IRI Webinar: How to Harness Growth in CPG During 2021

HOW TO HARNESS NEW GROWTH IN CPG DURING 2021

Discovering Pockets of Demand

December 14, 2020

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2

Krishnakumar (KK) Davey

President, Strategic Analytics

IRI

Nik Modi

Managing Director – Beverages, Tobacco

and Household Personal Care

RBC Capital Markets

TODAY’S

PRESENTERS


Level Setting –

Where We Are Now

SECTION 1


The U.S. is Experiencing Either Growing Case Counts

or Extremely High Numbers of New Cases

Where New Cases Are

Lower and Staying Low

Where New Cases Are

Lower but Going Up

Where New Cases Are

Higher and Staying High

Where New Cases Are

Higher but Decelerating

WA

OR

CA

NV

UT

AZ

ID

MT

WY

CO

NM

TX

OK

NE

KS

SD

ND

MN

IA

MO

AR

LA

MS

WI

MI

IL IN

KY

TN

AL GA

FL

SC

NC

VAWV

OH

PA

MD

ME

NY

VT

NH

MA RI CT

NJ

DE

Source: New York Times, RBC Capital Markets


Most States Seem Determined to Avoid Reverting to Full Lockdowns, but Given the

Severity of Spread, Several States Are Bringing Back Various Forms of Restrictions

WA

OR

CA

NV

UT

AZ

ID

MT

WY

CO

NM

TX

OK

NE

KS

SD

ND

MN

IA

MO

AR

LA

MS

WI

MI

IL IN

KY

TN

AL GA

FL

SC

NC

VAWV

OH

PA

MD

ME

NY

VT

NH

MA RI CT

NJ

DE

Reopened / Reopening

Pausing

Re-Closing

Source: New York Times, RBC Capital Markets


Unlike Past Recessions, the Current Market

Reflects An Unequal, K-Shaped Recovery Curve

In the 2020 COVID-19 pandemic, workers from hardest hit industries, (e.g., travel, hospitality, foodservice, entertainment), were among both the lowest-earning households and are also the most likely to have lost jobs due to the pandemic.

Since the 2020 COVID-19 pandemic, the lowest earners returned to pre-COVID-19 spending levels while higher income reduced spending.

2020 Coronavirus Crisis2008 Recession2001 Recession1990 Recession

Job Growth / Loss Since Recession Start

% chg. in Consumer Spending since COVID start

Source: Washington Post “The COVID-19 recession is the most unequal in modern U.S. history” based on Labor Department via UIPUS. Tracktherecovery.org based on consumer credit and debit card spending from Affinity Solutions. Updated as of 12/3/20.


U.S. HH Consumption Expenditures by Major Type of Product / Avg. Annualized $ per HH vs. YA

Households Are Still Spending More On At-Home

Food While Other Expenses Are Reduced

1,200

4,471

833

552

437

269

214

192

173

94

73

42

39

354

Recreation

All other

Education

Financial services & insurance

Clothing

Food and bev. purchased for off-premise

Communication

Accommodations

Total HH spend

Transportation

HH furnishings, equipment maintenance

Food services

Health

Housing, utilities & fuels

-3,612

-12,370

795

1,840

147

2,154

1,242

3,203

54

816

1,445

150

151

1,128

-605

-3,287

817

1,474

487

406

3

730

181

877

931

307

232

899

-39

-1,121

198

606

873

487

233

82

768

652

24

747

1,002

111

4.1% -9.6% -2.7% -0.7%

-15%

4%

-19%

2%

-33%

16%

-3%

-31%

-6%

-35%

-2%

-67%

-21%

-3%

4%

-5%

3%

-14%

11%

9%

-14%

-7%

-9%

0%

-60%

-12%

0%

4%

-1%

2%

-9%

11%

10%

-10%

-10%

-3%

1%

-54%

-10%

5%

4%

6%

5%

4%

3%

4%

2%

4%

2%

2%

3%

5%

PRE-COVID-19 MARCH - MAY 2020 JUNE - AUGUST 2020 SEPT.-OCT. 2020

Chg. vs. YA % Chg. vs. YA Chg. vs. YA % Chg. vs. YA Chg. vs. YA % Chg. vs. YA Chg. vs. YA % Chg. vs. YA

Total HH spend % chg. vs. YA

Source: BEA, based on seasonally adjusted annualized monthly figures through Oct 2020. Assumes constant number of households in US (128.58M). IRI analysis.


IRI Restaurant Dollar Sales % Change vs. YA

Restaurant Industry Performance is Reverting

Downwards in Recent Months, With More Stores Closed

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

10% Chg vs 2019

JunAprJan Feb Mar JulMay Aug Sep Oct Nov

Total US Casual & Upscale Restaurants Casual Upscale

Index to Prior Year Monthly Average

Food Away From Home 94 95 76 50 68 81 85 88 85 n/a n/a

Food At Home 98 95 119 104 112 107 111 109 104 n/a n/a

Total 96 95 97 76 89 94 98 98 94 n/a n/a

Away From Home % of

Total Food51% 52% 40% 34% 39% 45% 45% 46% 46% n/a n/a

Post-COVID open restaurants peaked in

June at 75%, dropping to 66% in November,

with many permanently closing

Limited service restaurant sales

grew 3.6% in August –October

while Full service declined2

Total U.S. Food at Home (FAH) vs. Food Away From Home (FAFH) Sales Index1

Steadily declining weekly

performance since

beginning of October

1. FAFH vs. FAH based on USDA Monthly Sales of Food with taxes & tips; Includes food sales across store types. 2. BEA Personal Consumption Expenditures. Source: IRI On-Premise Tracking Model, based on dollars per benchmark venue.


58%

61%Permanent Closures

58%

42%

43%39%Temporary Closures

42%

46% 57%

54%

32,109 Total Closures 30,374

16,585

6,451 6,024

10% to 20% of Restaurants Are Expected to Close Permanently in 2020

61% of Restaurants and Several Businesses

Marked Closed on Yelp That Were Open March

Source: Yelp, Technomic, RBC

Restaurants Shopping & Retail Beauty & Spas Bars & Nightlife Fitness


Estimates 2020 Restaurant Industry Sales and Orphaned Spending

(Annualized Due to Restaurant Closures)

The Food Industry Will Effectively Orphan ~$70B of Annualized

Spending on a Go-Forward Basis, Just From Closures

2019 Restaurant Industry Sales

2020E Best Case Sales Scenario

(10% Closures)

2020E Best Case Sales Scenario

(15% Closures)

2020E Worst Case Sales Scenario

(20% Closures)

Source: Technomic, RBC Capital Markets

$578

$531

$510

$483

$47B Orphaned Spending




$34 $34

Restaurants Grocery

Estimated Benefit to Grocery Sales and Surviving Restaurants ($B)

In the Near-Term, RBC Estimates $35B of Orphaned

Restaurant Spend is Up for Grabs for Grocers

6.4% of Total Grocery

Product Sales in 2019

Source: RBC Capital Markets


% of Stores in the Top 15 Hardest-Hit States for Business Closures

Some Retailers Are Likely to Benefit More

From Restaurant Closures Than Others

80%

66%

48% 47%44%

39%

28%

Source: Yelp


F&B and Non-Edible % Change vs. Year Ago

Total Omnichannel (MULO + C + Costco + eCom)

CPG Sales Growth Remains Elevated

8 w/e

2.23.20

4 w/e

3.22.20

4 w/e

4.19.20

4 w/e

5.17.20

4 w/e

6.14.20

4 w/e

7.12.20

4 w/e

8.9.20

4 w/e

9.6.20

4 w/e

10.4.20

4 w/e

11.1.20

4 w/e

11.29.20

F&B

Nonedible

2

31

1722

15 15 14 12 12 12 12

1

30

1316

8 7 7 6 7 7 9

5

29

9

1814 13 12

9 11 13 11

2

25

611

8 7 6 4 6 8 7

Dollar Sales Volume Sales1

slight re-stockpiling in paper products

more promo

1. Estimated average omnichannel volume change across categories based on price/mix trends in MULO+C. Source: IRI data ending 11/29/20. Omnichannel based on IRI MULO+C POS, IRI eMarket Insights and IRI Consumer Panel for Costco.


2020 Has Seen Unprecedented Growth

and Volatility in Many Categories

% of Categories by Difference in L24W $ Growth vs. YA vs.

2017-19 CAGR / Total IRI Omnichannel, % Change vs. YA

5

1518

14

24

10

14

<-5 ppts. -5 to 5 ppts. 5 to 10 ppts. 10 to 15 ppts. 15 to 20 ppts. 20 to 25 ppts. >25 ppts.

SAMPLE CATEGORIES

Cold / Cough

Gum

Snack Bars

Pet Food

Baby Food

Candy

Energy Drinks

Salty Snacks

Yogurt

Milk

Toilet Paper

Shampoo

Beer

CSD

Coffee

Natural Cheese

Hand Lotion

Vitamins

Paper Towels

Pet Supplies

Soap

Household Cleaner

of Categories

Are Experiencing

Growth of

More than

percentage

points vs.

Typical Growth

80%

+5

Note: Omnichannel defined as MULO + Convenience + Costco + eCommerce. Source: IRI POS, eMarket Insights and Consumer Panel, data ending 11/1/20.


Where We Stand

On a Vaccine

SECTION 2


Vaccine Development Headlines Have Been Positive, With

Multiple Vaccine Candidates Reporting High Efficacy Results

Source: Nature, New York Times, Fierce BioTech


But Challenges Remain, Particularly Around Manufacturing,

Storage, Logistics, Distribution, and Administration

Source: Science News, Fierce Pharma, Reuters, NPR, Freight Waves, Vox


The COVID-19 Vaccination Program Will Require a Phased Approach

The CDC’s Vaccine Distribution Playbook Warns of Shortages and

Limited Availability for the Vaccine in the Early Months of Distribution

Source: US Centers for Disease Control

*Planning should consider that there may be initial age restrictions for vaccine products.

**See Section 4: Critical Populations for information on Phase 1 subset and other critical population groups.


Males, Older, High Income and Urban Consumers Are Far More Interested in Getting

the Vaccine as Soon as it is Available

Despite Rising Cases of COVID-19, More than Half the Population

Remains Unsure or Not Interested in a Vaccine (as of Mid-November)

Source: IRI Survey fielded 11/13-15 among National Consumer Panel representing Total US Primary Grocery Shoppers; base 991

Not planning to get it

24.2%

28.1%

17.9%

20.5%Not sure yet

Yes, but I will likely wait a few months after it is

available before I get it

Yes, I plan to get it as soon as it is available to me

9.3%Yes, but I will likely wait at least 6 months

after it is available to me before I get it

Q: Do you plan to get a COVID-19

vaccine once it is available?


Looking Ahead

SECTION 3


Here’s Our Best Guess at How the Next 8 – 12 Months Will Play Out…

Source: RBC Capital Markets; Google Workplace Mobility, Mobility forecasts represent IRI Strategic Analytics POV.

ACTUAL FORECAST

-60

-50

-40

-30

-20

-10

0

10

3/8

/20

20

4/8

/20

20

5/8

/20

20

6/8

/20

20

7/8

/20

20

8/8

/20

20

9/8

/20

20

10

/8/2

02

0

11

/8/2

02

0

12

/8/2

02

0

1/8

/20

21

2/8

/20

21

3/8

/20

21

4/8

/20

21

5/8

/20

21

6/8

/20

21

7/8

/20

21

8/8

/20

21

9/8

/20

21

10

/8/2

02

1

11

/8/2

02

1

12

/8/2

02

1

1/8

/20

22

2/8

/20

22

3/8

/20

22

4/8

/20

22

5/8

/20

22

6/8

/20

22

DEC’20 – FEB’21

Case counts continue to rise.

Some form of stimulus likely

Phase 1 vaccine distribution

(front-line workers)

JUL – SEP 2021

Case counts decline

Some of the population is not

vaccinated

Need ~75% for herd immunity

MAY – JUN 2021

Vaccine becomes available

for everyone

Adoption curve?

Cases continue to decline

SEP 2021+

Several months for the side

effects to manifest.

Herd immunity begins.

Consumers begin to resume to

some sense of normalcy, though

certain habits are changed at

least through the near-term

MAR – APR 2021

Case counts begin to decline

Phase 2 vaccine distribution

(high-risk persons, early

education, food & agriculture,

sanitation, public works, etc.)

Potential Vaccine Adoption Timeline Potential Mobility Scenarios

Optimistic Scenario

Conservative Scenario


IRI 2021 Forecasts Based Quantifying Demand Drivers for

Hundreds of Categories Across the StoreFrozen

Beverage

Alcohol

General Food

Dairy / Eggs / Cheese

Refrigerated

Deli / Prepared

Meat

Bakery

Produce

General Food• Salty Snacks• Bottled Water• Candy• Coffee• Soup• Cookies &

Crackers • Condiments• Spices /

Seasonings• Snacks / Granola

Bars• Pasta• Rice• Beans• Baking Needs • Canned Goods

Refrigerated• Juice / Drinks• Dough• RFG Condiments

Nonedible• Toilet Tissue• Vitamins• Laundry Care• Paper Products• Food Storage• Household

Cleaners• Personal Care• Cosmetics

Frozen• Dinners /

Entrées • Ice Cream /

Novelties• Seafood• Pizza • Meat• Poultry• Potatoes• Vegetables • Fruit• Side Dishes

Dairy, Eggs & Cheese• Milk• Natural Cheese• Creamer• Butter / Blends• Yogurt• Non-Dairy

Alternatives

Bakery• Fresh

Bread & Rolls

• Pastry /Donuts

Meat• Breakfast Meat• Luncheon Meat• Plant-based Meat

Beverage Alcohol• Wine• Liquor• Beer

DEMAND FORECASTING WITH 100S OF CAUSAL CONTROLLABLE DRIVERS (E.G., ASSORTMENT, PRICING) AND UNCONTROLLABLE DRIVERS (E.G., MACRO ECONOMIC, COVID-19 MOBILITY)


Total CPG Omnichannel Dollar Sales Growth

Forecast / % Change vs. YA / Median Forecast

Anticipate Moderate Growth for in 2021

3.0

15.6

-4.8

10.1

-2.8

12.4

-10

0

10

20

Optimistic Scenario


3.5

15.4

2020vs. 2019

2019vs. 2018 -1.9

13.2

-1.0

14.3

-10

0

10

20

2021 (Median Forecast vs. 2020)

2021 (Median Forecast) vs. 2019

Highly impacted by

consumer mobility, 2021

CPG performance will vary

with COVID-19 vaccine

availability to general

population, with earlier

distribution increasing

mobility and driving

more consumption away-

from-home.

Slowing economic

recovery

and smaller stimulus will

impact growth and could

potentially lead to

shopping more for value.

CPG pricing is likely to

moderate due to more

promotions, better

availability and more

intense competition.

EDIBLE

NONEDIBLE

Forecast error range +/- 2%

Note: Omnichannel includes MULO + C + Costco + E-comm. 2020 = data ending 11/8/20, forecast for remainder of year,. E-commerce includes Click and Collect and Pure PlaySource: IRI POS, eMarket Insights and Consumer Panel IRI Strategic Analytics, Proprietary forecasting methodology


% of CPG Categories in Actual / Forecasted $ Growth

Range (% Change vs. YA) / Total Omnichannel

Many Categories Will Decline in 2021,

Lapping Spikes in 2020

1 1

423 3

17

33 3

19

4

13

6

25

5

45

7

23

12

29

12

8

23

6

29

4

36

1

39

1

16

-20 to -10%

<-20%

-5 to 0%

-10 to -5% 0 to 5%

5 to 10%

10 to 20%

>20%

2019 vs. 2018: 65% of categories

grew <5%

2020 vs. 2019: 68% of categories

grew >10%

2021 (F) vs. 2020: 65% of categories

will decline

2021 (F) vs. 2019: 75% of categories

will grow >5%

Categories minimally or negatively impacted by

reduced consumer mobility (e.g., candy, cosmetics) will likely see growth in 2021.

Note: Omnichannel includes MULO + C + Costco + E-comm. 2020 based on data ending 11/8/20 and forecast for remainder of year. 2021 forecast based on June 2021 COVID-19 vaccine assumption. Source: IRI Strategic Analytics, Proprietary forecasting methodology.

2020vs. 2019

2019vs. 2018


2021 (Median Forecast) vs. 2019


65% 75%65% 68%


% of Category Dollar Growth vs. YA Explained by Variable Type

With COVID-19, Category Demand Is Determined by

Uncontrolled External Drivers, Reversing Prior Year Trends

72.6%

30.0% 33.5%

27.4%

70.0% 66.5%

2015-19

Controllable

2020 2021*

External

28.4%

11.6% 10.0%

44.2%

18.4% 23.5%

20.1%

9.3% 5.5%

7.3%

5.2%

56.4% 55.7%

OtherExternal

Distribution

2015-19 2020

Price

2021*

Macro

4.3%

COVID-19/

Consumer

Mobility

External drivers are accounting

for ~70% of sales growth.Distribution is more important

than price among controllable drivers.

Source: IRI Strategic Analytics, Proprietary forecasting methodology / *2021 assumes access to vaccination by mid to late 2021


In Contrast to Other Channels, E-Commerce Will Continue to

Grow Regardless of the Vaccine Availability Scenarios in 2021

Total CPG % Change vs. YA

3.2

1.3

1.0

22.0

3.4

Grocery

Brick & Mortar

TotalOmnichannel

MULO

Brick & Mortar

E-Commerce1

Convenience

15.5

11.5

16.3

58.6

2.9

2020vs. 2019

2019vs. 2018


Note: Omnichannel includes MULO + C + Costco + E-comm. 2020 = data ending 11/8/20, forecast for remainder of year. Source: IRI POS, eMarket Insights and Consumer Panel IRI Strategic Analytics, Proprietary forecasting methodology1. E-commerce data includes eCommerce of MULO and Grocery as well as pure plays


-3.7

-7.7

-11.0

11.9

1.1

-2.1

-10.3

-12.7

31.5

0.3


11.0

3.2

3.5

92.0

3.3

13.1

0.3

1.5

125.5

4.1

Optimistic Scenario



4.1 5.07.4

2019

6.7

Q1

2020

2020Median

Forecast

Q2

2020

2021Median

Forecast

Q3

2020

6.5

8.0-

9.2

15.9

19.7

25.1

Q1

2020

Q2

2020

2019 Q3

2020

24.1

22.9

25.3-

29.2

NonedibleEdible

E-Commerce Dollar Share of Omnichannel

E-Commerce Will Continue to Gain Share in 2021

as Investments in This Channel Accelerate

Q4TD

2020

22.5

6.9

2020Median

Forecast

2021Median

Forecast

Q4TD

2020

Source: IRI POS, eMarket Insights and Consumer Panel , MULO + C+ Ecommerce+ Costco ending 11/01/20. E-Commerce share of Omnichannel based on 204 IRI tracked CPG categories, estimates for untracked CPG categories, channels. E-Commerce includes MULO and Pure Play, IRI analysis.

A large proportion of e-commerce spending

(buyers and baskets) will stick for many as

purchase habits take hold.

National players (e.g., Amazon, Walmart, Instacart, Target, national grocery, specialty pet and

beauty retailers) will continue to invest more

in infrastructure improvements

(e.g., technology, staffing, fulfillment space) and engage consumers in subscription models, driving further growth.

Optimistic Scenario



Mobility Changes the Impact of Millennials’ and

Higher Income Households’ CPG Spend Most

Consumer Cohorts Most Impacted by Consumer Mobility% Change in Total CPG Dollar Growth Associated with 10% Decrease in Mobility1,2

1. Based on linear relationship, excluding other factors.

6.7

Ø 5.7

5.9

5.5

6.1

5.5

5.1

5.8

5.0

5.9

6.1

5.6

5.3

4.9

6.4

5.0

Gen Z Millennials Gen X Boomers Seniors

Income

Generation

Low Middle High Low Middle High Low Middle High Low Middle High Low Middle High

Sources: IRI Strategic Analytics, Proprietary methodology for mobility elasticity. Based on IRI Shopper Loyalty data for 6.5M static households regularly shopping Grocery channel.

Cohort differences driven by at-home vs. away-from-home

consumption: High income and younger cohorts shift more spend

to/from away-from-home consumption as mobility factors change


Looking Ahead, CPG Players Will Need to Find

Attractive Pockets of Demand to Drive Growth

Lifestyle / Consumption ShiftsNew consumer needs across in-home consumption occasions (e.g., prepared meals, new flavors / variety)

Economic BifurcationBoth premium / super premium and value opportunities growing in the K-shaped economic recovery

Valuable CohortsDifferent behavioral patterns across cohorts (e.g., upper income, Millennials, Gen X)

Special OccasionsHoliday and celebration patterns shift

Channel ShiftingOnline, grocery, club and dollar channels gain share of wallet

Shopping Behavioral ShiftsShoppers buy larger baskets, spend less time in store and assortments shrink

2021 Growth Opportunities

• Nimbleness is critical as we face economic

and continued COVID-19- related uncertainty in

2021.

• Seize new in-store vaccination opportunities

in H1’21 by tailoring offers

• Strategically leverage assortment, pricing

and promotion by channel to enhance growth.

• Deliver solutions and assortments that will retain

Millennial and high-income households that

are most likely to increase away-from-home

spending as mobility restrictions ease.

• Work to be part of the limited consideration set of

Boomers and Seniors who are most likely to

retain restricted shopping behaviors.

• Focus on strong distribution in winning

channels and ensure products are physically

available where shoppers are.

• Commit to personalization at scale; use

targeted marketing to drive new usage occasions.


Thinking Out Loud

SECTION 4



On Average, it Takes 66 Days to Form a Habit;

in an Extreme Case it Could Take Up to 254 Days

HOW LONG DOES IT TAKE TO FORM A HABIT?

18 • 66 • 254minimum average maximum

Source: Healthline; RBC Capital Markets


Many Companies Instituted a

Work-from-Home Policy as of March

Which means as of today, we have been

working and spending more time in home for:

254 Days


254 Days + Counting at Home:

Two Resulting Consequences

Source: Google Images, RBC Capital Markets

Even More

Reluctance to

Go Out

A More

Hybridized

Work Schedule


HD Organic Sales Growth Y/Y

Keep in Mind, Consumers Have Invested in Their Homes /

Backyards, So They Increasingly Will Want to Spend Time There

30%

25%

20%

15%

10%

5%

0%

Mar-

16

Jun-1

6

Sep-1

6

Mar-

16

Mar-

17

Jun-1

7

Sep-1

7

Dec-1

7

Mar-

18

Jun-1

8

Sep-1

8

Dec-1

8

Jun-1

9

Sep-1

9

Dec-1

9

Mar-

19

Jun-2

0

Sep-2

0

Mar-

20

HD Organic Sales Growth

2-Year Average

Source: Company Filings, RBC Capital Markets


According to Pew Research Center, the Percentage of Young Adults Living

With Their Parents Has Risen to Levels Last Seen in The Great Depression

Many Young Adults Are Also Moving Back in

With Their Parents Due to COVID-19 Disruptions

41 4042 43

48

35

2931 32

3638

44

47

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

% of 18- to 29-year-olds in U.S. living with a parent 52July

2020

Feb.

2020

Decennial Census Annual Averages

Source: Pew Research Center




How many people do you

think attended this virtual

Travis Scott concert?

Source: Google Images


Capacity / Attendance / Viewership

Something You Never Heard of Had 12.3M Live Attendees –

More Than Half as Much Viewership as the 2019 NBA Finals

20,789

82,500

400,000

1,200,000

6,100,000

12,300,000

20,500,000

23,700,000

26,500,000

50,000,000

100,700,000

MSG Capacity

MetLife Stadium Capacity

Woodstock Attendance

Boston Marathon Viewership

The Last Dance Viewership

Travis Scott Virtual Concert Attendance

2019 NBA Finals Viewership

Thanksgiving Day Parade Viewership

2016 Olympics U.S. Viewership

Mayweather/McGregor Viewership

2019 Superbowl Viewership

Source: Wikipedia, MobileMarketer, RBC Capital Markets



CPGs Need to Rethink Resource Allocation, Perhaps Outsourcing More of Their Production and Distribution and Migrating

Those Dollars Toward Creating Truly New-to-the-World Products and Technologies.

Consumer’s Desire for Unique and Relevant Products

Will Only Increase in the Future

Percentage of Global Research and Development Spend by Industry (2018)

Computer and Electronics

Healthcare

Auto

Software and Internet

Industrials

Chemicals and Energy

Consumer

Aerospace and Defenses

Other

Telecom

0% 5% 10% 15% 20%

22.5%

21.7%

16.0%

15.7%

10.6%

4.1%

3.2%

2.8%

1.5%

25%

Source: Statista, RBC Capital Markets




The feels.

• Focused on experiences.

• Decide on sensory, emotional

factors (5 senses, pleasure).

• More worried about the

economy // culture.

• Inclined to embrace new

behaviors & routines.

Let’s go back. We have to change…

The facts.

• Focused on facts.

• Decide on rational factors

(time, convenience,

functional performance).

• More worried about the virus.

• Inclined to revert to previous

behaviors & routines.

Predictive Reaction and Levers We Can Influence

35%

65%

Source: Thriveplan


Source: Thriveplan



“We recently started buying a lot more soup…”

Facts vs. Experiences

35%

65%“It’s a quick,

simple way to get

something

wholesome on

the table.”

“I’ve actually

enjoyed making

meals and

learning some

new recipes.”

Source: Thriveplan



“It seems like I get an Amazon delivery every day…”

Why E-Commerce

35%

65%

“It’s convenient

and safe relative

to virus

exposure.”

“I like how it

suggests things

based on my

purchase history –

and even TV shows

I might like!”

Source: Thriveplan


Please Join RBC Capital Markets, in Partnership with Alpha-Diver (Formerly Thriveplan)

for a Unique Consumer Symposium on Tuesday, December 15th 2:00 – 3:00 PM (EST)

Psyched Out? Getting a Grip on Consumer Behavior

REGISTERHERE

The Panel Will Focus on a Variety

of Topics and Perspectives:

• The current issues we see with how CPG companies

are dealing with the existing, challenging environment

• Viewpoints on the ways brand leaders can be truly

become “consumer-centric” to leverage today’s state

of affairs

• Understanding of durable, and predictable consumer

behaviors in the months ahead, guided by modeling

from the world of neuropsychology

• Tangible actions companies can take to thrive during

and after the pandemic

Featured Speakers

– Paco Underhill, Founder of consulting firm, Envirosell Inc., and

author of popular books including Why We Buy: The Science of

Shopping.

– Priscilla McKinney, CEO of Little Bird Marketing, an award-winning

agency specializing in content marketing, lead generation, branding

and design. Priscilla is a popular keynote speaker, industry innovator,

and host of the podcast Ponderings from the Perch, with over 200

episodes and thousands of annual downloads.

– T. Sigi Hale PhD, Principal Neuroscientist /Director of Research at

the insights and strategy firm, Alpha-Diver. Sigi is the scientific

architect of The 9 WHY’s insights model – which reveals & measures

the subconscious drivers & barriers that explain consumer behavior,

and is applied regularly by Fortune 100 brands to dramatically elevate

effectiveness in marketing strategy & activation

https://event.on24.com/eventRegistration/EventLobbyServlet?target=reg20.jsp&referrer=&eventid=2877883&sessionid=1&key=CC2BBA2D1078CA6826193465A79940BB&regTag=&sourcepage=register


Summing Up: Five Layer Framework on Go-Forward CPG Consumption

SOCIETAL

History would suggest that changes in the way we work, live, and play have the single-biggest impact on how we behave and interact with food. Our study takes a look at the evolution of eating patterns going back to the 1920s to provide some context on how changes occurring due to COVID-19 could impact future behaviors.

EDUCATION

A global survey found that almost half of all respondents chose ready-to-eat meals versus preparing a meal from scratch due to not knowing how to cook, lack of confidence in cooking skills, or a dislike for cooking—on par with a lack of time. Even schools have substantially scaled back student access to “home economics” where cooking was a central part of the curriculum. We believe the proliferation of “education cen ters” for food preparation (Facebook, Instagram, Google, YouTube, etc.) over the past 10 years has eliminated one of the biggest barriers to cooking at home.

RECESSIONARY EFFECTS

Interestingly, economic downturns of the past have not created a significant surge in demand for package food categories. We believe future recessions will have a more positive impact on package food consumption. Importantly, we believe the purchasing patterns over the past several weeks have provided: 1) some transparency into how much it costs to make a meal at home versus eating out; and 2) practice in preparing meals.

UNPRECEDENTED TRIAL

Pantry loading and more at-home consumption have created a trial surge that most observers thought we would never see. Importantly, big brands have fared very well due to a combination of supply-chain strength, brand recognition and consumers migrating to comfort/things with which they are familiar. Importantly, many packaged food companies have “leaned into” trial, which should create a decent amount of repeat.

ONLINE MIGRATION

We believe the ramp in online grocery shopping over the past 3 months has created an advantage for “Big Food”. In many instances, the largest brands tend to dominate on the first page of any eCommerce portal. Importantly, Numerator data suggests consumers that purchase online tend to be more brand loyal than consumers shopping in a brick-and-mortar environment.



Krishnakumar (KK) Davey

IRI Global Headquarters150 N. Clinton St., Chicago, IL [email protected]

+1 732.713.3446

Nik Modi

RBC Capital Markets | Equity Research200 Vesey Street | New York, NY 10281

[email protected] +1 212.905.5993

CONTACT US for More Information


Mark Clouse

President and CEO, Campbell Soup Company

November 10, 2020

Stuart Aitken

Chief Merchant & Marketing Officer, The Kroger Co.

September 3, 2020

Vivek Sankaran

President & CEO, Albertsons Companies

August 25, 2020

https://www.iriworldwide.com/en-us/csuite4




(click to see full report)IRI COVID-19 IMPACT ASSESSMENT REPORTS

COVID-19: THE CHANGING SHAPE OF THE CPG DEMAND CURVE

SPECIAL COVID-19 SERIES: RECESSION PROOF YOUR BUSINESS

COVID-19 EMERGING POINT OF VIEW DISCOVERING POCKETS OF DEMAND

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Thought-Leadership.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Thought-Leadership-3-25-2020.pdf




https://www.iriworldwide.com/IRI/media/Library/COVID-19-Impact-Assessment-Millennials-Meat-5-15-20.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-COVID-19-Impact-Assessment-4-24-2020.pdf/

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Changing-Shape-of-the-Demand-Curve-Part-3-6-18-20.pdf




https://www.iriworldwide.com/IRI/media/Library/U-S-CPG-Growth-Leaders-TL_aug20.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Changing-Shape-of-the-Demand-Curve-Part-8-8-28-2020.pdfhttps:/www.iriworldwide.com/IRI/media/Library/COVID-19-Changing-Shape-of-the-Demand-Curve-Part-8-8-28-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-3-Brand-Performance-5-21-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-2-Maintaining-Pricing-Discipline-5-7-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-I-4-29-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-4-Private-Label-5-28-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-5-Building-Brands-6-3-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-6-Innovation-Lessons-6-12-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-7-Defending-and-Recapturing-the-Shelf-7-6-2020-vF.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Demand-Curve-Part-9-Total-Store-Display-9-28-2020-vF.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Demand-Curve-Part-10-Convenience-Rebound-10-20-2020-vF.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Emerging-Point-of-View-7-30-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Emerging-Point-of-View-8-11-2020-vF.pdf/

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Emerging-Point-of-View-8-14-2020-vF.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Demand-Curve-Part-11-Holidays-10-30-2020-vF.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Demand-Curve-Part-12-Revenue-Management-10-30-2020-vF.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Demand-Pockets-Part-1-Premium-Opportunity-11-10-2020-vFF.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Demand-Pockets-Part-2-Harness-Growth-in-2021-11-30-2020-vF.pdf


The IRI CPG Demand Index™ provides a standard metric for tracking changes in spending on consumer packaged goods.

U.S. Demand Index™ Forecasts are delivered through a proprietary, fully automated forecasting solution that anticipates consumer demand.

Channel Shift Index™ provides a standard metric for tracking changes (migration) in spending on consumer packaged goods across select channels.

The IRI E-Commerce Demand Index™ provides a standard metric for tracking changes in spending on consumer packaged goods purchased online.

Inflation Tracker™ provides the well-known price per unit metric for tracking changes in pricing of consumer packaged goods.

Supply Index™ provides a standard metric for tracking changes in product availability (i.e., in-stock rates) in stores for consumer packaged goods.

Out-of-Stock Levels for Top-Selling Subcategories by Market Area in the U.S.

Top U.S. Topics from IRI Social Pulse™

CPG Economic IndicatorsAccess IRI’s industry-standard metrics for consumer product demand and supply during the pandemic, our CPG inflation tracker and the latest data on category trends, out-of-stock levels, consumer sentiment and more.

Demand Index™ U.S. Demand

Index™ Forecasts

Channel Shift

Index™

E-Commerce

Demand Index™

Inflation

Tracker™ Supply Index™ Out-of-Stock Levels

for Subcategories

U.S. Topics from

IRI Social Pulse™

https://advantage.iriworldwide.com/Engineering/covid19/?i=0


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Documents

IRI Webinar: How to Harness Growth in CPG During 2021