Fresh in Focus: Dairy Spotlight...Source: IRI Total Store View + Perimeter Market Advantage MULO+C,...

November 7, 2018

Fresh in Focus: Dairy Spotlight

Milking Foot Traffic: Strategies for Success in

Today’s Complex Dairy Department

© 2018 Information Resources Inc. (IRI). Confidential and Proprietary. 2

Jonna ParkerPrincipal

Fresh Center of Excellence

• Jonna recently returned to lead the new

IRI Fresh COE focusing on client

consultation in Produce, Bakery and Deli

• An innovator in the fresh foods space for

two decades, she has continually

advocated for consumer-driven decision

making and big data analytics as a leader

at an ISB/Deli manufacturer and the

Perishables Group

• Her insights have been cited across the

industry associations, including past

IDDBA webinars and What’s In Store

publications, as well as the trade and

consumer media including Grocery

Headquarters, NPR and USA Today

Melissa RodriguezConsultant

Client Insights-Dairy

• Melissa has been with IRI for 13 years,

with a heavy focus on the Dairy Vertical.

• Extensive knowledge base in Dairy

Thought Leadership, with a focus on New

Products and Innovation, as well as M&A

work.

• Strong background in base business team

management, driving growth across

Clients through analytics and consumer

research

• Currently leading committee for Twin

Cities region of NEW (Network of

Executive Women)

Meet The IRI Team


TODAY’S

DISCUSSIONMeet IRI for Fresh

Total Store Performance

Dairy Department Drivers and Disruptions

Macro lifestyle trends fueling Dairy performance

Impact of lifestyle and consumer trends on assortment

Opportunities for the Path Forward


IRI has a dedicated, experienced dairy and fresh practice focused on helping retailers and suppliers

GROW through integrated fresh insights on market performance and consumer behavior

IRI Fresh Center of Excellence

Solution

Enhancements

Thought

Leadership

Fresh

Expertise Client

Consultation

Retailer,

Supplier,

Industry

Ecosystem

Tailored for

Perimeter


Updated as of July, 2018.

NEW IDDBA & IRI Spotlight Series

MAR

2019JUL

2019

NOV

2019

MAY

2019

Webinar

Spotlight on

DAIRY

NOV

2018

Webinar

Spotlight on

BAKERY

Webinar

Spotlight on

CHEESE

Nov 7 Mar 20 May 15

Webinar

Innovations Seen

at the IDDBA 2019

Showcase

July 17

Webinar

Spotlight on

DELI MEATS &

PREAPRED FOODS

Sept 18

Webinar

Spotlight on

DAIRY 2019

Nov 6

LINK TO FRESH MATERIALS AT IRIWORLDWIDE.COM/INSIGHTS

ENGAGE WITH EXPERTS AT THE IDDBA.ORG COMMUNITY SITE

SEPT

2019


Where do IRI’s fresh insights come from?

IRI Market AdvantageTotal U.S. Multi-Outlet - Food, Mass, Club

Retailer sales data for packaged

and random-weight/non-UPC

IRI Consumer and Shopper Insights Advantage Total U.S. All Outlet

100k Household Panel

Expanded to include random-weight purchases

IRI Shopper Loyalty Network of Supermarket Grocery

30 Million Households,

100k Weekly transactions down to the item level, packaged

and random-weight/non-UPC


Total Store Performance


Edible+Perimeter grew in every Channel except Drug

MULO+C FOOD MASS w/WMT CONVENIENCE DRUG A/O

$643.4

$362.6

$141.0

$79.9

$12.4$47.5

+1.9% +1.1% +3.4% +3.3% -4.0% +3.7%

Source: IRI Total Store View + Perimeter Market Advantage MULO+C, 52 week ending 09/09/18

• Although small in comparison, Mass and Convenience are driving Total Store growth


The Fresh Perimeter Departments Make Up 22% of Total Store

Source: Dollar Sales, IRI Total Store View + Perimeter Market Advantage, 52 weeks ending 10-7-18 vs. Year Ago;

PRODUCE

BAKERY

(Aisle & ISB)

FROZEN

DELI MEAT & CHEESE

MEAT

DELI PREPARED

$60B

$5B

$58B$29B

$12B

$8B

$50B

BEV & LIQUOR

$96B

GENERAL FOOD

$158B

$565BTOTAL FOOD & BEV

CENTER STORE PERIMETER

DAIRY

$56B

SEAFOOD

$793BTOTAL STORE$224BNON-EDIBLE

FLORAL

$5B

$30B

REFRIGERATED


Center-store food departments experiencing both dollar and unit

growth, while Dairy and Perimeter growth flattened

2.8%

1.6%

BEVERAGES

3.0%

1.8%

FROZEN

1.4%

0.1%

GENERAL FOOD

2.5%

1.0%

LIQUOR

3.4%

2.0%

REFRIGERATED

EDIBLES

2.1% 0.5%

PERIMETER

1.4% -0.7%

$ % CHG VS. YAGO UNIT % CHG VS. YAGO

1.1%

-0.7%

BAKERY

-0.2%

-0.8%

DELI CHEESE

-0.1%

-0.4%

DELI MEAT

2.1%

-1.4%

DELI PREPARED

1.0%

-1.1%

PRODUCE

2.5%

0.1%

SEAFOOD

1.6%

-0.1%

MEAT

Source: Total Store View + Perimeter Market Advantage, MULO 52-weeks ending 10-7-18

1.3%

-0.9%

DAIRY


Being the biggest doesn’t meant the Best

Dairy

Liquor

Snacks

Vegetables

Fruit

CSD

Bakery

Candy

RFG Meats

Meals

$57.8

$54.1

$43.0

$29.9

$29.3

$27.7

$25.5

$25.4

$23.9

$23.6

Top 10 Edible Aisles

$ Sales (B)

Ref Meals

Ref Condiments

Water

Fz Snacks

Sports/Energy Drinks

Bagels

Fz Meals

Ref Meats

Cakes

Snacks

8.3%

7.6%

6.7%

6.0%

5.5%

4.7%

4.2%

3.8%

3.4%

3.4%

Top 10 Growing Edible Aisles

% Δ $ Sales


• Dairy is the largest Edible Aisle driving foot traffic for the retailer, however, isn’t one of the top growing

areas of the store.


Dairy Department Drivers and Disruptions


Dairy Drives Trips & Basket Value to the Store- And Increasingly So

Source: IRI Shopper Loyalty, Total Store View + Perimeter hierarchy 52 weeks ending 9/9/2018

49 Avg trips per buyer

44%of store baskets

2.9

x

Average total store

transaction is

Larger when dairy is

in the basket

1.3

pts

Increase in share

of all baskets

Higher than prior year

for baskets with dairy

DAIRY BUYING TRENDS


Dairy Growth Has Slowed Dramatically in Recent Years

Dairy is at an impasse –

what got us here, won’t get us there

Source: IR Market Advantage, Total Store View + Perimeter, Dairy excludes Eggs where growth has been volatile, MULO, data period ending 10/7/18

2.5% 2.8%

1.3%1.2%

1.7%1.6%

2.5% 2.2%

0.6%

1.3%

2.1%2.1%

5.3%

-0.9% -1.1%

0.1%

-0.6%-0.8%

2014 2015 2016 2017 Latest 52 wks YTD

Total Store, Center-Store Food (Edibles) and DairyDollar Sales Change versus Year Ago

TOTAL STORE | %Change vs YA EDIBLE | %Change vs YA DAIRY (ex Eggs) | %Change vs YA

Dairy growth rates slow, as rest of

store picks up steam


Increased

Competition

Lack of

Change

Commodity

Challenges

Price

Pressures

Shifting

Consumer Needs

Retail challenges are

more complex than ever


Dairy growth is stalling in heavily populated areas of the country


Dairy Total US

MULO+C Average

1.1%


Category Performance

Milk

Natural Cheese

Yogurt

Ice Cream/Sherbet

Fz Novelties

Creams/Creamers

Butter/Butter Blends

Processed Cheese

Cream Cheese

Margarine/Spreads

Sour Cream

Cottage Cheese

Ref Dips

Ref Whipped Toppings

Ref Desserts

$15,277.4

$12,956.0

$7,251.6

$6,869.7

$6,214.2

$5,148.2

$3,101.5

$2,881.5

$1,715.5

$1,307.8

$1,246.2

$1,080.4

$1,042.2

$1,022.7

$739.2

Top Categories – Dairy15

$ Sales (M)

Ref Dips

Ref Whipped Toppings

Creams/Creamers


Fz Novelties

Cream Cheese

Ref Desserts

Ice Cream/Sherbet

Natural Cheese

Cottage Cheese

Sour Cream

Yogurt

Margarine/Spreads

Processed Cheese

Milk

11.6%

8.6%

5.6%

5.0%

4.4%

2.9%

2.7%

1.2%

1.0%

0.5%

0.2%

-2.9%

-3.1%

-3.5%

-4.0%

Top Growing Categories – Dairy15

$ Sales % Δ (M)

IRI Total U.S. MULO+C – 52 weeks ending 07-15-2018


• Areas that are innovating are winning in Dairy


Growth pockets are emerging in driving dairy sales

Rfg Skim/Lowfat Milk

Ref Yogurt

Ice Cream

Ref Whole Milk

Natural Cheese-Shredded

Fz Novelties

Natural Cheese-Chunk

Ref Butter

Ref Coffee Creamer

Natural Cheese-Slices

Processed Cheese-Slices

Ref Flavored Milk

Margarine/Spreads

Natural Cheese-String/Stick

Sour Cream

$7,264.7

$6,472.0

$6,159.3

$4,747.2

$4,736.3

$4,732.3

$3,616.6

$2,760.6

$2,579.6

$2,245.4

$1,633.0

$1,524.0

$1,307.8

$1,258.0

$1,246.2

Top Sub-Categories – Dairy15

$ Sales (M)

Fz Novelties

Coffee Creamer


Ref Almond Milk

Ref Dips

Natural Cheese-Slices

Non-Aerosol Whipped Top

Ref Yogurt Drinks

Ice Cream

Natural Cheese-Shredded

Cream Cheese-Soft

Ref Milk Subs-AO

Fz Yogurt

Ref Dairy Half & Half

Fz Ice Cream/Ice Milk

$187.5

$165.6

$132.7

$124.1

$108.2

$72.1

$65.7

$59.9

$54.7

$51.6

$45.0

$39.0

$31.9

$25.9

$16.1

Top Growing Sub-Categories – Dairy15

$ Sales Δ (M)

IRI Total U.S. MULO+C – 52 weeks ending 07-15-2018


• While Milk and yogurt are still table stakes in Dairy, growth is coming from niche areas like creamers,

dips, and alternative milks


Macro Lifestyle Trends fueling Dairy performance


New Consumer-Based

Definitions of Health

and Wellness that

Drive Growth

Source: Business Insider, IRI Staff Images


7.5%

19.1%

13.6%

1.4%

8.6%

26.8%

2.6%6.9%

13.4%

0.4%

Non-GMO Protein No Gluten Omega Calcium No/Low/RedFat

Organic No Hormone Natural No/Low/RedSugar

% Contribution To Total Dairy New Items By Health & Wellness Claim

497

304

175 120 120 97 76 59 51 34

Non-GMO Protein No Gluten Omega Calcium No/Low/RedFat

Organic No Hormone Natural No/Low/RedSugar

Health & Wellness Claim New Items Indexed To Total Dairy New Items

Non-GMO and Gluten Free claims showing up more

Source: IRI Total U.S. MULO+C

• While Protein and Calcium remain table stakes attributes across the Dairy Aisle, consumer focus is

shifting


By the numbers

0.1% 0.4% 0.4% 0.5%2.1%

3.3%4.3%

6.8%

20.4%

24.4%

FrozenNovelties

Sour Cream WhippedTopping

Butter Yogurt ProcessedCheese

Cream Cheese Ice Cream Cream &Creamer

Milk

% Of New Item Dollar Sales From Plant-Based Alternatives


• Other Dairy Categories are jumping on board and providing plant-based solutions


It’s not just in Milk anymore

• There is a lot of talk around non-animal protein sources and innovators in 2017 reached across the

Dairy Aisle


And we continue to see them grow in numbers!



Consumers are

demanding ways to

make their lives

easier so they can

spend time on other

things


Across the store, consumers seek step-saving solutions and offerings that meet all their needs –

retailers and manufacturers need to ensure they’re appealing to all needs states

Find the Balance

Traditional commodity—

Requires consumer to create

their own serving sizes

Have at least one step

removed from the

preparation but still

isolated from other foods

Packages components

together with new varieties

and innovations

Completed prepared—

Little to no work necessary

$767M$635M$4.0B$1.3B

67% of Drinkable Yogurt Buyers also buy other yogurt forms


Convenient offerings in dairy bring people in!


Impact on Assortment


“Milk” that foot traffic in Dairy

Dairy Trips outperform by 100%


Dairy needs to use its space power to drive sales with on-trend items


Space gains need to be relevant

While Dairy space increased, sales per foot declined nearly 9%


Having the right assortment will win

MORE SPACE MORE SALES


Opportunities for Path Forward


Growth in dairy lies within:

“Milk” the core traffic – something to

be said about the good, familiar staple

items and brands

Bring excitement and uniqueness back

– shakeup stale assortment

Consider the continuum to solve the

consumer need

What got us here won’t get us there –

New items that fit in all of the above

will take the space


THANKYOU!

For More Information, Contact Us…

Jonna ParkerPrincipal, Fresh COE

[email protected]

Melissa RodriguezConsultant, Client Insights

[email protected]

mailto:[email protected]



Fresh in Focus: Dairy Spotlight...Source: IRI Total Store View + Perimeter Market Advantage MULO+C,...

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Transcript of Fresh in Focus: Dairy Spotlight...Source: IRI Total Store View + Perimeter Market Advantage MULO+C,...