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Total Frozen Performance
Kantar Worldpanel - 52 w/e 31th December 2017
Chris Hayward
Agenda
2
1. Market Context – Christmas
2. Frozen Review
Discounters and Tesco performed best over the 12 weeks of Christmas
Source: Kantar Worldpanel Till Roll 12 w/e data to 31 December 2017
12w/e Retailer Christmas Performance
28.2%
16.7%
15.5%
10.9%
6.0%
6.0%
4.4%
5.3%
2.3%
1.2%
28.0%
16.4%
15.3%
10.7%
6.8%
5.8%
5.0%
5.2%
2.2%
1.3%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Tesco
Sainsbury's
Asda
Morrisons
Aldi
Co-op
Lidl
Waitrose
Iceland
Ocado
Share of Till Roll Grocers £%
12 Weeks to 01/01/17 12 Weeks to 31/12/17
3.1%
2.0%
2.2%
2.1%
16.8%
-0.2%
16.8%
2.3%
2.9%
8.4%
-2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%
Tesco
Sainsbury's
Asda
Morrisons
Aldi
Co-op
Lidl
Waitrose
Iceland
Ocado
YoY % Growth
3
We Three Themes….
3 key themes through 2017…are they still true at Christmas?
5
Inflation Own Label Promo De-escalation.
-10
-8
-6
-4
-2
0
2
4
6
831
-Jan-1
6
28
-Fe
b-1
6
27
-Ma
r-16
24
-Apr-
16
22
-May-1
6
19
-Jun-1
6
17
-Jul-16
14
-Aug-1
6
11
-Sep-1
6
09
-Oct-
16
06
-Nov-1
6
04
-Dec-1
6
01
-Jan-1
7
29
-Jan-1
7
26
-Fe
b-1
7
26
-Ma
r-17
23
-Apr-
17
21
-May-1
7
18
-Jun-1
7
16
-Jul-17
13
-Aug-1
7
10
-Sep-1
7
08
-Oct-
17
05
-Nov-1
7
03
-Dec-1
7
31
-Dec-1
7
co
ntr
ibu
tio
n to
ch
an
ge
%p
ts
Volume change Store Choice Promotions Product Choice
Consumers traded up this Christmas by indulging in quantity through cheaper products
Source: Kantar Worldpanel Grocery 4 w/e 31st December 2017
Trended Market Coping Strategies
6
Source: Kantar Worldpanel Grocery 4 w/e 31st December 2017
7
However it was Standard Own Label that saw the biggest gains this Christmas
Standard
Own Label
Branded
Premium
Own Label
Loss
Gain
GainLoss
£1.5m
£1.6m
£1.4m
£6.6m
Value Own
Label
Switching by Product Tier: Total Market
7
Penetration % pt Change
Ultimate success was found in those that could drive penetration across the tiers
8Source: Kantar Worldpanel Grocery 4 w/e 31st December 2017
OL Tier Penetration Change
-2
0
2
4
6
8
10
12
Tesco Asda Sainsbury's Morrisons Waitrose Co-op Aldi Lidl Iceland M&S Ocado
Value OL
Standard OL
Premium OL
9
20172016
Full Price
Price Cuts
MultiBuy
Y for £X
Meal Deal
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
D J J F M A M J J A S O N D D
2017 was a year of pulling back from promotions, however this changed at Christmas
%Growth
Source: Kantar Worldpanel Grocery 4 w/e 31st December 2017
Promotional Contribution to Growth
Despite extra activity compared to the rest of 2017, Christmas promotions were lower than ever
Spend % on promotion
Source: Kantar Worldpanel Grocery 4 w/e 31st December 2017 10
40.0
36.9
36.2
Christmas 15 Christmas 16 Christmas 17
Spend £% on promo
3 key themes through 2017…are they still true at Christmas
11
Inflation Own Label Promo De-escalation.
3 key takeouts…
12
Everyone’s a Winner
Something for everyone this
Christmas as shoppers shop
around more.
Those most successful
performed well all the way up to
New Years Eve.
Multi-tier strategy wins
Own Label continues to
outperform Brands.
Just focusing on one tier (e.g.
premium) is not enough to win.
Targeted strategy through Value,
Standard and Premium meets
the customers’ needs.
Price remains key
‘Christmas Essentials’ is the
most important driver of store
choice at Christmas.
Retailers targeted different
strategies to win, but Morrisons
saved themselves most cash vs
Xmas 2016.
2018 could be tougher for the Retailers with less “free” growth from inflation
Source: Kantar Worldpanel Grocery 4w/e 31st December 2017
Latest 12 weeks
inflation = 3.7%
2018 expected to settle
2% -2.5%*
*Projected inflation rate based on current economic and supply conditions
Agenda
14
1. Market Context – Christmas
2. Frozen Review
Before we start…..
To turn the Frozen category into a £10 Billion market.
When inflation stops driving Frozen growth, new growth levers will need to be found.
The Online channel is a contributing force in growing the category and needs to be further considered in future growth.
AAmbition
BBarrier
CConclusion
EXECUTIVE SUMMARY
Frozen is in strong growth of +6.4%, largely due to higher average prices.
Although the higher prices haven’t dissuaded shoppers to buy Frozen foods less frequently.
Total Frozen | Measure Tree | 52 w/e 31st December 2017 18
Measure52 w/e 01
Jan 17
52 w/e 31
Dec 17
Change
(Actual)
Change
(%)Spend (£000) 5,734,289 6,099,458 +365,169 +6.4%Volume (000 kg) 2,022,443 2,067,566 +45,123 +2.2%Penetration (%) 99.07 99.24 +0.18 +0.2%
Frequency 47.59 48.36 +0.77 +1.6%Spend per Buyer (£) 213.43 224.43 +11.00 +5.2%Volume per Buyer (kg) 75.27 76.08 +0.80 +1.1%Spend per Trip (£) 4.48 4.64 +0.16 +3.5%Volume per Trip (kg) 1.58 1.57 -0.01 -0.5%Price per kg (£) 2.84 2.95 +0.11 +4.0%
Value up 6.4% worth £365.2m
-100,000 0 100,000 200,000 300,000 400,000 500,000
Spend (£000)
+£365.2m
£6099.5m (+6.4%)
Price per kg (£)
+£235m
£2.95 (+4%)
Buyers
+£67.1m
27.2m (+1.2%)
Volume (000 kg)
+£130.2m
2067.6m (+2.2%)
Volume per Buyer (kg)
+£63.1m
76.1 kg (+1.1%)
Frequency
+£94.1m
48.4 trips (+1.6%)
Volume per Trip (kg)
-£30.9m
1.6 kg (-0.5%)
Penetration (%)
+£10.3m
99.2% (+0.2%)
GB HH Population
+£56.8m
27.4m (+1%)
Frozen prices are
increasing above that of
Total Grocery (+3%)
Category growth has continuously picked up over the year.
This comes in unison with price increases starting around March 2017.
Total Frozen | Trended Measure Tree | 52 w/e 31st December 2017 19
-200,000
-100,000
0
100,000
200,000
300,000
400,000
500,000
Contr
ibution
Frequency Trip Volume (kg) Price per kg Penetration (%) GB HH Population Total Contribution (£000s)
How can the category maintain
growth once inflation stabilizes?
Total Frozen | Future Growth | 52 w/e 31st December 2017
At current levels of growth, it’ll take the Take-Home Frozen market 4 years to be
worth £7.5B
20
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Year 1 Year 2 Year 3 Year 4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Growth with current levels of Inflation Growth at current level without Inflation
Sp
en
d (
£B
)
£7.5B
Total Grocery | Category Value and Growth | 52 w/e 31st December 2017
The Frozen category has achieved the strongest growth at Total Grocery.
Beating Ambient and Fresh & Chilled in its yearly performance.
21
Total Ambient
£29.6B
+3.2%
Total Frozen
£6.1B
+6.4%
Total Fresh & Chilled
£44.5B
+4%
Frozen is currently 7.6% of Food & Drink
(excluding Alcohol)
Turkey was the main winner this year through both Fresh & Frozen formats
Fresh Meat & Poultry & Gammon Performance
Source: Kantar Worldpanel MLC9 4 w/e 31st December 2017 22
-5,000 -4,000 -3,000 -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000
Fresh Beef Roasting
Fresh Lamb Roasting
Fresh Pork Roasting
Total Fresh Turkey
Total Frozen Turkey
Gammon
Penetration % Purchase Frequency Trip Volume (kg) Price per kg GB HH Population
-0.7
6.0
-1.2
6.0
9.6
5.7
% Change
Total Frozen | Demographic Growth | 52 w/e 31st December 2017
Who are the shoppers driving the Frozen market?
The driving force behind Frozen growth are older, less affluent shoppers.
23
47.3 47
52.7 53
34 33.3
66 66.7
68 68.4
32 31.6
54.6 55.2
45.4 44.8
52 w/e 01 Jan 17 52 w/e 31 Dec 17
3 + Member HHs
1 & 2 Member HHs
With Children
Without Children
Shopper Aged 45+
Shopper Aged under 45
Class C2DE
Class ABC1
+4.9%
+5%
+7%
+7.5%
+4.2%
+7%
+5.7%
+7.6%
Total Grocery | Grocery Area by Life-stage | 52 w/e 31st December 2017
How does shopper buying habits evolve by life-stage?
As people age, and begin families, their frozen food consumption increases.
24
36.9 37.3 38.2 39.9 40.2 37.4 36.6 34.3
55.5 55.3 53.5 51.5 50.8 54.3 56.1 59
7.6 7.4 8.2 8.6 9 8.3 7.3 6.6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total Lifestage Pre-Family Young Family 0-4 Years Middle Family 5-9 Years Family 10+ Years Older Dependents Empty Nesters Retired
Spend S
hare
(%
)
Total Ambient Groceries Total Fresh+Chilled Total Frozen
Total Frozen | Channel Growth and Share | 52 w/e 31st December 2017
There is a shift in the way people buy Frozen food.
Main Stores are growing behind the market, with the Discounters and Online retailers pushing growth furthest.
25
52.4 51.3
21.4 21.4
9.7 10.8
8.7 9
6 5.6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
52 w/e 01 Jan 17 52 w/e 31 Dec 17
Spend S
hare
(%
)
Total Bargain Stores
High St
Convenience
Online
Discounters
Freezer Centre
Main Store
+36.7%
+4.1%
+8.9%
-0.3%
+9.9%
+18.8%
+6.4%
The Main Store has struggled to improve shopper engagement, growing through price.
Reaching £10B is unlikely to come through Main Estate alone, focusing on the discounters and online gives
Frozen the best chance of success.
Total Frozen | Channel Comparative Measure Tree | 52 w/e 31st December 2017 26
-100,000 -50,000 0 50,000 100,000 150,000 200,000
Main Store
Freezer Centre
Discounters
Online
Convenience
High St
Total Bargain Stores
Penetration % Purchase Frequency Trip Volume (kg) Price per kg GB HH Population
4.1
6.4
18.8
9.9
-0.3
8.9
36.7
% Change
Both Brands and Own Label are driving Online success.
Brands fair better online than in the Total Market.
Total Frozen | Brand/Private Label Share and Growth | 52 w/e 31st December 2017 27
45.3 50.4
54.7 49.6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total Frozen Frozen Online
Spen
d S
har
e (%
)
Private Label
Branded
+11.3%
+8.6%+2.4%
+9.9%
How can the online channel help Frozen reach £10B?
Unlike in Main Estate, shoppers are buying Frozen more often online, and at the higher average prices.
Total Frozen | Total Online | Measure Tree | 52 w/e 31st December 2017 29
£547.6M(+9.9%, +£49.3M)
22.4% GB Penetration
(+1.3%, +£6.7M)
12.9 trips over the year
(+4.8%, +£24.4M)
2.3KG per shop
(-1.7%, -£8.2M)
£3.08 per KG
(+4.2%, £21.4M)
Online continues to attract new
shoppers.
+138,600 new Frozen shoppers via the
Online channel.
Total Grocery | Total Online | Category Share and Growth | 52 w/e 31st December 2017
How does Frozen compare to the other Grocery categories Online?
Similar to at Total Grocery, Frozen leads the pack, being the fastest growing Grocery category Online.
30
39.4 39.6
28 28.1
9.7 9.7
9.7 9.4
6.5 6.6
5.6 5.4
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
52 w/e 01 Jan 17 52 w/e 31 Dec 17
Spend S
hare
(%
)
Total Healthcare
Total Toiletries
Total Frozen
Total Household
Total Alcohol
Total Ambient Groceries
Total Fresh & Chilled
+6.1%
+7.5%
+3.8%
+9.9%
+4.7%
+8.0%
+8.0%
Total Frozen | Total Online | Category Share and Growth | 52 w/e 31st December 2017
Frozen Prepared Foods and Confectionery have been key to Online success.
With fewer households scratch cooking over the past few years, the emphasis is on prepared foods to provide a
convenient solution.
31
57.620.8
13.4
5
3.2
Frozen Prepared Foods
£315.5M, growing at +9.8%Frozen Confectionery
£113.9M, growing at +13.6%
Frozen Fish
£73.2M, growing at 8.8%
Frozen Poultry & Game
£27.3M, growing at +1.7%
Frozen Meat
£17.6M, growing at 7.4%
Online added £49.3M to the Frozen category. What are the top sub-sectors driving this?
Frozen Ready Meals added £6.1M to online Frozen despite being smaller than the other top 5 sectors.
Total Frozen | Total Online | Top Contributing Sectors | 52 w/e 31st December 2017 32
£84.3M £49.7M £73.2M £55.6M £66.8M+£11M +£6.1M +£5.9M +£4.9M +£4.6M
Value (£M)Growth (£M)
Ice-Cream Frozen Ready Meals Frozen Fish Frozen Vegetables Frozen Potato Products
Frozen is out performing many corresponding Chilled sectors.
Chilled Ready Meals has been a driving force for Chilled performance, however Frozen now grows ahead.
Total Frozen | Total Online | Sector Performance | 52 w/e 31st December 2017 33
Chilled Convenience Frozen Prepared Foods Chilled Ready Meals Frozen Ready Meals
+7.9% +9.8% +9.8% +14%
EASE OF PREPARATION HAS BECOME MORE IMPORTANT THAN SPEED
Source: Kantar Worldpanel Usage – 52 w/e 26TH March 2017
Total In Home/Carried Out consumption
7.6
7.8
8
8.2
8.4
8.6
8.8
9
9.2
D M J S D M J S D M J S D M
Total Consumption – Practicality Needs
201620152014
Quick to prepare
Easy to prepare
Servings Vert %
2017
Time has become less important. Making my life easier is now more of a driver. RTC products which take 30
minutes in the oven are a prime example of this.
35
SPENDING MORE TO SAVE TIME
Total Savoury Meals
35 minutes
Scratch Cooking
43 minutes
Ready Meals &
pizzas
27 minutes
£2.28 £2.8456p per person
to save 16 minutes
KWP Usage: Average prep time & cost per meal occasion52 w/e March 2017
It’s not just about the time saving in food preparation. They could be quicker/easier to wash up as well as
perhaps providing a dish that the respondent could not make themselves.
WHAT’S NEXT
To turn the Frozen category into a £10 Billion market.
When inflation stops driving Frozen growth, new growth levers will need to be found.
The Online channel is a contributing force in growing the category and needs to be further considered in future growth.
AAmbition
BBarrier
CConclusion
EXECUTIVE SUMMARY