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HARVESTING THE FRUITS OF INNOVATION DONE RIGHT
Larry Levin, Executive Vice President
May 2, 2017
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 2
Defining the Best of the Best What is a Pacesetter: IRI’s New Product Pacesetters Criteria
New or Extended Brand, or
Existing Brand in a New Category
30% Distribution
Starts the Clock on Year-1
30%+ Distribution
at Year-1 Completion
Top 100 Brand
Launches in Food and
Beverage and Non-Food
New Products that Completed
their First Year in
Calendar Year 2016
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 3
Seven Deadly Sins of New Product Innovation
Forecast F Assortment A Incremental I Languish L Unclear U Retread R Elusive E
90% of Launches Fail to Meet Critical Milestones
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 4
12,000 new brands were launched in 2016
200 of these brands made IRI NPP
status
8 of these brands
achieved >$100M
Though blockbuster products are few and far between
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 5
Blockbuster Products are Few and Far Between…
Million
37%
37%
46%
67%
41%
38%
37%
22%
8%
14%
6%
4%
11%
9%
8%
3%
4%
4%
5%
[VALUE]
2013
2014
2015
2016
<$20
$20-$39
$40-$59
$60-$99
>$100
Note: Numbers may not add to 100% due to rounding
Year-One Dollar Distribution
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 6
Beverage Manufacturers delivered 22 Pacesetters with a stronger revenue performance, including three over $100 million
67%
71%
55%
22%
16%
14%
4%
6%
14%
3%
2%
0%
[VALUE]
5%
14%
2016 Pacesetters
2016 Food and Beverage Pacesetters
2016 Beverages
<$20 $20-$39 $40-$59 $60-$99 >$100
Note: Numbers may not add to 100% due to rounding
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 7
WHAT’S WORKING?
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 8
Small Manufacturers Represented Almost Half of NPP Manufacturer Companies This Year
While We See Innovation Coming from Small and Large Manufacturers…
small
large
medium
Small Companies as % of Total NPP Companies
NPP 2012
31%
46%
23%
mediu
m
sm
all
larg
e
NPP 2013
28%
35%
38%
mediu
m
sm
all
larg
e
NPP 2014
26%
38% 37%
mediu
m
sm
all
larg
e
NPP 2015
26%
44%
29%
mediu
m
sm
all
larg
e
NPP 2016
20%
34%
46%
mediu
m
sm
all
larg
e
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 9
Giving Rise to a Proliferation of New Brand Innovations, Particularly Across Food and Beverage Aisles New Brand Introductions as a % of NPP Brands
Food & Beverage
12%
2004
to
2016
14%
2015
39%
2016
8%
2004
to
2016
14%
2015
13%
2016
Non-Food
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 10
2016 Dollar Sales excludes private label sales
<$100M
$100M - $1B
$1B - $5B
>$5B
…and Helping Smaller Manufacturers Capture a Larger Share of Industry Sales Dollars
57.2% 54.6% 54.1%
19.9% 20.3% 20.3%
14.0% 15.1% 15.3%
8.9% 9.9% 10.3%
2011 2015 2016
Extra Small
Small
Midsize
Large
Source: IRI/BCG 2016 Growth Leaders / numbers may not add to 100% due to rounding
CPG Dollar Sales by Company Size
-3.1 pts
+2.7 pts
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 11
PERSONALIZATION PREVENTION
Three Key Themes are Resonating with Consumers
PERSONALIZATION PREVENTION
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 12
Who are the engineers of 2016’s bridges to growth?
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 13
Beverages that Make Life Exciting and Engaging are Hitting the Mark
Milk
$1,163.1M
Coffee
$204.1M
Beer/Ale/Cider
$114.6M
Beer/Ale/Cider
$50.3M
Wine
$49.7M
Artesano DairyPure 1 Dunkin’ Donuts K-Cup Pods
Not Your Father’s Root Beer
3 Henry’s Hard Soda
4 5 2
Body Armor Sports Drink
Red Bull Summer Edition
6 BAI 5 Bubbles 8 Coney Island Hard Root Beer
9 10 7 Best Damn Root Beer
$44.3M $44.7M
$26.1M $25.3M
$23.7M
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 14
And, of course, Beverages drive success into the C-Store channel!
Milk
$385.9M
Energy Drinks
$149.0M
Snack/Granola Bar
$78.4M
Snack Nuts
$60.2M
Sports Drink
$55.0M
BODYARMOR DairyPure 1 Red Bull – The Summer Edition
Quest Bar 3 Nut Harvest
4 5 2
Rockstar Freeze
Rockstar BOOM!
6 Not Your Father’s Root Beer
8 Monster Energy Ultra Black
9 10 7 AMP Energy Zero
$53.3M $51.7M
$44.2M $39.5M
$25.0M
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 15
WILL YOU STILL LOVE ME TOMORROW?
PROTECT THE 2ND YEAR
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 16
BEING A PACESETTER DOES NOT ENSURE LONG-TERM SUCCESS… YEAR 2 PRINCIPLES
Minimally Retain Distribution and Tell People You Are There
Variety is the Spice of Life
Repeat, Repeat, Repeat
Do Not Underspend
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 17
Support in Year Two Drives Disproportionate Success
WHILE UNSUPPORTED PRODUCTS TRULY HAD TROUBLE FINDING THEIR WAY
4%
4% of New Products
Achieve $20M in U.S. Food & Maintain ACV
in Year 2
Sales Decreased
64%
Sales Increased
36%
76% Decreased Media in Year 2 76%
24% Maintained or
Increased Media in Year 2
24%
Sales Increased
71%
Sales Decreased
29%
Maintained ACV: Y2 ACV +/- 10% Y1 ACV Maintained Media: Y2 media spend > than -5% Y1 media spend
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 18
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 19
Questions & Answers
Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 20
Larry Levin Larry.Levin@IRIworldwide.com 818.450.7614
Thank You!
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How trendy are consumers willing to be? Beverage Forum, April 28, 2017
2
Understand the why behind the buy
Mintel’s new tool Purchase Intelligence surveys consumers about every new US food and beverage product uploaded into GNPD since January 2016. The survey helps to answer product development questions such as: • How likely are consumers to buy my new
product? • What attributes are connecting with
consumers? • What is motivating a purchase? • What price should we charge? • Do consumers think this product will succeed?
Source: Mintel.com/purchase-intelligence
3
The preference for natural, simple and flexible diets will drive further expansion of plant-focused formulations
4
GLOBAL HEAT MAP: Power to the Plants
Source: Mintel’s Better for you Eating Trends: Spotlight on Real – US, September 2016
of US adults plan to buy more vegetarian or plant-based food products in the next year.
33%
5
Consumers are open to plants in a number of places
Lipton Cranberry Pomegranate Superfruit Green Tea “Fruitilicious” relaunch is made with hibiscus and
chamomile flowers, cinnamon, licorice root and lemon peel. It has a 62% purchase intent* vs. 30% for hot and
RTD teas launched from January-March 2017.
Tropicana Essentials Peach Passion Fruit Probiotic Beverage
Flavored juice blend with added probiotics and vitamin C has a 50% purchase intent* vs. 33% of
juices launched from January-March 2017.
*Statistically significant Sources: Mintel Purchase Intelligence
6
*Statistically significant; Source: Mintel Purchase Intelligence; Bases: Dairy alternatives base: 12,900 respondents; Dairy milk base: 13,000 respondents
Plant-based milk keeps pace with dairy milk – except for taste
62 60
49 48 47 45 45 41
56 53
43 40
36
48
35 30
Healthy Natural Trustworthybrand
Quality Premium Tasty Exciting Unique
% C
onsu
mer
Per
cept
ion
Consumer perception scores of dairy alternative beverages vs. dairy milks, US, January 2016-March 2017
Dairy alternative beverages Dairy milks
* * *
*
Silk Dark Chocolate Almond Milk has a 51% purchase intent* vs. 31% purchase intent of plant-based milks
launched in 2016
* *
* *
7
Popularity of almonds influences spirits
Bailey’s Almande Almondmilk Liqueur Liqueur made with sweet almond oil and almond essence extracted from crushed almonds along with cane sugar,
purified water and real vanilla.
• Bailey’s Almande liqueur has a 37% purchase intent* compared with 26% for liqueurs launched in 2016.
• Tasty is the product attribute with the highest correlation to purchase of liqueurs. Bailey’s Almande has a 58% Tasty rating* compared with 42% for liqueurs overall.
Verbatim responses: • “I love Baileys so I would like to try this product and see if
it was as good as some of their other products,” Female, age 35-54 from Southern US
• “It might be interesting to try, but I don’t usually drink this brand,” Male, age 21-34, Western US
• “It is targeted to women according to the packaging,” Male, age 21-34, Southern US
• “I don’t know what I’d mix it with,” Female, age 35-54, Northeastern US
* Statistically significant Source: Mintel Purchase Intelligence
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THE WORLD’S LEADING MARKET INTELLIGENCE AGENCY Our expert analysis of the highest quality data and market research will help you grow your business.
Jenny Zegler Global food and drink analyst jzegler@mintel.com
Thank you!
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#1 Commit to Your Brand
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#3 Collaborate with Your
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#1 CommitOver commit to your brand
#2 ListenBe close to the ground
#3 InviteCollaborate with your consumer
Innovating beyond liquid and package.
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MEGHAN LABOTMEGHAN@SPRINGDESIGNPARTNERS.COM@MeghanLabot646 224 7889
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