Powered by Dairy Opportunities for Growth- Preliminary Findings

Powered by Dairy Opportunities for Growth- Preliminary Findings

October, 2013Lynn M. Stachura

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What we will cover:

• Why Is Powered By Dairy Important?

• Foundation for Powered By Dairy Research

• What Opportunities Can Dairy Leverage Within The Energy Space?

• Relative Size of Prize/Opportunities Quantified

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Basis of Interest for “Powered By Dairy” Research

• Energy drink market in US was $4.8BN in 2008

• Functional drinks estimated to grow to $19BN by 2013 (160% growth from 2008)

• 63% of Americans are concerned about lack of energy

• 69% say ‘provides energy’ is important in determining products to buy

• Chocolate milk proven to be a good recovery drink

• 21% are regular energy drink users, including 43% of those ages 18–24

• Only 29% of consumers strongly agree protein is naturally found in milk; only 25% familiar to whey protein

Idea Thought Starters:

• Symbols on products to show ‘good source of protein’

• Dairy energy bars/drinks

• Flavors associated with protein: peanut butter

• Mental energy drinks

• Fusions – milk + high protein products (granola, nuts)

Supply Chain Thought Starters:

• Vending machines at health clubs, athletic centers at universities

• Machines that check energy levels (similar to blood pressure machines) in food stores and then recommend high protein items to buy

Basis of Interest Potential Ways to Bring to Life

DAIRY INGREDIENT

Making dairy the go-to food/beverage for people who want more physical or mental energy

Innovation Center research compiled by GfK identified 3 dairy categories that have possible opportunities within the energy space:

MILK YOGURT

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Team Work Plan to Uncover Opportunities Dairy MightLeverage Within The “Powered” Space

Making dairy the go-to food/beverage for people who want more physical or mental energyDairy entry into new & existing “energy” markets

GfK Qualitative Work:

Identify consumer needs by need state/ occasion/ segments

Conduct global scan for new product innovation across energy market

Quantitative & Secondary Research: Exploration of energy claims within food &

beverage within the retail channel E.g. understanding energy drink/shot categories

TNS Landis Database Quantitative Work: Identify potential categories focused in the

“energy” arena so dairy can leverage equity and consumer acceptance

What dairy opportunity can be leveraged within the energy space and who is the target consumer?

Players within the “claimed” energy space?

Understanding the Why behind consumer needs, habits/practices, attitudes, and behavior?Help identify emerging innovative energy territories

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Executive Summary

• Dairy has permission to play within energy space

• Highest priority areas for innovation are– Regular yogurt, greek yogurt, smoothies, drinkable yogurt & low fat/skim milk

• Yogurt categories show most potential to compete w/ energy categories

• Uncovered preliminary roadmaps for both “close-in” and “farther-out” innovation– Closer-in growth doesn’t require new product development, rather leverages

current dairy benefits

– Farther-out growth requires greater innovation which can lead to higher incremental growth

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Executive Summary

Snack universe (defined by TNS):• Regular and greek yogurt occasions have an opportunity to move into the

energy space, which accounts for 21% of the snack occasions

• Learnings from regular and greek yogurt can be applied to other categories such as dessert yogurt, probiotic yogurt and frozen yogurt

• Relative potential for dairy-based energy snacks is $18.9 billion

Beverage universe (defined by TNS):• Smoothies, drinkable yogurt and low fat/skim milk occasions have opportunity

to move into the energy space, accounts for 30% of the beverage occasions

• Learnings from smoothies, drinkable yogurt and low fat/skim milk can be applied to other categories such as reduced fat/calorie milkshakes, lactose free milk and organic milk

• Relative potential for dairy-based energy beverages is 15.9 billion gallons

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INITIAL DISCOVERYPowered By Dairy:

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Initial Discovery Uncovers Why “Powered By Dairy” Is Important To The Industry

• The functional food/beverage category is a profitable market that grew 25% between 2008 - 2011 despite the recession

• Energy is among the fastest growing claims with sales increasing 15% in the past year

• Adults are increasingly more interested in obtaining physical and mental energy in these hectic times

• Natural energy is becoming the new functional energy trend

IRI Sales versus year ago (1 year ending July 15, 2012)New Nutrition Business 2011New Nutrition Business Key Health and Nutrition Trends 2012

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Consumers Are Changing Their Diets For A Variety Of Reasons

Weight management67%

Top Reasons for Changing Diet: % Made Dietary Changes in Past Year

Overall improved health and wellness

54%

Improve body shape/fat composition46%

Improve overall quality of life46%

Increase energy levels 34%

Source: The NPD Group/Functional Foods & Beverages Custom Survey; June ‘12

Disclosed with permission of The NPD Group solely for the purpose for which it is being provided by DMI. The reproduction, dissemination or use of the information for any other purpose is strictly prohibited without NPD’s prior written consent.

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Physical And Mental Energy Are Important To Consumers

Physical Energy Mental Energy Do not use for energy

73%

63%

24%

Types of Energy Consumer Are Looking For In Functional Products

(Foods & Beverages; % of Adult Sample)

Source: The NPD Group/Functional Foods & Beverages Custom Survey; June ‘12


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Energy Products Maintain Younger Consumers Interest, While Older Consumers Seek More Natural Sources

36% of adults would rather get their nutrients from foods and beverages as opposed to supplements

Natural is a good point of difference

Source: Package Facts dietary supplements us 2010 studySource: The NPD Group/Functional Foods & Beverages Custom Survey; June ’12


The Move To “Natural” Products Is Evident In The Product Introductions And Expanded Users

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Does Dairy Have Permission to Expand Into Energy Space?

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DAIRY OUTLOOK IN ENERGY SPACEPowered by Dairy:

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Using The TNS Landis Database, Consumers Define “Energy” As…

Note: Energy is defined as a need within food and beverage

• Provides quick energy • Picks me up/gets me going

• Is a supercharged energy source

• Is a good source of protein • Is a good source of soy/ soy protein

• Enhances mental performance• Helps me stay sharp and alert

• Is a good way to start the day • Helps me stay on track

• Helps me concentrate • Helps wake me up

• Helps manage my blood sugar • Helps me get through my day• Provides lasting energy

• Won't impair performance • Helps me lead active lifestyle• Is good after physical exercise • Enhances physical performance• Energy w/o making me crash later• Will not slow me down/feel sluggish

Protein Based Energy

Physical Energy (Exercise)

Sustained energy…

• Boosts of energy naturally

Mentalenergy…

Energy Quickenergy…

Natural energy…

• Gives me energy w/o the calories

• Boosts my metabolism • Rejuvenates me• Revitalizes me

Other

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Some Dairy Categories Have Opportunity To Move Into Energy Space

Prioritized 5 Dairy Categories

52 Energy Categories

Energy Attributes

25 Dairy Categories

25 Dairy Categories

• 11 dairy categories in the Beverage Universe

• 14 dairy categories in the Snack Universe

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Energy Attributes

• Energy attributes define the energy categories

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Examples of energy attributes:

• Provides quick energy

• Helps me get through my day

• Enhances my physical performance

• Is a good source of protein

• Enhances my mental performance

52 Energy Categories

• The 26 energy attributes aligned with 52 energy categories

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We Prioritized Five Opportunity Areas Where Dairy Has Greater Permission to Innovate

Regular Yogurt

• Yogurt- Dessert

• Yogurt- Probiotic

• Packaged Frozen Yogurt

Greek Yogurt

• Yogurt- Dessert

• Yogurt- Probiotic

• Packaged Frozen Yogurt

Yogurt Smoothies

Drinkable Yogurt

• Reduced Fat/ Calorie Milkshakes

Low Fat/ Skim Milk

• Lactose Free Milk

• Organic Milk

Snack Opportuniti es Beverage Opportuniti es

Additionally, these dairy categories below have similar traits to innovate against:

1 2 3 4 5

Lower Priority Dairy Categories

(Don’t meet energy needs or other categories meet the needs)

Snack opportunities Beverage opportunities String Cheese Individually Wrapped Cheese Slices Premium Ice Cream Non Premium Ice Cream Soft/ Spreadable Cheeses Cottage Cheese

Chocolate Milk RTD Refrigerated Milkshakes Whole Milk

Note: Reduced fat/ calorie milkshake category are products that require “adding milk and stirring”

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4%NS12 Socialize & Entertain

6%NS8

14%NS1

13%NS2

7%NS7

7%NS6

6%NS9

9%NS5

4%NS10

134%

12%NS3

10%NS4

U.S. Snack Universe Within TNS Landis Database:(Overview of Snack Need States)

Enjoyment Multitasking

Relieve Boredom

Indulge With Family

Do Other Things

Fresh & Filling

Enhance My Health

Sharpen My Mind & Body

Healthy Meal Replacement

Energize Me

Break the Routine

Permit Plenty

Save Time & Savor

Speedy, Sweet & Portioned

Nutritionally complete options for every day, made with the goodness of real fruit, that

rehydrate and rejuvenate the body, enhancing health over the longer term

Vitamin-fortified, energy and metabolism-boosting snacks that help you stay focused, physically active and

looking your best

A heart-healthy meal replacement with nutritional value that boosts bodily function

and gives the body what it needs to feel good

A natural energy source that revitalizes and sustains throughout the day, with built-in

benefits (like antioxidants or calcium) to help improve the body’s function and endurance

A freshly prepared, full-flavored option that is a meal in itself – served warm, tastes authentic, and is a good change of pace

from the usual routine

4%NS11 Reward Me

Simple/basic, shareable, savory snacks with big flavor, enjoyed while spending

time with friends and family

Spontaneous, spur-of-the-moment, easy, hand-to-mouth snacks to just open and eat

to relieve boredom

Sweet, full-flavored, uplifting, and craveable indulgent treats that are fun for

the whole family

Simple, no-prep, hand-to-mouth savory snacks that are not messy and can be enjoyed while doing other things, whether on the go,

at the computer, or in front of the TV

Bite-size, pop-in-your-mouth, low-calorie snacks, good anytime and portable for

anywhere, whether on the go or at work or school, permissible for munching all day

Savory options with crispy, baked texture, that come complete with all the ingredients

and are quick to prepare, but with flavor you don’t want to rush

Portable, single-serve, sweet, flavorful treats for any time of the day, that provide

quick energy to keep going, whether working at a desk or driving in the car

For personal moments of indulgence that are comforting and not rushed, to help you

relax and escape during and after a stressful day

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Dairy Category

Need State/Consumer Segment

Target Need State Need State Definition % of Snack Universe

String Cheese Speedy, Sweet & Portioned

Individually Wrapped Cheese Slices

Speedy, Sweet & Portioned

Regular Yogurt Enhance My Health

Premium Ice Cream


Non-Premium Ice Cream


Soft/Spreadable Cheeses

Healthy Meal Replacement

Greek Yogurt Energize Me

Cottage Cheese Energize Me

Dairy Opportunity Across Snack/Energy Need States(Relative Size of Prize)

14%

7%

13%





Nutritionally complete options for every day, made with the goodness of real fruit, that

rehydrate and rejuvenate the body, enhancing health over the longer term

Vitamin-fortified, energy- and metabolism-boosting snacks that help

you stay focused, physically active, and looking your best

Vitamin-fortified, energy- and metabolism-boosting snacks that help

you stay focused, physically active, and looking your best

A heart-healthy meal replacement with nutritional value that boosts bodily function

and gives the body what it needs to feel good





13%

7%

Dairy's share of the energy related snack

occasions is…

54%However, regular and

greek yogurt occasions have

opportunity to move into the energy space which encompasses…

21%

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11%NS3

The Real Deal

All-natural, wholesome, and great-tasting beverages that

have heart-healthy ingredients and help set a good example

11%NS2

Proper Health Management

Beverages that make you feel fit/healthier, enhance your

mental focus, aid your digestive system, and make you feel that your are taking care of yourself

9%NS5

An on-the-go beverage that gives you quick energy so that

you can keep going while you’re doing other things

Easy, Quick, Convenient

6%NS10

5%NS11

9%NS6

6%NS9

17%NS1

7%NS7

7%NS8

10%NS4

4%NS12

Craveable, indulgent, and fun beverages that make you happy

and put you in a good mood

Fresh beverages that have a homemade taste and help you

de-stress and relax

Sweet, full-flavored, and fun beverages that have a mix of

tastes and are made with fresh fruit that my whole family can

enjoy

Fruit-flavored, vitamin and mineral-fortified beverages with a mix of tastes that boost your

energy naturally

Refreshing, thirst-quenching, and light-tasting beverages that

are good to have with a meal

Fresh, natural, and nutritionally complete beverages that

strengthen teeth and bones, build muscle, and tide you over

until your next meal

Filling, energizing beverages that tide you over until your next meal and make you feel

adventurous

Natural Soothing Selections

Sweet Fun with a Twist

FruityGoodness Healthy Meal Replacement

Satisfying Energy Enhancement

Easy Refreshment

Indulgent Moments

Healthy Weight Management

Low This, Low That

Daily guilt-free beverages, lower in sugar and calories, that are not too filling and help you

manage your weight

Lower in sugar and calories beverages that are not too filling,

don’t spoil your appetite, and help you feel in control

EmotionalReward

PortableConvenience

MealReplacement

Health Management

U.S. Beverage Universe Within TNS Landis Database:(Overview of Beverage Need States)

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Dairy Category

Need State/Consumer Segment (Beverage Universe)

Target Need State Need State Definition % of Beverage Universe

Fruit or Yogurt Smoothies From a Restaurant/Smoothie Shop

Fruity Goodness

Chocolate Milk in Bottles/Cartons

Easy, Quick, Convenient

RTD Refrigerated Milkshakes

Satisfying Energy Enhancement

Drinkable Yogurt Proper Health Management

Whole Milk Proper Health Management

Low-Fat/Skim Milk Healthy Weight Management

Dairy Opportunity Across Beverage/Energy Need States(Relative Size of Prize)

9%An on-the-go beverage that gives you quick energy so that you can keep going while you’re doing other things

5%

9%

Filling, energizing beverages that tide you over until your

next meal and make you feel adventurous

Beverages that make you feel fit/healthier, enhance your mental focus, aid your digestive system, and make you feel that your are taking care of yourself

10%

Daily guilt-free beverages, lower in sugar and calories, that are not

too filling and help you manage your weight

Fruit-flavored, vitamin and mineral-fortified beverages with a mix of tastes that boost your energy naturally

Beverages that make you feel fit/healthier, enhance your mental focus, aid your digestive system, and make you feel that your are taking care of yourself

11%

Dairy’s share of the energy related beverage

occasions is…

44%However, smoothies, drinkable yogurt and

low fat/ skim milk occasions have

opportunity to move into the energy space which encompasses…

30%

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The Study Defined Two Distinctive Types Of Innovation For Dairy

Further-Out Innovation

Closer-In Innovation

How to innovate: Develop communication that builds upon dairy benefits so it can be positioned against energy categories

1. Innovation that is quick but yields less growth; doesn’t require new product development

2. Leverage new benefits/positioning that communicate dairy categories strengths against existing competitive energy categories

• Helps build upon needs not met by energy categories yet delivered by dairy

• Capitalize on needs that dairy outperforms energy categories

Example: Position drinkable yogurt messaging that delivers opportunities such as helping feel good, looking my best or helping family maintain health as a way to compete against other energy categories

How to innovate: Create a new hybrid product that leverages dairy benefits and meets energy attribute needs

1. High Innovation needed but yields high growth

• Highly incremental opportunity

2. New hybrid product not created, consumers slower to grasp concept

• Requires longer lead time

3. Need to address consumer needs that are served well by energy categories however, not dairy categories

• Extending dairy into strongly connected energy categories

Example: New to the world hybrid category…

Nutritionally Balanced Drinkable Yogurt Shots:

This product would deliver on helping consumer feel and look their best and can be considered an option for the family to stay healthy. Goal is to help consumer meet energy needs of feeling fit/ healthier and makes up for less nutritional choices

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Where Does Regular Yogurt Currently Play?

Defining… Enhanced My Health

Health functions Fresh/natural ingredients Sound nutrition Better performance Natural lift

Categories Competing Within Enhance My Health Need State

Fresh fruit –whole or precut 100% RTD fruit smoothies Greek yogurt Dairy-based vegetable dips Cottage cheese

Fruit cups Fruit Crisp Bars Cereal naturally sweetened Peanut butter in on-the-go

cups

Need State: Enhance My Health(Accounts for 14% of Energy – related Snack Occasions )

Regular Yogurt: Opportunity At A Glance

Who Is My Target Consumer…?

Older consumers Proactive and disciplined Love food and are adventurous eaters Managing their food and nutrition choices Freshness and sources of the foods important

Disciplined Eaters: Eat To Live Closer-In Innovation

OR


How To Innovate…?

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Regular Yogurt: Preliminary Guidance For InnovationHow To Innovate…?

Enhances daily health Helps ensure long-term health Has redeeming nutritional value Helps me feel good about self

1 2 Helps digestive system work at its best Helps maintain teeth/ bones strength

Cheese/Queso dips Dairy-based vegetable dips Peanut butter OTG cups Low-calorie chocolate candy bars Reduced calorie brownies Reduced calorie cookies

Needs Not Met By Energy Categories:

Communicate Regular Yogurt Benefits*:

Yogurt Outperforms Energy Categories:

Note: *Must meet both criteria (1 and 2) before innovation

Closer-In Innovation Further-Out Innovation

Innovate Against Energy Competitive Set:

Develop regular yogurt positioning that optimizes above communication/benefits

Ex: Regular yogurt needs to communicate some of its inherent benefits, such as bone health, to compete with the above competitive set

Regular yogurt competes against these energy based categories (competitive set):

Important energy attributes needed to innovate:

* Must communicate all the regular yogurt benefits (above) to innovate far-out:

Build new dairy/energy product: Low to high innovation/risk factor:

MODERATE INNOVATION

NEEDED

HIGH INNOVATION

NEEDED

LOW INNOVATION

NEEDED

• Not applicable

• Fruit cups• Reduced calorie brownies• Peanut butter OTG cups• Reduced-fat/sugar cookies• Low-calorie chocolate candy bars

• Dairy-based vegetable dips• Cheese/Queso dips

Is naturally sweetened

Use high quality ingredients

Naturally rich in vitamins

Fuse regular yogurt with energy product to create new hybrid product

Higher innovation… higher growth New product not yet invented Ex: Expand regular yogurt into energy

space by leveraging above benefits along with energy attributes to create breakthrough innovation fusion categories/products

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Where Does Greek Yogurt Currently Play?

Defining… Energize Me

Gets me going, keeps me going Has sound nutrition Is a natural lift Has fresh/natural ingredients Supports body functions

Categories Competing Within The “Energize Me” Need State

Peanut butter Packaged frozen yogurt Regular Yogurt Fresh fruit – precut or whole Fruit cups

Cereal – 100% nutritionally complete, 100% wholegrain

Fresh, cooked or raw vegetables Heart-healthy spreads

Need State: Energize Me(Accounts for 6% of Energy – related Snack Occasions )

Greek Yogurt: Opportunity At A Glance


Image is important for these consumers “Live to eat” as mindful of health & nutrition

Yet struggle with weight/guilt of eating Take time to exercise and look attractive

Yet not truly satisfied w/ how they look

Life- Balancing Weight Manager Closer-In Innovation

OR


How To Innovate…?

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Greek Yogurt: Preliminary Guidance For InnovationHow To Innovate…?

Good source of calcium

1 2 Helps build muscle Boost immune system Helps digestive system work at its best

Fruit cups Cereal – high fiber Cereal – 100% wholegrain Cereal – 100% nutritionally complete Heart-healthy spreads


Communicate Greek Yogurt Benefits*:

Greek Yogurt Outperforms Energy Categories:




Develop Greek yogurt positioning that optimizes above communication/benefits

Ex: Greek yogurt needs to communicate some of its inherent benefits, such as builds muscle, boosts immune system or helps digestive system work its best to compete with the above competitive set

Greek yogurt competes against these energy based categories (competitive set):


* Must communicate all the Greek yogurt benefits (above) to innovate far-out:


MODERATE INNOVATION

NEEDED

HIGH INNOVATION

NEEDED

LOW INNOVATION

NEEDED

• Not applicable

• Cereal- high fiber• Fresh fruit/precut with a dip• Fresh fruit/whole

• Cereal – 100% nutritionally• Cereal – 100% wholegrain• Heart-healthy spreads• Fruit cups

Enhance physical/ mental performance

Good source of antioxidants

Fortified w/ vitamins and/or minerals

Is made with fresh/real fruit

Promotes healthy skin

Fuse Greek yogurt with energy product to create new hybrid product

Higher innovation… higher growth New product not yet invented Ex: Expand Greek yogurt into energy


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Where Does Fruit/ Yogurt Smoothies Currently Play?

Defining… Fruity Goodness

Good for body Fruit- flavored Natural energy

boost Kid-friendly

Partner with exercising

Complex taste Good for lunch/

as a snack

Categories Competing Within Fruity Goodness Need State

Bottle tea blend w/ fruit juice Fruit juice drinks/blends Sparking fruit juices Soft drinks fortified with

vitamins and/or minerals

Fortified fruit juice Regular RTD sports drinks Pre-game fuel drinks Post-game drinks Herbally enhanced drinks

Need State: Fruity Goodness(Accounts for 9% of Energy-related Beverage Occasions )

Fruit/Yogurt Smoothies: Opportunity At A Glance


Eating is important to younger single men Rely on other to prepare food (at home & away) On-the-go consumers w/ active, busy lifestyle Don’t worry about weight or health issues

Social Indulger: Live to Eat Closer-In Innovation

OR


How To Innovate…?

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Fruit/ Yogurt Smoothies: Preliminary Guidance For InnovationHow To Innovate…?

Fruit flavored, sweet Kids can prepared/serve themselves Kids like/parents approve of…

1 2 Good mixture of tastes Variety of tastes in every bite Good as a snack

Flavored fitness water RTD sports drink (regular/low calorie) Pre-game fuel drinks Post-game drinks Herbally enhanced drinks Nutritionally complete drinks Calorie-burning drinks


Communicate Fruit/Yogurt Smoothie Benefits*:

Smoothies Outperforms Energy Categories:



Innovate Against Energy Competitive Set: Develop fruit/yogurt smoothie positioning

that optimizes above communication Ex: Smoothies needs to communicate some

of its inherent benefits, such as mixture or variety of taste or good snack and kid friendly to compete with the competitive set

Fruit/yogurt smoothies competes against these energy based categories:


* Must communicate all the smoothie benefits (above) to innovate far-out:


MODERATE INNOVATION

NEEDED

HIGH INNOVATION

NEEDED

LOW INNOVATION NEEDED

• Not applicable

• Flavored fitness water• RTD sports drinks• Pre-game fuel drinks• Low-calorie RTD sports drinks• Post-game drinks• Nutritionally complete drinks• Calorie-burning drinks

• Herbally enhanced drinks

Fuse smoothies with energy product to create new hybrid product

Higher innovation… higher growth New product not yet invented Ex: Expand smoothies into energy


Good for fast paced lifestyle

Easy to prepare

Doesn’t drip when I drink it

Provides quick energy

Good for when I am surfing the web, blogging or texting

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Where Does Drinkable Yogurt Currently Play?

Defining Proper Health Management

Feel and look my best Promotes healthier lifestyle Promotes brain function Better bodily function Controlling the “bads”

Categories Competing Within Proper Health Management Need State

Soy milk Bottle water fortified w/ vitamins Vegetable juices Weight-loss beverages Low-fat/skim milk

Protein-enhanced water Unflavored fitness water Nutritionally complete drinks Calorie-burning beverages

Need State: Proper Health Management(Accounts for 11% of Energy-related Beverage Occasions )

Drinkable Yogurt: Opportunity At A Glance




OR


How To Innovate…?

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Drinkable Yogurt: Preliminary Guidance For InnovationHow To Innovate…?

Helps me feel good Helps maintain family health Give my body what it needs to feel good

1 2 Helps me look my best

Nutritionally complete drinks Weight-loss beverages


Communicate Drinkable Yogurt Benefits*:

Drinkable Yogurt Outperforms Energy Cat.:




Develop drinkable yogurt positioning that optimizes above communication/benefits

Ex: Drinkable yogurt needs to communicate some of its inherent benefits, such as making me feel good, maintaining family health to compete with the above competitive set

Drinkable yogurt competes against these energy based categories (competitive set):


* Must communicate all drinkable yogurt benefits (above) to innovate far-out:


MODERATE INNOVATION

NEEDED

HIGH INNOVATION

NEEDED

LOW INNOVATION

NEEDED

• Not applicable

• Not applicable

• Nutritionally complete drinks• Weight-loss beverages

Helps me feel fit/ healthier

Helps make up for less sensible choices

Fuse drinkable yogurt with energy product to create new hybrid product

Higher innovation… higher growth New product not yet invented Ex: Expand drinkable yogurt into

energy space by leveraging above benefits along with energy attributes to create breakthrough innovation fusion categories/products

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Where Does Low Fat/Skim Milk Currently Play?

Defining Healthy Weight Management

Weight control/Better for me No-regret consumption Healthy ingredients Low/no sugar and Light/not too filling Better health management

Categories Competing In Healthy Weight Management Need State

Unflavored fitness water Bottled spring water Bottled purified water – plain Low-cal. fruit-flavored drink mix Sparkling water – unflavored

Unflavored bottled teas Soy milk Low-cal. RTD sports drinks

Need State: Healthy Weight Management(Accounts for 9% of Energy-related Beverage Occasions )

Low Fat/Skim Milk: Opportunity At A Glance




OR


How To Innovate…?

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Low Fat/Skim Milk: Preliminary Guidance For InnovationHow To Innovate…?

Low fat/low calories Can have every day Does not contribute to childhood obesity

1 2 No added sugar Helps lower cholesterol

Unflavored fitness water Soy milk Vegetable juices


Communicate Low Fat/Skim Milk Benefits*:

Low Fat/Skim Milk Outperforms Energy Cat.:




Develop low fat/skim milk positioning that optimizes above communication

Ex: Low fat/skim milk needs to communicate some of its inherent benefits, such as providing no added sugar and lowers cholesterol to compete with the above competitive set

Low fat/skim milk competes against these energy based categories (competitive set):


* Must communicate all low fat/skim milk benefits (above) to innovate far-out:


MODERATE INNOVATION

NEEDED

HIGH INNOVATION

NEEDED

LOW INNOVATION

NEEDED

• Unflavored fitness water • Soy milk

• Not applicable

• Vegetable juices

Is low in salt/ sodium Is sugar free

Fuse low fat/skim milk with energy product to create new hybrid product

Higher innovation… higher growth New product not yet invented Ex: Expand low fat/skim milk into

energy space by leveraging above benefits along with energy attributes to create breakthrough innovation fusion categories/products

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Relative Size of Prize For Dairy Snacking And Beverage Energy Occasions

Energy Related Snack Occasions

Energy Related Beverage Occasions

• Snacking is a $90+ billion industry

• 21% of snacking occasions are energy-related, which creates a:

$18.9 Billion 15.9 Billion Gallon

• Beverage a 53 billion gallon industry

• 30% of beverage occasions are energy-related, which creates a:

1: Innovation Center of U.S. Dairy, Snacking white paper (2009)2: Innovation Center of U.S. Dairy, Dairy Beverage Reinvented (2012)

Opportunity Opportunity

1 2

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What Else Might We Uncover From This Initial Work?

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Additional Mining of This Data Could:

• Look more deeply into protein energy connection

• Create work around energy dimensions – Example: sustained, natural or quick energy etc…

• Dig into the consumer target(s) of highest priority opportunities

• Explore some “lower priority” dairy categories

• Further refine sizing estimates based on new information

• Other issues of interest for your organization…?

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APPENDIXPowered by Dairy:

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Matrix™ Consumption UniverseMethodology Overview – Overall Food & Beverage

What is the Consumption Universe?

A comprehensive insight resource for food and beverage marketers, leveraging the proprietary TNS Matrix™ methodology to model how consumers see the market and make their product choices

Massive scope: 24,000 consumer interviews – 360 food, beverage, and snack products/categories evaluated across 360 occasion-based needs and product benefits, plus over 50 statements defining differentiated consumer targets based on shared beliefs, behaviors, and lifestyle factors

The Matrix™ Consumption Universe is designed to help you:

Understand all factors impacting consumer choice in your category – or a new category of interest

Quickly uncover bona fide gaps and opportunities grounded in consumer needs

Efficiently expand your perspective beyond traditional category definitions to identify new opportunities

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Survey Overview

Many approaches, such as A&U’s, ask a lot of questions on a survey, the more the better, and then hope something interesting surfaces.

Matrix instead leverages a consumer behavioral model to drive survey content and analytics/deliverables, and take the guesswork/risk out of research design and execution.

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What is a consumer target?

Consumers have varied lifestyles, behaviors, tensions, and beliefs which predispose them to act in certain ways.

Matrix uncovers the differentiated consumer segments which comprise your market targets – each with different beliefs, behaviors, and/or lifestyle tensions – and sizes them to aid prioritization.

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U.S. Consumption Universe – Consumer Segments

Food Aficionados Struggling DisciplinedCarefree

Overview of Beliefs & Lifestyles

These women provide basic home-cooked

food, and eat with their families. They are not focused on health or nutrition, and do not

limit themselves or feel guilty about it. They are not impacted by daily stresses in their lives.

These “foodies” are adventurous in life, cooking, and eating. They moderate their eating to maintain a

healthy lifestyle and an active social life. They enjoy freshly prepared foods more than fast

food or junk food.

Eating is important to these younger, single men, but they rely on

others to prepare foods for them – whether at

home or away. Their active, busy

lifestyle means they are often eating on the go, and they don’t worry

about weight or health issues.

Life is stressful for these consumers, and they

lack the energy to tackle life’s challenges.

Although they struggle with weight issues, they

rely on easy prep or simple meals to make their families happy.

They tend to stick with the “tried and true” in their food choices, and

often use food for comfort.

These consumers struggle to maintain a healthy weight and try to eat better, but don’t always succeed. They are focused on fresh

food and nutrition, and do not rely on fast food

for their meals.

For these single male consumers, food is fuel

that supports their on-the-go lifestyle. Takeout and quick-cooking foods are the basis of their meals

and snacks, and they rarely prepare their own food.

Neither explorers nor adventurers, they regularly eat the same foods. They

eat what they want without health concerns.

These consumers are mindful of health and nutrition, but struggle with weight issues and

guilt about eating. Image is important to these consumers, and

they take steps to exercise and look

attractive, but they are not truly satisfied with

how they look.

Although these older consumers are lovers of food and adventurous about eating, they are

proactive and disciplined in managing their food and nutrition choices. Freshness and

sources of the foods they choose are

important to them.

Home Cookin’ Family Pleaser(10%)

Conflicted Stressed Manager

(15%)

StressedStruggler

(15%)

Routine Convenience

Seeker

(10%)

Social Indulger

(11%)

Life-Balancing

Weight Manager

(11%)

Wellness Proactive

(13%)

Upbeat Food

Explorer

(14%)

LIVE TO EATEAT TO LIVE

40

Yogurt Cereal

Yogurt - with probiotics Cereal - bran/high fiber

Yogurt - Greek type Cereal - 100% wholegrain

Yogurt - regular type Cereal - 100% nutritionally complete Drinkable yogurt BarsNuts, Granola Energy bars Granola, fruit, and nut mix in pouches Protein bars Granola/muesli Chewy granola bars Fortified nut mixes such as for bone or heart health Chewy granola/cereal bars with fiberTrail Mixes Nutritional bars Fruit Based Crunchy granola/cereal bars Dried fruit Fruit crisp bars Fresh fruit - whole Weight-loss meal replacement bars Fruit cups Dips/Spreads100% fruit smoothies - ready-to-drink Reduced-fat/fat-free vegetable dipsConfections/Treats Heart-healthy spreadsLow-calorie chocolate candy bars or clusters Crackers/SeedsReduced-calorie brownies Whole wheat/multigrain crackersPeanut butter in on-the-go cups Seeds (like sunflower, pumpkin, etc.)Natural/organic cookies

Energy-Related Categories (Snack Universe)

41

Protein Drinks Energy BeveragesProtein-enhanced sports drinks Energy shots (like 5-Hour Energy, etc.)

Protein drinks - ready-to-drink Single-serve flavored powdered energy drink mix

Protein-enhanced water Energy drinks Weight Management Beverages Single-serve flavored powdered energy drink mixCalorie-burning beverages Coffee BeveragesWeight-loss beverages Brewed coffee - regularFuel/Functional Beverages Instant coffeePre-game fuel drinks Single-serve, one-cup-at-a-time coffee Post-game drinks with electrolytes and carbs Other BeveragesRegular ready-to-drink sports drinks Vegetable juicesLow-calorie ready-to-drink sports drinks Soy milk

Flavored fitness water Unflavored fitness water Herbally enhanced drinks Nutritionally complete drinks

Energy-Related Categories (Beverage Universe)

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