The New Conversation: IBIE October 2013

International Baking Industry Exposition

October 2013

THE NEW CONVERSATION ABOUT NUTRITIVE SWEETENERS CHANGING CONSUMER PERCEPTIONS AND THE IMPACT

ON CONSUMER PURCHASE DECISIONS

CAPRI SUN® and logo are registered trademarks of Rudolf Wild GmbH & Co. GATORADE® and logo are registered trademarks of Stokley-Van Camp, Inc.. HEINZ® brands are registered trademarks

of H.J. Heinz Co. HUNT’S® brands are registered trademarks of ConAgra Brands Inc. MIRACLE WHIP® and logo are registered trademarks Kraft Foods, Inc. NUTRI-GRAIN® and logo are registered

trademarks of The Kellogg Company. POWERADE® and logo are registered trademarks of The Coca-Cola Company. SARA LEE® and logo are registered trademarks of Sara Lee™ Holdings used

under license.

TODAY’S SPEAKERS

Martin Concannon Founder and Managing Director, Lafayette Associates

President and Founder, White Technical Research

John S. White, Ph.D.

FIRST & FOREMOST:

How can we continue to create food and beverage products that consumers will want to buy?

3

TOP QUESTIONS FROM F&B INDUSTRY PROS

• Why do I read or hear that a large percentage of consumers are concerned about HFCS?

• How do I know that research that says different applies to my consumers?

• If consumers say they want to avoid “sugar,” don’t they really mean HFCS?

• Isn’t it true that consumer attitudes about HFCS drive their purchase decisions?

• If nothing else, isn’t “HFCS-Free” a niche market for incremental volume and share?

4

WHY WE ARE HERE:

To share 3rd-party research that will answer those questions and help you make informed business decisions about sweeteners.

5

WHAT WE WILL COVER Consumer Attitudes Toward Sweeteners & HFCS

The Science of Sweeteners

Sweeteners & Consumer Purchase Decisions

Sweetener Strategies

Summary & Looking Ahead

6

7

WHAT DO CONSUMERS THINK?

FIRST, WHAT DO YOU THINK CONSUMERS ARE THINKING? Is the media coloring your perception of consumer attitudes?

“Mom: High fructose corn syrup caused diabetes”

(6/24/13)

“You Really Can’t Eat Just One, and Here’s the Reason”

(3/17/13)

“High fructose corn syrup linked to global diabetes crisis”

(11/27/12)

Fructose changes brain to cause overeating, scientists say

(1/2/13)

“New Research Suggests High Fructose Corn Syrup Triggers Addictive Consumption Similar to Drugs”

(6/6/13)

8

“Is Sugar Toxic?” (4/01/12)







9

Source: Mintel.

THE BIG GAP: WHAT PEOPLE SAY AND WHAT THEY DO

It’s the difference between what people say and what they

actually do – as conclusively shown in extensive research by

Mintel, NPD Group, and Nielsen.

Responses to unaided questions reveal top-of-mind concerns,

true attitudes and likely behavior.

10

11

American consumers are much more concerned about total sugars in their diet than about any specific sweetener.

12

In fact, consumers avoid added sugars more than any other ingredient.







13

HOW DO WE KNOW? WE TALKED TO CONSUMERS.

MINTEL OCTOBER 2012 SURVEY: • 2,400 primary household grocery shoppers • Nationally representative, regionally balanced samples • Methodology: Unaided and aided questions

HOUSEHOLDS: + Children under 18yrs + No children

INCOME RANGE: < $35,000 through >$85,000

EDUCATION: < High school through doctorate degree

Mintel research focuses on moms, the primary shopper.

Sample weighted by age and education prior to analysis. 75% of primary shoppers being women is within range of other studies. Results accurate +/- 2.0% at a 95% confidence level..

14






• How do I know that consumer research is relevant to my brand?


15

SEGMENTATION BASED ON

COMBINATION OF AIDED AND UNAIDED

• Q3. In the last six months, have there been any particular foods, beverages, or

specific ingredients that you and your family are trying to consume less of or avoid?

(Multiple responses accepted) *Includes HFCS & Corn Syrup (Unaided)

• Q8. Which of the following statements best describes your beliefs regarding the foods

and beverages that you or your family consume? (Aided)

– I/we limit or try to avoid high fructose corn syrup specifically

– I/we have no real concerns with respect to the sweet content of the foods and/or beverages I/we consume

– I/we limit or try to avoid sugar of any kind

– It is the overall sugar content that matters more to me/us, not the high fructose corn syrup

Source: Mintel, October 2012; N = 2,400 16

CONSUMERS FALL INTO THREE MAIN SEGMENTS.

• Sugars Avoiders: Say they avoid or limit sugars on an unaided basis. – This segment includes HFCS Avoiders – those who mention HFCS specifically on

an unaided basis.

• Sugars Concerned: On an aided basis, say they limit all sugars, or that total sugars matter more than HFCS. – This segment includes HFCS-Concerned – those who say on an aided basis that

they limit or avoid HFCS specifically.

• Eaters: No concerns about sweeteners in foods and beverages.

Source: Mintel, October 2012; N = 2,400 17

“HFCS AVOIDERS” – WHAT PART OF THE POPULATION?

EATERS: 20.3% SUGARS CONCERNED: 58.4% SUGARS AVOIDERS 21.3%

HFCS AVOIDERS:

2.9%

79.7% of consumers are concerned about total sugars.

Source: Mintel, October 2012; N = 2,400

HFCS CONCERNED:

23.1%

unaided aided

aided unaided

Only 2.9% of consumers avoid HFCS specifically.

18

WHAT ARE CONSUMERS DEMANDING? LESS ADDED SUGAR. In the last six months, have there been any particular foods, beverages, or specific

ingredients that you and your family are trying to consume less of or avoid? (UNAIDED)

3%

3%

3%

4%

5%

8%

13%

17%

21%

22%

Red meat

Processed/packaged foods

High fructose corn syrup

Fast food

Carbohydrates/white foods

Soda/carbonated beverages

Salt/Sodium

Fats/oils, hydrogenated fats

Sugar, added sugar

Not avoiding or purposefully consuming less of anything

Source: Mintel 2012; N = 2,400

Q3. In the last six months, have there been any particular foods, beverages, or specific ingredients that you and your family are trying to consume

less of or avoid? (multiple responses accepted)

* “HFCS” Includes HFCS and corn syrup

19

PRIMARY SHOPPERS DON’T LOOK FOR HFCS ON LABELS.

Frequency of label-reading (UNAIDED) Information sought on labels (UNAIDED)

Hardly Ever 15%

Never 12%

Regularly 48%

Occasionally 30%


Q2. When you read labels, what information are you looking for? (multiple responses accepted)

* “HFCS” Includes HFCS and corn syrup

38%

30% 28% 24%

13%

5% 5% 4% 4% 4%

20

FEWER THAN 3% OF SHOPPERS SPECIFICALLY AVOID HFCS

IN 12 HIGH-VOLUME FOOD AND BEVERAGE CATEGORIES.


Q11. You said that you consider sugar or other sweeteners when buying …… Please tell us why. (Open-ended response = “Avoid/dislike HFCS”)

Category Shoppers Specifying HFCS as a Concern When Buying Products (UNAIDED)

21

2.7% 2.2% 2.1% 2.0% 1.9% 1.9% 1.7% 1.5% 1.5% 1.3% 1.3% 0.7%

36%

60%

21%

43%

56% 54%

29%

45% 42%

52%

24%

35%

2.7% 2.2% 2.1% 2.0% 1.9% 1.9% 1.7% 1.5% 1.5% 1.3% 1.3% 0.7%

SHOPPERS ARE FAR MORE CONCERNED ABOUT ADDED

SUGARS OVERALL THAN ABOUT HFCS SPECIFICALLY.

Category shoppers specifying HFCS as a concern when buying products

Category shoppers who consider sugar/sweeteners when buying products

Q10. Do you consider ….when buying ...?

Q11. You said that you consider sugar or other sweeteners when buying …… Please tell us why. (Open-ended response = “Avoid/dislike HFCS”) 22


HFCS IS A CONCERN FOR THREE OUT OF 100 FRESH/PACKAGED BREAD BUYERS.

76%

53% 46% 46%

36% 36%

0%

20%

40%

60%

80%

Vitamins Calories Fiber Protein Fats Sugar

Fresh Packaged Bread

Q11 You said that you consider sugar or other

sweeteners when buying fresh packaged bread.

Please tell us why? (open ended)

Response % of all

respondents

buying bread

Limit/watch sugar/sweeteners 12%

Avoid/dislike sugar/sweeteners 5%

Diabetic reasons/avoid diabetes 4%

Avoid/dislike added sugar/sweeteners 4%

Watching calories/weight/fattening 3%

Avoid/Dislike HFCS/Corn Syrup 3%

Like natural sweeteners/ingredients 2%

Sugar unhealthy/bad for teeth/junk food 2%

Control carbohydrates 1%

Prefer Diet/Sugar Free/Light products 0%

Total 36%

2012 Base n =2,008

2012 Base n Buy Fresh/Packaged Bread =1,649

Q10 Do you consider ….when buying ...?

23

TWO IN 100 COOKIE/CAKE/PASTRY BUYERS MENTION HFCS AS A CONCERN.

44% 43% 43%

30%

35%

40%

45%

50%

Fats Sugar Calories

Cookies/cakes/pastries

Q11 You said that you consider sugar or

other sweeteners when buying cookies,

cakes and pastries

Please tell us why? (open ended)

Response % of all

Respondents buying

Cookies, Cakes and

Pastries

Limit/watch sugar/sweeteners 15%

Family member likes it/All Other 11%

Avoid/dislike sugar/sweeteners 6%

Watching calories/weight/fattening 5%

Like natural sweeteners/ingredients 3%

Diabetic reasons/avoid diabetes 3%

Avoid/dislike added sugar/sweeteners 3%

Sugar unhealthy/bad for teeth/junk food 2%

Avoid/Dislike HFCS/Corn Syrup 2%

Prefer Diet/Sugar Free/Light products 1%

Control carbohydrates 1%

Total* 49%

2012 Base n =2,008

2012 Base n Buy Cookies, Cakes and Pastries= 1,024

Totals equal more than 43% due to multiple responses

Q10 Do you consider ….when buying ...?

24

42.2 42.9 47.1

53.6

68

1.4 1.3 1.3 1.2 1 0

10

20

30

40

50

60

70

80

July 1, 2009 July 1, 2010 July 1, 2011 July 1, 2012 July 1, 2013

Searc

h I

nd

ex

"Sugar"

"Soda"

"Stevia"

"High FructoseCorn Syrup"

LOW SEARCH VOLUME FOR “HFCS” INDICATES LOW INTEREST. Search volume for “Sugar” is more than 60x greater than for “HFCS” – a clear sign of what matters more to consumers.

*”High Fructose Corn Syrup” search combines commonly used terms, “High Fructose Corn Syrup and “Corn Syrup” Source: Google Trends, Scale is based on the average traffic in US only from January 4, 2004

25

July 2009 July 2010 July 2011 July 2012 July 2013

SOCIAL MEDIA “BUZZ” DOES NOT REFLECT HIGH INTEREST.

>60% of posts about HFCS are by

people who post only once or twice a year – clearly not a high priority issue for them.

Additional 15% of posts from

people paid to post & from automated “bots.”

Actual conversation:

Mainly on forums and

personal blogs by people

heavily engaged in activities

such as organic farming and

body-building.

“…We need to take into account the motivations of some commentators seeking to create false controversies. A high volume of comments on sites such as Facebook and Twitter does not necessarily translate to high consumer interest.”

K.D. Paine, CEO, KDPaine & Partners

Source: KDPaine & Partners, 2011

Base: 301,497 comments, posts and published conversations 26

KEY TAKEAWAY

CONSUMER ATTITUDES:

Research shows that consumers

are focused on added sugars

overall, not on the sweetener type.

27

Unaided questions reveal top-of-mind concerns, true attitudes,

and likely behavior.

27

28

THE SCIENCE OF SWEETENERS

HFCS IS MORE THAN JUST A SWEETENER.

• Maintains freshness in condiments

• Promotes browning of baked goods

• Enhances fruit and spice flavors in marinades

• Aids fermentation in breads and yogurts

• Retains moisture in breakfast bars and cereals

• Makes high-fiber baked goods and cereals more palatable

• Maintains consistent flavors in beverages

• Keeps ingredients evenly mixed in salad dressings

29

30

CLEAR SCIENTIFIC AGREEMENT

… with no nutritive difference. HFCS and table sugar are safe …

31

IS HFCS NATURAL? YES, UNDER FDA POLICY.

HFCS meets the Food and Drug Administration’s

test for use of the term “natural.”

HFCS is made from corn, a natural grain product,

and enzymes used in production of HFCS are

found in nature.

Source: Letter from Geraldine June, FDA Center for Food Safety and Applied Nutrition, to Audrae Erickson, President of

the Corn Refiners Association, July 3, 2008.

0

50

100

150

200

250

300

350

0%

10%

20%

30%

40%

50%

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

Ca

lori

es p

er

pe

rso

n p

er

da

y

Pe

rce

nta

ge

of p

op

ula

tio

n o

be

se

OBESITY

HFCS

Data: USDA Economic Research Service (U.S. per capita loss-adjusted food availability: “Total Calories”); Flegal et al, JAMA, 2010; Flegal et al, JAMA, 2012.

HFCS USE DECREASED

AS OBESITY RATES

CONTINUED TO RISE.

Data for the last 10 years do not support the HFCS hypothesis.

32

OBESITY =

EXCESS CALORIES

HFCS is not a significant part of the calorie increase.

Average Calories Consumed Daily Per Capita (U.S.) Percentage of Caloric Growth

2,076 2,534

+458 Calories

1970 2010 Added sugars

7%

Added fats 53%

Flour/cereal products

37%

All other 3%

Source: Economic Research Service, USDA (U.S. per capita loss-adjusted food availability: “Total Calories”) 33

34

THE SWEETENER

CONVERSATION HAS

SHIFTED.

USDA 2010 dietary guidelines emphasize total caloric intake; industry labeling initiatives are in sync, highlighting total sugar content.

It’s not the type of added sugar that matters to consumers; the issue is total sugar consumption.

CONFUSION ABOUT HFCS

MISCHARACTERIZED Some nutritionists and researchers have erroneously suggested a direct and unique causation between the consumption of HFCS and obesity.

MISUNDERSTOOD Consumers have been told that sugar is a more natural substitute for HFCS.

MISALLOCATED Some companies have begun to replace HFCS with other sweeteners in their brands for marketing purposes.

35

KEY TAKEAWAY

There is no meaningful nutritional difference between HFCS and sugar.

There is widespread agreement among health and science experts that

36

37

SWEETENERS & CONSUMER PURCHASE DECISIONS







38

Source: Nielsen

RETAIL SCAN DATA SHOWS WHAT SHOPPERS ARE REALLY DOING. Nielsen scanner data tracked sales performance of brands that switched from

HFCS to sugar: more than 3,200 SKUs across 25 leading brands in three

major product categories.

39

BEVERAGES BAKED GOODS PREPARED FOODS

Soft Drinks

Ready to Drink Teas

Juice Drinks

Sports Drinks

Refrigerated Yogurt Drinks

Fresh Bread

English Muffins

Bagels

Rolls

Buns

Snack Crackers

Canned Soup

Condiments

Syrup

Granola

NUTRI-GRAIN BREAKFAST BAR SHARE

($) OF TOTAL BREAKFAST BAR MARKET

Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March 2013.

0%

5%

10%

15%

20%

25%

30%

35%

40%

HFCS Sugar

Nutri-Grain brand dollar sales share has not increased with recent reformulation to

HFCS-free.

40

SARA LEE BREAD SHARE ($) OF TOTAL

FRESH BREAD MARKET


Product reformulation to HFCS-free in 2010 has not increased brand dollar share. The uptick in sales

the last four months is likely due to retail promotions.

0%

1%

2%

3%

4%

5%

6%

7%

8%

HFCS Sugar Low / No Sugar

41

KEY TAKEAWAY

CONSUMER PURCHASE DECISIONS:

42

The overwhelming majority of consumers

don’t respond to strategies based on

promoting single type of sweetener.

42

43

SWEETENER STRATEGIES

SWEETENER STRATEGIES VARY WIDELY ACROSS BRANDS.

44

APPROACH DESCRIPTION

Replace Reformulate brand without promotion

Extend Offer HFCS-free line extension

Promote Reformulate brand with heavy promotion (including

package label call-outs)

Reduce Offer lower-sugars line extension

Maintain Stay with HFCS

New data emerging on performance of brands with different approaches. Many

have already switched back to HFCS – including “Mom & Kid” brands.

45

REPLACE: MIRACLE WHIP

HFCS

Sugar

52 wk trailing


$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

1/1

/2009

4/1

/2009

7/1

/2009

10/1

/2009

1/1

/2010

4/1

/2010

7/1

/2010

10/1

/2010

1/1

/2011

4/1

/2011

7/1

/2011

10/1

/2011

1/1

/2012

4/1

/2012

7/1

/2012

10/1

/2012

1/1

/2013

$ S

ale

s (

Millio

ns)

52-week sales trend shows no sales gain from either sweetener change.







46

EXTEND: HEINZ GIVES UP AS

MUCH AS IT GAINS.

47

Low-salt, HFCS-free SKUs cannibalized about 7% share from their

existing base.


0%

10%

20%

30%

40%

50%

60%

70%

Jan-0

9

Mar-

09

May-0

9

Jul-09

Sep-0

9

Nov-0

9

Jan-1

0

Mar-

10

May-1

0

Jul-10

Sep-1

0

Nov-1

0

Jan-1

1

Mar-

11

May-1

1

Jul-11

Sep-1

1

Nov-1

1

Jan-1

2

Mar-

12

May-1

2

Jul-12

Sep-1

2

Nov-1

2

Jan-1

3

Mar-

13

Mark

et S

hare

, $ S

ale

s

HFCS

Sugar

PROMOTE: HUNT’S BRAND

REFORMULATION DIDN’T PAY OFF.

48

“Overall, consumer demand for HFCS-free ketchup was not as

strong as expected.” - Hunt’s spokesperson, May 31, 20121

1. Source: http://www.foodnavigator-usa.com/Market/ConAgra-switches-back-to-HFCS-in-Hunt-s-ketchup-citing-lackluster-demand


0%

5%

10%

15%

20%

25%

30%

HFCS

Sugar

CAPRI SUN SALES: GAINS FROM PROMOTIONS, NOT FROM

SWITCHING SWEETENER.

49

0%

2%

4%

6%

8%

10%

12%

1/1

/2009

4/1

/2009

7/1

/2009

10/1

/2009

1/1

/2010

4/1

/2010

7/1

/2010

10/1

/2010

1/1

/2011

4/1

/2011

7/1

/2011

10/1

/2011

1/1

/2012

4/1

/2012

7/1

/2012

10/1

/2012

1/1

/2013


HFCS

Sugar

24 wk trailing

50

CAPRI SUN “ROARIN’ WATERS”: HFCS-SWEETENED, AND

LOWER-TOTAL-SUGARS STRATEGY BOOSTS SALES.

HFCS

52wk trailing


$0

$1

$2

$3

$4

$5

$6

$7

1/1

/2009

4/1

/2009

7/1

/2009

10/1

/2009

1/1

/2010

4/1

/2010

7/1

/2010

10/1

/2010

1/1

/2011

4/1

/2011

7/1

/2011

10/1

/2011

1/1

/2012

4/1

/2012

7/1

/2012

10/1

/2012

1/1

/2013

Millio

ns

Success of HFCS-sweetened Roarin’ Waters reflects the fact that lower sugars overall, not a specific

type of sweetener, is what matters to primary shoppers (moms) – which Capri Sun purposely leveraged.

Consolidated sales:

$259.9 million

MAINTAIN: POWERADE GAINS

ON GATORADE

51

Gatorade share was flat (up .3%) over this period. Staying with an

HFCS formulation, Powerade share rose from 9.5 % to 11.5 %.


HFCS

Sugar

0%

5%

10%

15%

20%

25%

30%

35%

40%9/1

/20

09

11

/1/2

009

1/1

/20

10

3/1

/20

10

5/1

/20

10

7/1

/20

10

9/1

/20

10

11

/1/2

010

1/1

/20

11

3/1

/20

11

5/1

/20

11

7/1

/20

11

9/1

/20

11

11

/1/2

011

1/1

/20

12

3/1

/20

12

5/1

/20

12

7/1

/20

12

9/1

/20

12

11

/1/2

012

1/1

/20

13

3/1

/20

13

Ma

rke

t S

ha

re,

$ S

ale

s

HFCS (No change)

KEY TAKEAWAY

SWEETENER STRATEGIES:

A “reduce” strategy (reduction of total sugars) is aligned with current consumer needs. Consumer purchase data confirms HFCS-free as a brand point of difference does not impact market share.

52

53

SUMMARY & LOOKING AHEAD

WHY DO COMPANIES SWITCH FROM HFCS?

Most cite one reason:

“Our consumers are demanding it.”

54

THIRD-PARTY RESEARCH TELLS A DIFFERENT STORY.

Consumers care more about total sugars, not about which nutritive sweetener is added.

55

THE SWEETENER LANDSCAPE IS CHANGING.

F&B companies have focused on changing the type of sweetener they use.

• But sales data clearly show that changes in the type of sweetener have no significant positive effect on sales.

By taking a new look at consumer attitudes about sweeteners and healthier eating, we now understand:

• How consumer attitudes translate into purchase decisions. • How leading brands are leveraging a successful sweetener strategy.

56

LOOKING AHEAD: THE ISSUE OF TOTAL ADDED SUGARS

1. Are you incurring unnecessary costs to develop or promote HFCS-Free products that few of your consumers care about?

2. Instead, should you consider lowering added sugars overall in your products, in response to changing consumer needs?

Key questions for food and beverage manufacturers:

57

Who else in your company needs to know?

58

THANK YOU For more information, visit

or call 1-877-825-6635.

Copyright 2012 Corn Refiners Association 59

LEARN MORE

• Whitepaper: The New Conversation About Sweeteners: Changing

Consumer Perceptions and the Impact on Consumer Purchase Decisions

• Mintel Research Consultancy: Categorical Proof that HFCS is Not the Issue

• Nielsen Shopper Data: Customers Aren’t Buying HFCS-Free

• Frequently Asked Questions about HFCS

• Schedule a Free Lunch And Learn At Your Company

• Find us on Twitter

60

http://bit.ly/15BnLh8

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http://bit.ly/15T3qFd

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mailto:http://bit.ly/18V3HIt

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The New Conversation: IBIE October 2013

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Transcript of The New Conversation: IBIE October 2013