What’s driving demand around the globe united states - dennis simonis
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International Macadamia Symposium Global Conference – Brisbane, Australia U.S. Market Profile
Dennis J. Simonis
September 2012
U.S. Economic Environment
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Economic Measure 2008 2009 2010 2011
GDP (% chg) 2.2% -1.7% 3.8% 1.7%
Unemployment (%, SA) 5.8 9.3 9.6 9.2
Consumer Price Inflation (% Chg) 3.8% -0.3% 1.6% 1.7%
Retail Sales (% Chg) -1.0% -6.4% 6.6% 6.5%
Residential Permits, Total (Mil) 3.6 2.3 2.4 3.5
Source: Moody’s, February 2011
Many consumers pessimistic
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Personal Financial Health versus Last Year
% of Consumers Source: Moody’s, February 2011
And expect more COL increases
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Improve Pt Chg YA
(2.6)
(0.1)
(7.1)
Consumer Perceptions of Economic and Financial Health
% of Consumers Source: Moody’s, February 2011
U.S. Snack Market Profile
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Snack food industry overview
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• Large industry generating $67.7 billion in FDMWC during 2010
Source: Symphony/IRI Group “State of the Snack Industry 2010”
Snack food industry overview
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• Overall flat sales with some segments growing +5% annually
Source: Symphony/IRI Group “State of the Snack Industry 2010”
Snack food market drivers
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Health &
Wellness Satiation Portability
Company
Values The
Economy
Consumers more health focused
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of consumers
71%
are trying to eat
healthier
Source: Symphony/IRI Group “State of the Snack Industry 2010”
Influencing snack choices
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40% of consumers
view snacks as an
important part of a
healthy eating
plan throughout
the day
60% of consumers
are trying to eat foods that
help prevent health problems
and/or manage existing health
conditions
24% of consumers
seek snacks that offer benefits
beyond basic nutrition
Source: Symphony/IRI Group “State of the Snack Industry 2010”
Snack consumer drivers
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• Low Fat
• Low Cholesterol
• Low Sugar
• High Fiber
• Low Calorie
• Whole Grains
50%
47%
47%
46%
45%
44%
• Low Salt/Sodium
• All Natural/Natural
Ingredients
• Gluten Free
45%
39%
Proven attributes Emerging attributes
Important Product Attributes
% of Consumers Source: Symphony/IRI Group
“State of the Snack Industry 2010”
37%
Emerging attributes potential
Organic/Natural Snacks Gluten Free Foods
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Source: Symphony/IRI Group “State of the Snack Industry 2010”
Packaged Facts, “2011 Gluten Free Foods Report”
Healthy outpacing indulgent
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Nutritional Snacks/Trail Mixes
Yogurt
Snack Nuts
Snack/Granola Bars
Salsa
+9.8%
+8.1%
+7.6%
+7.4%
+6.7%
Total
Healthier
+4.4%
Prepared Pudding
Chocolate Covered Salted Snacks
Dried Meat Snacks
Rfg. Appetizers/Snack Rolls
Chocolate Candy
+13.7%
+13.5%
+10.0%
+8.9%
+4.7%
Total
Indulgent
+1.2%
FDMx $ Growth
2011 v 2010 Source: Symphony/IRI Group
“State of the Snack Industry 2010”
Causing a share shift
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Share of Dollar Sales- FDMx
2010 v 2006 Source: Symphony/IRI Group
“State of the Snack Industry 2010”
Satiation is an important benefit
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Perception of the Role of Snacks % of Consumers Source: Symphony/IRI Group
“State of the Snack Industry 2010”
Portability is also important
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• Consumers are spending more time in transit
• Products that provide healthy satiation are benefitting
of consumers
seek snacks that can
be eaten on the go
39%
Source: Symphony/IRI Group
“State of the Snack Industry 2010”
Company Values Do Matter
• Customers that care about healthy eating care about:
• Environmental and safe growing practices
• Green packaging
• Clean ingredient statements
• Do you have a higher “cause”?
• Key Partnerships and Influencers
• Doing business ethically
Snack Nut Segment
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Snack nut sales
• Nut sales were $5B in 2010, up 46% versus 2005
• Health is the primary sales driver
• Favorable trends will drive 6% CAGR through 2015 Source: The Mintel Group Nuts and Dried Fruit Report, January 2011
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3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
2005 2006 2007 2008 2009 2010
(est.)
2011
(fore.)
2012
(fore.)
2013
(fore.)
2014
(fore.)
2015
(fore.)
Millions o
f dollars
($)
Sales of nuts, 2005-15
Snack nut consumer
• Over 60% of consumers snack on nuts monthly
• Only Fresh Fruit and Chips are consumed at a higher rate
Source: The Mintel Group Nut and Dried Fruit Report, January 2011
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79
83
60
62
56
51
41
26
26
84
82
68
64
66
59
44
30
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0 10 20 30 40 50 60 70 80 90
Fresh fruit
Chips
Crackers
Nuts
Vegetables
Popcorn
Pretzels
Dried fruit
Trail mix
Percent of respondents (%)
Past month snack consumption, by gender, September 2010
Male
Female
Snack nut consumer
• Consumers view nuts as a good source of energy
• Energy is a key benefit that is being used to increase sales
Source: The Mintel Group Nuts and Dried Fruit Report, January 2011
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U.S. Macadamia Nut Market
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IMS Conference – September 2012 U.S. Supply
Metric Tons 2010 2011 2012 est.
Domestic Production 3,890 4,500 4,300
Kernel Imports
Kenya 1,498 2,578 2,600
S. Africa 2,336 2,437 2,500
Australia 1,384 396 750
All Others 2,013 2,026 1,950
Total 7,231 7,437 7,800
Kernel Exports (733) (735) (800)
Consumption 11,202 11,300 11,300
Est. Global Crop 27,574 29,000 32,500
Est. % of Global Crop 40.6% 39.0% 34.8%
Source USDA NSS Reports
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Macadamia commodity price Historical and Projected
Price per pound
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
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• Pricing driven up primarily by increased demand, China
consumption and lower then expected Australian crop
• Weather has affected crop size
• Pricing is projected to decline as the global crop increases
• Normal weather in Australia
• New acreage in South Africa
Continental U.S. macadamias
Situation
•52 weeks FDM sales ending were $10.0MM (-6.0%)
•Private label is the leading brand with a 49% share
•Mauna Loa is #2 with a 34% share
•Macadamia sales shifted to other nuts, primarily almonds
Key issues
•Loss of distribution in major continental US FDM retailers
•Lack of brand support with consumers and trade
•Lack of product innovation capitalizing on wellness trends
(1) IRI FDM Sales data
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Macadamia nut consumer
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Source: The Mintel Group Nuts and Dried Fruit Report, January 2011
IMS Conference U.S. Macadamia Consumption
Mix by Geographic Market:
Hawaii 20 % 2.200 MT
U.S. Mainland 80% 9.100 MT
Total 100 % 11.300 MT
• Internal estimates only
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IMS Conference U.S. Macadamia Consumption
Continental US
Macadamia Nuts and Related Products
Mix by Channel
($ million)
Grocery 23.0 38%
Drug 3.4 6%
Mass 0.8 1%
Club 33.3 55%
Total 60.5 100%
Internal estimates only.
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IMS Conference U.S. Macadamia Consumption
US Market Potential
• If marketed aggressively and properly, the U.S. market could absorb 100% of the global macadamia crop.
• Direct selling opportunities offer tremendous potential
• Club stores, mainly Costco, are carrying the weight, but Food, Drug and Mass channels are largely underserved
• Health attributes have not been adequately communicated
• Inconsistent quality of foreign kernel has been an issue
• Consistent supply is a challenge in the current market