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Consumer Goods Strategies and Trends Executive Summary & Excerpt

CAGNY* Roundup, March 2017

* Consumer Analyst Group New York

SCHIEBER RESEARCH

Consumer Goods Strategies and Trends | Apr. 2017 2

CAGNY 2017The Consumer Analyst Group New York (CAGNY) conference is where marketing and other executives of the leading food, beverage, household/ personal products and tobacco companies come together to discuss major consumer and market trends, and describe how their companies intend to address them. The 47th CAGNY conference took place in February 14-20, 2017 in Boca Raton, Florida.

There’s hardly a better place to gain an insight into how consumer goods giants view strategy and trends in innovation and marketing.

We are proud to have covered the CAGNY conferences since 2014. You can find our previous reports here: 2014, 2015, 2016.

Food & Beverage:

Non Food:

Among the companies included in the report:

http://www.slideshare.net/hamutalewin/strategic-innovation-trends-in-food-beverage-cagny-2014-english

http://www.slideshare.net/hamutalewin/cagny-2015-fb-market-trends-and-innovation-platforms

https://www.slideshare.net/hamutalewin/consumer-goods-innvation-strategies-cagny-2016-roundup


The free excerpt contains the second chapter and summary.

For the full report, please contact us

https://researchci.com/2017/05/01/cagny_purchase/


* White spaces: unmet needs, in terms of products, consumption occasions, or demographics

02 | Growing the Core

Building awareness and trial+

Extending or creating new uses for existing products

+

Creating or improving products to meet unmet consumption occasions or new demographics

(white spaces)+

Channel expansion (notably e-commerce)+

Stretching brands into new categories

Almost every company recognized that its core brands and products were the most effective engine of growth. Several strategies for continuing to

grow the core were prominent:

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Companies continue to refocus their businesses on mega brands and platforms.

Mega brands

Core brands grow Nestlé

Nestlé allocates 80% of marketing spend to billion-dollar brands, which generated 77% of company’s revenues and 83% of profit, and grew 5.2% between 2012 and 2016 (compared with 1.9% for the rest of the group).

Nestlé’s highest growth category is portioned coffee, which registered 13.2% CAGR in 2013 – 2016. The company ranks first or second in many of the fastest growing food and beverages categories. Among the company’s successful innovations are L’Atelier chocolate, Nescafe Gold Barista, Nespresso VertuoLine (targeting the U.S. market) and Coffee Mate Natural Bliss. The company said that 30% of sales come from products innovated or renovated in the past 3 years.

Les Recettes de l'Atelier Nescafe Gold Barista Nespresso Vertuoline Coffee-mate Natural Biss

02 | Growing the Core

Excerpt


Core brands generate about 70% of Mondelez’s net revenues, and grow twice as fast as the company, with superior margins.

Mondelez launched Ritz Crisp & Thins in Europe, positioning Ritz as a better-for-you single-serve salty snack aimed at the convenience channel.

The brand will next expand into the U.S. market.

Mondelez will also extend Barni platform, which has been a success in Eastern Europe, into the U.S., highlighting wellbeing claims (whole grains,no HFCS) and expanding into soft cakes.

Expansion, digital and marketing grow Mondelez core brands

Oreo Dunk Challenge is a global omni-channel campaign comprising events, a mobile app, influencers and ads that helps in building awareness and trial.

e-commerce and digital marketing;promoting variouspackaging options suitable for a variety of consumersand occasions (pantry, immediate use).

Targeting new demographics. Adult consumers, familiar with the brand but interested in BFY snacks, are offered Oreo Thins. In fact, Thins became a successful platform which includes other snacks by Mondelez.

A case study for “growing the core”, Oreo, the $ 2bn Mondelez brand, generates further growth by:

02 | Growing the Core | Mega Brands

Excerpt


Kellogg’s: Cheez-It is playbook for core brands

Kellogg’s presented Cheez-It as the “playbook” to be implemented by its other brands. Digital marketing, social and mobile media contributed to brand building and growth. The brand’s U.S. net sales were $1bn, up 8.6%, in 2016, with growth in consumption, gross margin, and share, and a 6% 4-year CAGR.

Kellogg’s continued to invest in key brands: expanding occasions and formats, launching more indulgent versions, and more spending on social and mobile activation. Net sales growth of Rice Krispies Treats in the U.S. was 9% CAGR between 2012 and 2016.

Invest to Grow Expand Occasions / Formats Platform Innovation


Excerpt



Innovation

Expand Occasions / Formats

Excerpt


P&G uses sampling to draw new consumers

About 80% of American men aged 18 received samples of grooming products (Gillette) for their birthday.

About 70% of new American mothers received sample of baby care products (Pampers).


Clorox focuses on experience and function to grow home care brands.

The Scentiva platform integrates experience (scent) and function

Kickstart, with 60% less sugar and a functional claim of energy, expands Mountain Dew into “better for you” positioning. Retail revenues have passed the $500m mark.

Crafted Mountain Dew and Spiked lemonade expands the brand into craft & premium

PepsiCo’s Mountain Dew succeeds through functional & craft positioningExcerpt


* White spaces: unmet needs, in terms of products, consumption occasions, or demographics

Summary


The CAGNY conference, which brings together marketing executives from the world’s leading consumption goods giants, is a rare opportunity to learn about consumer trends and business response.

Among the dozens of companies presenting you’ll find Mondelez, PepsiCo, Coca-Cola, General Mills, Unilever, Nestlé, Tyson Foods, L’Oréal, Colgate-Palmolive, Johnson & Johnson and many other international household names.

We have covered the CAGNY conferences since 2014. The 2017 conference took place last February in Florida. We’ve watched and listened to the presentations, and read the reports. Now we would like to share the insights we gleaned.

In virtually every presentation “digital” has received ample attention. If there’s one takeaway, it is that companies which only a few years ago have been relatively removed from the digital revolution are now feeling its heat. Surprisingly perhaps (and maybe to save face), companies present digital not as a threat but as an opportunity — for revenue, innovation and marketing.

Digital shapes every aspect of business:

• Across the board companies shift more dollar ads to digital. There’s nocampaign without a social media component.

• Companies spend on e-commerce (both direct-to-consumer and throughretails). The trend is international (for American and European companies,e-commerce in China is especially critical for reaching out to consumers).

• Companies use proprietary mobile apps to complement products and formarketing and sales.

• IoT is not yet a game changer. Companies experiment with the Internetof Things but are yet to find compelling ways of reimagining products ormarketing on a large scale.

• But Amazon Echo (Alexa), staring in many presentations, may be a first-stepfor many into the world of IoT.

Summary

Excerpt


Probably the most interesting market to emerge from the presentations is snacking (estimated at $1.2bn a year globally), on the intersection of two important consumer motivations — Convenience and better-for-you indulgence.

• Snackification, or the introduction of a snack format in a food category,continues. The Breakfast segment, especially, seems to be heating up.

• Snacks are key in companies’ premiumization strategies.

Companies believe consumers want better-for-you products. Better-for-you can take many forms, including vegan, all-natural, allergen-free, non-GMO and so on.

• Better-For-All is our appellation for the merging effect between Sustainability(environmentally friendly but also fair-trade and social responsibility) andvarious Health & Wellness considerations. BFA seems to be an engine ofproduct innovation.

• Gut health is on the rise. Companies already pay attention to the gut-mindconnection (the effect of digestion and gut bacteria on every aspect of mentaland physical performance) and are starting to incorporate the concept intheir marketing and in product development, as well as through M&A.

• Companies use the nuances in BFY perception to innovate: a premium cola(Pepsi 1893) doesn’t contain artificial sweeteners and the sugar is presentedas natural.

Excerpt


Summary: Strategic Pillars Discussed on CAGNY 2017

Enablers & Macro-Trends Discussed

Consumer Trends

Strategy & Innovation

• Changing retail landscape -Emerging channels

• Emerging Demographics – aging vs digital generations

• Digital penetration

• Income Gaps

• Health & Wellness

• Convenience & Snacking

• Indulgence & Premiumization

• Personalization

• Grow the Core and drive trial

• Optimize channel strategy, focus on direct to consumer

• Stretch brands and expand platforms

• Bolt-On acquisitions, focus

Excerpt


How can we help?

Schieber Research is a market research and competitive intelligence firm that helps companies recognize new opportunities, innovate, and grow.

Founded in 2009, and with offices in New York and Tel Aviv, Schieber Research has served hundreds of companies worldwide, from startups to private equity firms to major consumer goods manufacturers. We provide tailor-made research, ongoing competitive intelligence and reports on industry and consumer trends.

We developed a special methodology to monitor, analyze and facilitate market trends, and our worldwide network of field analysts monitors developments in retail and consumer goods on site.

We have worked with clients from diverse industries, including: food and beverages, automotive, finance, pharma, retail, beauty and personal care, hospitality, home appliances and digital.

Founder and CEO Hamutal Schieber is an expert on consumer goods and innovation, and frequently writes for major business publications and lectures at business schools. She is a graduate of the Hebrew University Faculty of Law and has over 16 years of experience in market research.

CEO Hamutal Schieber founded the company in 2009. Our offices are in New York and Tel Aviv.

Visit us at www.researchci.com

http://www.researchci.com

Contact us:[email protected]. 212-403-28191001 Ave of the Americas, New York, NY 10018

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