium2 Ppt
EDIBLE Share of Change Share of Change NONEDIBLE Share of Change Share of Change
Category Category vs. YA Category vs. YA Category Category vs. YA Category vs. YA
Spirits / Liquor 33.6% 4.2 40.9% 3.5 Soap 12.5% 7.8 35.6% 9.4
Ice Cream/Sherbet 36.3% 3.1 48.6% -0.4 Dish Detergent 45.7% 2.3 57.1% 3.6
Bottled Water 36.9% 2.8 37.6% 0.5 Household
15.5% 1.3 44.2% 10.7
Cleaner
Frozen Dinners /
20.0% 2.6 30.2% 1.6 Cups & Plates 22.6% 1.2 35.5% 2.7
Entrees
Wine 21.5% 2.0 38.0% 0.8 Vitamins 1.9% 0.8 29.2% 1.9
1. Based on 40 largest edible and nonedible categories. Price tier defined as avg price per volume vs. subcategory. Super Premium = >+50% above subcategory average, Premium = +25% to +50%,
Mainstream = -25% to +25%, Value =In Pasta Sauce, Rao’s and Other Premium Brands Saw Accelerated Share
Performance During COVID-19, a Nod to Elevating the At-Home Dining Experience
Case Study: Pasta Sauce $ Share in Pasta Sauce1 Sample Brands Driving Premium Acceleration
Ppt. Chg. Ppt. Chg.
vs. YA vs. YA
Super 1.9
Premium 19.5% 4.9 3X premium to the category
23.9%
+3.3 ppts share during COVID-19
Premium 1.8% 0.3 (+2.0 ppts pre-COVID-19)
2.2% 0.3
Natural, locally positioned brand
Mainstream 48.2% -0.5
46.7%
2X premium to the category
-1.5
+0.5 ppts. share during COVID-19
(+0.1 ppts pre-COVID-19)
Certified keto and plant-based
Value 20.4% -1.7
17.4% -3.0 4X premium to the category
+0.4 ppts. share during COVID-19
Private (no share gain pre-COVID-19)
Label 10.0% 0.0 9.7% -0.7
Pre-COVID-19 During COVID-19
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 15Alcohol, Wine and Spirits Saw Accelerated Trends Toward
Super Premium, While Hard Seltzer Continued to Grow in Beer
Case Study: Alcohol Category $ Share in Alcohol Category Sample Brands Driving Premium Acceleration
Ppt. Chg. Ppt. Chg. Ppt. Chg.
vs. YA vs. YA vs. YA
Super 10.4% 0.4
Premium Premium and
emerging hard seltzer
33.9% 2.4 33.7% 4.5 and cocktail brands
Premium 24.6% 2.8 and line extensions
0.3 11.4% 0.1
17.8%
Premium Wine
and Sparking Wine
-0.9 27.4% -0.7
Mainstream 55.8% -1.6 20.6%
Large brand premium
tequila and cognac
27.8% -1.8 27.4% -3.9 and small players like
Skrewball peanut
Value 9.2% -1.5 butter whiskey
Beer Wine Spirits
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 16In Frozen Dinners, Indulgent, Convenient and Better-for-You
Brands Saw Accelerated Share Growth During COVID-19
Case Study: Frozen Dinners $ Share in Frozen Dinners1 Sample Brands Driving Premium Acceleration
Ppt. Chg. Ppt. Chg.
vs. YA vs. YA
Natural / Better-for-You
Super
Premium 22.7% 0.8 24.3% 1.5 2X premium to the category
+0.2 ppts. share during COVID-19
(+0.1 ppts pre-COVID-19)
Premium 5.4% 0.3 5.6% 0.2
2X premium to the category
+0.4 ppts. share during COVID-19
(+0.3 ppts pre-COVID-19)
Mainstream 58.3% -1.0 56.7% -1.3
2X premium to the category
+0.1 ppts. share during COVID-19
-0.3 -0.4 (no share gain pre-COVID-19)
Value 11.1% 10.8%
Private Label 0.1 0.1
2.5% 2.6%
Pre-COVID-19 During COVID-19
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 17In Hair Care, Premium and Natural Brands Saw Accelerated Share
Growth During COVID-19, With Self-Care Moving to In-Home
Case Study: Hair Conditioners
$ Share in Hair Conditioners1 Sample Brands Driving Premium Acceleration
Ppt. Chg. Ppt. Chg.
vs. YA vs. YA
2X premium to the category
+0.5 ppts. share during COVID-19
Super 3.4
(+0.1 ppts pre-COVID-19)
43.2% 1.7 46.4%
Premium
Premium 0.9% 0.1 0.1 3X premium to the category
1.1% +0.5 ppts. share during COVID-19
(no share gain pre-COVID-19)
Mainstream 37.0% 34.1%
-0.6 -3.4
2X premium to the category
+0.4 ppts. share during COVID-19
-1.4 (+0.2 ppts pre-COVID-19)
Value 18.5% 17.8% -0.2
Private Label 0.3 0.1
0.5% 0.5%
Pre-COVID-19 During COVID-19 Note: Shampoos also saw growth in super premium with +2.6 share point gain during COVID-19 vs. YA
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 18In Chocolate Candy, the Affordable Luxury of Premium Brands Such as Lindt
and Ghirardelli Saw Accelerated Share Performance During COVID-19
Case Study: Chocolate Candy
$ Share in Chocolate Candy1 Sample Brands Driving Premium Acceleration
Ppt. Chg. Ppt. Chg.
vs. YA vs. YA
Super
Premium 17.4% 0.0 16.1% 0.5 2X premium to the category
+0.2 ppts. share during COVID-19
Premium 9.5% 7.9% 0.1 (no share gain pre-COVID-19)
0.6
2X premium to the category
+0.1 ppts. share during COVID-19
Mainstream 60.3% -0.1
55.7% -0.8 (-0.1 ppts pre-COVID-19)
2X premium to the category
+0.1 ppts. share during COVID-19
0.2 -0.5 (no share gain pre-COVID-19)
Value 14.9% 13.1%
0.2
Private Label 0.0
2.6% 2.7%
Pre-COVID-19 During COVID-19
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 19Premium Brands Across Soup Types Gained Share
Case Study: Soup $ Share in Soup1 Sample Brands Driving Premium Acceleration
Ppt. Chg. Ppt. Chg.
vs. YA vs. YA
Super Wet Soup & Broth
Premium 13.0% 0.3 15.0% 2.0
1.5X premium to the category
Premium 8.2% -0.1 +0.1 ppts. share during COVID-19
7.8% -0.7
(-0.2 ppts pre-COVID-19)
Dry Soup
4X premium to the category
Mainstream 58.9% -0.3 57.1% -0.6 +0.2 ppts. share during COVID-19
(no share gain pre-COVID-19)
Ramen
2X premium to the category
Value 7.8% 8.3% -0.6 +0.3 ppts. share during COVID-19
0.5
(-0.1 ppts pre-COVID-19)
Private Label 12.2% -0.4 11.8% -0.1
Pre-COVID-19 During COVID-19
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 20E-Commerce Previously Skewed High on Super
Premium Products, But Is Trending More Mainstream
With the Surge of New Shoppers During COVID-19
CPG Price Tier Growth in E-Commerce1 / $ Share in Largest Categories2
Ppt. Chg. Ppt. Chg. Ppt. Chg. Ppt. Chg.
vs. YA vs. YA vs. YA vs. YA
Super -3.2 38.3% -4.8 -3.5
Premium 43.1% -1.6 46.5%
50.4%
8.1% -0.2
Premium 8.1% +0.1 -0.4
0.0 8.0%
8.4%
+1.3
34.5% +2.2
Mainstream 32.4% +0.6
31.5%
+2.8
28.7%
Value 7.1% +0.2 7.3% +0.2 +0.4 +1.1
Private 7.7% 9.1%
Label 9.3% +1.6 11.9% +2.6 +0.5 0.0
4.8% 4.9%
Pre-COVID-19 26 WE Pre-COVID-19 26 WE
52 WE 2/23/20 10/4/20 52 WE 2/23/20 10/4/20 Changing buyer and category mix also
TOTAL E-COMMERCE PURE PLAY E-RETAIL contributes to the acceleration of
1. e-Commerce includes Click & Collect, home delivery and home shipment models. 2. Top 25 largest edible and top 15 largest nonedible CPG categories. Price mainstream and value in e-commerce
tier defined as avg price per volume vs. subcategory based on Brick & Mortar classification. Super Premium = >+50% above subcategory average, Premium =
+25% to +50%, Mainstream = -25% to +25%, Value =Exhibiting Lower Sales in Mainstream than Brick & Mortar, TREND VS.
E-Commerce Is Developing More Mainstream and Value Brands PRE-COVID-19
Accelerated
Similar
Top Categories Experiencing Mainstream & Value (M&V) Acceleration in E-Commerce Decelerated
E-Commerce and MULO, 12 WE 10/4/20
E-Commerce1 MULO E-Commerce1 MULO
M&V Ppt M&V Ppt M&V Ppt M&V Ppt
EDIBLE Share of Change Share of Change NONEDIBLE Share of Change Share of Change
Category Category vs. YA Category vs. YA Category Category vs. YA Category vs. YA
Frozen Pizza 39.5% 7.1 68.3% -0.1 Weight Control 46.1% 11.5 72.2% -0.5
Soup 49.0% 3.9 65.7% -1.1 Internal Analgesics 48.7% 7.7 37.9% 2.4
Frozen Seafood 11.3% 3.0 30.8% -2.3 Soap 38.0% 7.2 63.4% -6.5
Cold Cereal 73.1% 2.6 87.9% 0.3 Pet Food 35.5% 4.7 51.5% -1.4
Fresh Eggs 8.2% 2.3 13.3% 1.2 Pet Treats 22.5% 3.3 44.7% -0.9
1. E-commerce includes Click & Collect, home delivery and home shipment models. 2. Top 25 largest edible and top 15 largest nonedible CPG categories. Price tier defined as avg price per
volume vs. subcategory based on Brick & Mortar classification. Super Premium = >+50% above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value =To Capture the Premium Opportunity, Many Manufacturers Have
Recently Launched New Premium Products in the Last Six Months
Häagen-Dazs Heaven Bud Light Seltzer Tide Plus Downy Free
Light Ice Cream Hard Seltzer Liquid Laundry Detergent
Ice cream with fewer calories Low calories and sugar For sensitive skin, no irritants
and no artificial flavors such as dyes and perfumes
Noosa Starbucks Nitro L'Oréal
Greek Yogurt Cold Brew Coffee Magic Root Cover Up
Fresh, natural ingredients Cold brew infused with Root touch-up spray
nitrogen microbubbles
Evol Plant-Based Fever-Tree Birch Benders
Frozen Meals Mixer Paleo Pancake Mix
No antibiotics, artificial Sparkling Pink Grapefruit Organic, Gluten Free,
colors or flavors Paleo and Keto friendly
New product launches in the last 6 months / Source: IRI Consulting analysis.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 23MANUFACTURERS IMPLICATIONS RETAILERS
The Premium
Opportunity
• CPG brands should promote sales of premium • Retailers should drive sales of premium and
and super premium products, even in lower super premium products, even in lower-
income trading areas. income trading areas.
• Tailor messaging for premium products: for • Tailor messaging for premium products: for
Millennials, for example, promote the Millennials, for example, promote the
“experience” of premium products. Low-income “experience” of premium products. Low-
households might define special occasions as income households might define special
associated with specific premium products, an occasions as associated with specific premium
opportunity to expand the occasion with different products, an opportunity to expand the
premium products. occasion with different premium products.
• With an increase in e-commerce adoption, • Know which attributes resonate with your most
marketers will have to use the right search words valuable shoppers and promote relevant
to draw attention to premium offerings as attributes that mark a product as premium,
consumers increasingly purchase more e.g., health and wellness, immunity, hygiene,
mainstream offerings online. indulgence and convenience.
• Promote relevant attributes that mark a product • As online shopping continues to escalate, use
as premium (e.g., health and wellness, immunity, the right search words to draw attention to
hygiene, indulgence and convenience). premium offerings.
• Tailor price-range architecture and assortment • Target and tailor messages to purchase-based
to meet the unique needs of your shoppers premium audiences (e.g., premium brand,
by channel. non-price sensitive, non-promotion sensitive).
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 24Mark 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
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 25IRI COVID-19 IMPACT ASSESSMENT REPORTS (click to see full report)
COVID-19: THE CHANGING SHAPE OF THE CPG DEMAND CURVE
SPECIAL COVID-19 SERIES: RECESSION PROOF YOUR BUSINESS
COVID-19 EMERGING POINT OF VIEW DISCOVERING POCKETS OF DEMAND
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 26CPG 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™
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 27Want to Be the First to Know?
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© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 28IRI Global Headquarters
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and Proprietary.
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