Whats in store consumers food and the recession 090711

What’s In Store?Consumers, Food and The Recession

by Brand Amplitude, LLC

Fall, 2011

In 2010 and 2011, Brand Amplitude helped several major manufacturers of grocery products to better understand the trends affecting their customers in light of the continuing economic turmoil.

This work spans diverse categories including beverages, juice, proteins, condiments, even pet food! Despite this diversity, we observed many common themes regarding consumer needs and coping strategies.

While we all hope the economy improves soon, we increasingly see these findings as the new reality for retailers and manufacturers alike.

The following pages summarize the findings we can share without compromising any client confidences, supported by publicly available information where available. We hope you find this recap helpful, and would love to hear your experiences and thoughts.

Bon appetit!

-Carol Phillips & Judy Hopelain

What We’ve Been Up To: Food, Food and More Food!

2Brand Amplitude, LLC All Rights Reserved 2011

Our Take

• The Economy

• The Saga Continues

• What to Make

• How Consumers Answer the Question: “What’s for Dinner?”

• How to Save

• Multiple, Creative Savings Strategies Now the Norm

• Where to Shop

• It’s not Just About Women or Any One Format Anymore

• What Brand to Buy

• National Brands Feel the Heat

• Beyond the Numbers

• What Consumers Want Now 3Brand Amplitude, LLC All Rights Reserved 2011

The Economy | Key Trends | Implications

The Effects of the Great Recession on Consumers Will Last Indefinitely

• In general: More than ever, people want good value for the money.It’s cool to do, and Web 2.0 companies are making it easier than ever

“Consumers continue to pay down debt and build up their savings. There is little reason to believe that consumers will give up their frugal behaviors in the short term. Consumers remain cautious, especially following their disappointment with the slow pace of improvement over the past year.”

Marcelo Tau, Principal at Booz & Company

http://www.booz.com/global/home/press/article/48816483

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Brand Amplitude, LLC All Rights Reserved 2011


Lasting Effects on Consumers Relative to Meals

- On food at home: 28% cut back on expenditures vs. 23% in 2009

- Consumers also continue to trade down by switching to less expensive brands. 39% continue to trade down on household products

- 37% said they traded down on food at home, similar levels compared to last year’s survey.

• We’re eating more meals at home and the recession has affected what we serve, how we choose it, and where we buy it.

Consumer Frugality Persists In The Post-Recession U.S. Economy,Finds Latest Booz & Company Annual Survey

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“Even as the rest of the economy improves and consumer attitudes brighten further, people will resist spending much. [the continuing decline in home values is] an ongoing message to households to be conservative about your spending and rebuild your savings because you can't trust the housing market as a wealth-creating machine.”

- Wall Street Journal 2/23/11

Consumers Continued Their Saving Ways in 2010,& May Behave This Way for a Long Time to Come

Source: Consumers Celebrate Practicality This Holiday Season , Symphony/IRI, Dec 2010

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Recession Spurred Renewed Interestin Private Label Products

“With share-of-sales growing at an average annual rate of 0.5 percent between 2005 and 2009….store-brand sales are still growing nearly twice as fast as sales of national brands.”

“As the recession ends, consumer shopping habits and attitudes toward brand consumption are changing. This shift is creating greater overlap in the competencies of retailers and national-brand marketers.”

Source: Nielsen

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92% of consumers have made some sort of change in their grocery shoppinghabits as a result of the recession

“Today’s consumers... are using tactical tools and capabilities they have to perform better in the marketplace:

Coupons, loyalty cards, meal planning, shopping lists, delayed gratification, lowered standards (although not as often as one might think), brand switching, channel switching, store switching, cooking more, eating out less, buying fewer prepared meals, clarifying want versus need, reassessing convenience, larger packages, smaller packages, and more.”

Most People Believe the Recessionhas Changed Their Habits and Caused Them to

Become More Self-Reliant

“Cutting back has made consumers feel smart, not deprived, and they have no intention of returning to old habits even when the economy returns.”

Source: The 2010 American Pantry Study, Deloitte KnowledgeCo LLC and Harrison Group (July 2010)

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What to Make | How to Save | Where to Shop | Which Brand to Buy

More People are Cooking and Eating at Home Largely as a Result of the Recession

• In 2009, 55% of respondents said that they prepared more

meals at home in 2009 than they did in 2008

• Most report that they are cooking more at home to save money

Source: NPD Group’s 24th Annual Report on Eating Patterns in America

Source: FMI’s 2009 US Grocery Shopper Trends report

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• Since they are eating out less, there is greater pressure on keeping food at home interesting

• Consumers are looking for new products - flavors, ingredients (e.g., different seasonings and spices), small treats (e.g., new juice blends)

• Eating at home challenges meal preparers to diversify their menus to avoid serving the same dish too often• As a result, they are searching for new recipes

to ‘mix it up’

Faced with this Frugality, Consumers’ Biggest Meal Challenge may be Fighting Boredom

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Cost and Health Pressures are Driving New Ingredient Priorities

• Overall consumer spending on groceries grew 8% after inflation over past five years; real growth forecast at 18% over next ten

• Expenditures for Fruit, Milk, Cheese, Eggs grew faster than total expenditures from 2005-2009

• Expenditures for Bread, Cereals and Vegetables are expected to outpace all other types of food from 2010- 2020

Datamonitor, Consumer Lifestyles in the U.S., Food and Drink

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The Biggest Change in US Diets is Expected to be a Shift from Animal Proteins & Fats to Grains & Vegetables

• Spending on Bread and Cereal expected to surpass spending on Meat in 2015

• Spending on Vegetables expected to match spending on Milk, Cheese and Eggs by 2020

Datamonitor, Consumer Lifestyles in the U.S., Food and Drink

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• Allrecipes.com traffic rose from 5 million UV’s month in July 2007 to 7.5 million in July 2010, and is continuing to trend up*

• Over 150 million recipe related searches in Q4 2010

• Chicken recipes consistently most searched**

As More Meals Eaten at Home and Ingredients Shift, Cooking Websites and Cookbooks Have Grown in

Popularity

*Quantcast **Mintel

Cookbook Sales A Bright Spot For Book Industry During the Recession

• 2010 total book sales – down 4% vs. 2009• Cookbook sales – up 5%

Source: Nielsen, Food: The Social Network of the AgesNovember 22, 2010

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Source: Mediapost: 50% Of Consumers Check Nutrition Facts Label, 01/27/2011

“Calories, total fat, sugar, sodium and calories from fat are the top five items consumers usually look for when they read the Nutrition Facts label.”

–NPD National Eating Trends

Consumers Are Actively Lookingfor Healthy, Nutritious Food Options

• As of 2010, 51.8% of U.S. consumerscompletely or mostly agreed with thestatement: "I frequently check labelsto determine whether the foods I buycontain anything I'm trying to avoid.”

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Taste and Flavor Variety Claims Are Even More Popular Than Health and Wellness

Source: SymphonyIRI:New Product Pacesetters March 2011

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"Understanding the meal preparation process prior to grocery shopping, behavior around recipes, impulse purchases, and the use of prepared foods can help manufacturers, food retailers, and marketers design effective strategies for increasing loyalty, trip frequency, and basket size…The frequency of meal planning is an indication that many purchase decisions are made prior to grocery shopping.“ - Ann Hanson, Executive Director of Product Development at NPD • 58% U.S. households are using shopping lists

Meal Planning Before Grocery Shopping Drives Purchase Decisions, Reports NPDChicago, December 1, 2010

Consumers Have Become More ‘Planful’ – Particularly for Dinner

SOURCE: Nielsen :Survey: Fewer of 10 % of US Consumers DislikeGrocery Shopping December 2009

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Confident and Anxious Consumers AlikeUse Coupons to Determine Where to Shop


•Between 2005 and 2009 the percentage of Confident Consumers who agree that coupons draw them to stores they don't normally shop grew from 27% to 33%. (Experian Simmons NCS)

• 94% of shoppers used CPG coupons at least once in 2009, 77% said they used them regularly

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Packaged Facts: The Post-Recession Consumer in the U.S. May 2010

*2010 NCH Coupon Facts Report (3/10); **Kantar Media Intelligence

As a Result, Coupon Use Has Exploded

• Food and beverage categories alone distributed 118.7 billion coupons in 2009, an increase of 6.0%**

Printed: In 2010, more than 291 billion coupons were distributed via FSI’s -- thehighest level of activity during the past decade and a 7.2% increase versus 2009*

Redeemed: 3.3 billion consumer packaged goods coupons were redeemed in 2009,a 27% increase over the 2.6 billion redeemed in 2008. (Inmar)

• Measured coupon redemption for grocery products increased 25% in 2009*

Coupons.com, a Web site with coupons from grocery stores and manufacturersincluding Safeway and Rite Aid reported the value of savings from coupons printedon its site increased 212% during first five months of 2009, compared to the sameperiod last year. - DM News, Digital Coupons Help Grocers Boost Loyaly Programs

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Price Concerns Increasingly Drive Decisions about Where to Shop and What to Buy

• Stocking up on family favorites and bargain hunting are the most popular cost-saving strategies

Source: IRI/Symphony: Consumer Expectations: Is CPG Serving to Satisfy?, October 2010

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Most Consumers See Different Store Formats as Best for Different Grocery Needs and Shop Accordingly

“Cross-channel shopping has become a well-entrenched part of the CPG shopping experience; three-quarters of consumers shop in five or more channels to meet their CPG needs.” -SymphonyIRI Times & Trends (August, 2009)

• Nielsen research found that consumers who shopped in four or more channels spent from 3 to 5x more than single channel shoppers

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Men Increasingly Important Grocery Shoppers, Particularly for Smaller Basket, ‘Immediate Need’ Trips

• Women are still doing the majority of shopping in all retail channels (except convenience stores), but men have increased trip shares between 2004 and 2010 in all channels except drug stores

• At grocery stores, women spend an average of $44.43 per trip, while men spend $34.81

• At dollar stores and warehouse stores, women are only spending $3 and $5

more per trip than men respectively.

Source: Nielsen: Men Take To Stores, Women Head To CouchMarch 15, 2011, Mediapost

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Multiple Forces Leading to Devaluing of Brands

Across 40 categories, buying private-label products when available saved $43.92 on average (33.6% savings)

Source: MediaPost, January 21, 2011Only 19% Think National Brands Are Worth The Money

• More consumers are trying private label and finding it satisfactory

• More stores are offering a tiered private label offering, so consumers can self-select their desired level of quality by category (e.g., canned goods vs. prepared frozen entrees)

• Consumers are using coupons to make branded goods more affordable

• Entire communities have emerged around the hunt for deals, conferring bragging rights on those who find – and share -- biggest bargains

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• Several sources have concluded that the uptick in sales private labels experienced during the economic downturn will continue, even as prosperity returns.

Overall, Private Label Penetration 23% of Units in 2010,Slightly Above Pre-Recession Levels

Packaged Facts: The Post-Recession Consumerin the U.S. May 2010

IRI/Symphony: Store BrandsMore Than Just a Safe Harbor in Turbulent Times, June 2010

“The recent surge in store brands sales is likely to continue as more than 60% of respondents plan to buy more private labels in order to save money.”

“Approximately two-thirds of those surveyed had switched to lessexpensive consumer goods over the previous year, with more than ¾’s of switchers agreeing that the less expensive products were as good or better than the more expensive items.”

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Brands Are Training Consumersto Look for Discounts in FSI’s and In-store

• FSI’s offering coupons on major brands accounted for 89% of coupons distributed and over half of all coupons redeemed in 2009

• Food items represent the most active coupon segment

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‘Coupon Divas’ Are Becoming Influential by Showing Consumers How to Reap Greater Savings

One of the show’s four main subjects

is Philadelphia’s own Joyce House, a

retired nurse who “hasn’t paid for a

toothbrush, toothpaste or deodorant in

34 years.” On one trip to a local

Philadelphia supermarket, House

lands a load of groceries for $6.32,

originally valued at $230.38. One of

her tricks of the trade is knowing her

grocery store’s coupon policy in and

out, plus apparently if an item scans

incorrectly at check-out,

you can often get it for free.

• Consumers are tapping into a vast online network of deal-hunting sites: GottaDeal, RetailMeNot, Buxr, Hot Coupon World, Newegg.com, WeUseCoupons, and many, many more.

• Known as the “Coupon Diva,” Joyce House was featured on NBC’s The Today Show last year. Check out her Facebook page for a heads up on local sales.

Source: uwishunu.com/

• Coupon usage is highly concentrated: during the first half of the year—81% of units purchased with a manufacturer coupon were from just 19% of households

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http://www.uwishunu.com/2010/12/tlcs-new-show-extreme-couponing-features-the-philadelphia-coupon-diva-premiering-december-29/

Insights Beyond the Numbers: What Consumers Want Now

• Consumers want to eat at home without feeling deprived or bored.

• The traditional family meal is being replaced by foods that can be heated or re-heated and eaten by one or two people at a time when their schedules allow. Ingredients and recipes that accommodate this will win.

• The differences between meals and snacks are blurring.

• Consumers want labeling information to be clear and understandable, they want to know what the ingredients are without a lot of mumbo jumbo or trumped up claims

• They are looking for food and beverages that cost less and have new tastes, more variety and more interesting flavors that satisfy their more sophisticated palettes, and are willing to go to multiple stores to find what they are looking for at the right price.

• They want to show that they care about their families by serving healthy food and drinks that don’t compromise taste and make them feel clever for doing so – especially healthy snacks.

• They want to serve favorites and find treats to make their family happy and make themselves feel they are doing a good job.


www.brandamplitude.com

Carol [email protected]

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Judy [email protected]

415-810-8268

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Whats in store consumers food and the recession 090711

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