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Part November
2020
THE PREMIUM OPPORTUNITY
Discovering Pockets of Demand 10
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2
Executive SummaryThe pandemic-induced economic slump presents as an atypical K-shaped recovery, with many consumers enjoying healthy incomes while others struggle to make ends meet. For consumers across all income levels, spending patterns have shifted as stay-at-home behaviors continue – spending more on food-at-home and spending less on discretionary purchases of foodservice, professional services (e.g., spa, medical / dental), travel and entertainment.
While CPG growth during the pandemic has been robust, CPG manufacturers must Discover Pockets of Demand to ensure growth into 2021 and beyond. We start this new series of reports by highlighting one such growth pocket: premium and super premium demand pockets. Beyond Pelotons and backyard living spaces, consumers of all income levels look to find joy and elevated experiences with premium CPG products.
Observations• Despite ongoing economic uncertainty, anticipated
recessionary spending behaviors, including an increase in spending on private label and value brands, as well as a shift to value channels, hasn’t occurred to date.
• Consumption has shifted to at-home; lower-income households have maintained higher growth in at-home CPG consumption than other income levels throughout the pandemic.
• Shoppers are trading up in grocery and other large format channels, with premium / super premium products gaining share at the expense of value tier and private label. Both high-and low-income shoppers are trading up in many categories, including food and beverage, cleaning and personal care.
• With increase in e-commerce adoption, e-commerce is seeing more growth in mainstream products, despite generally being skewed to more premium sales.
Implications• Manufacturers and retailers need to ensure they drive sales of premium and
super premium products, even in lower income trading areas.• Tailor messaging for premium products: For Millennials, for example, promote
the “experience” of premium products. Low-income households might define special occasions as associated with specific premium products, an opportunity to expand the occasion with different premium products.
• Know which attributes resonate with your most valuable shoppers and promote relevant attributes that mark a product as premium, e.g., health and wellness, immunity, hygiene, indulgence and convenience. With increase in e-commerce adoption, marketers will have to use the right search words to draw attention to premium offerings.
• Tailor price-range architecture, assortment to meet the unique needs of your shoppers by channel.
• Target and tailor messages to purchase-based premium audiences (e.g., premium brand, non-price sensitive, non-promotion sensitive).
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Attractive Demand Pockets Emerge Due to the
Pandemic-Induced Changes in CPG and Retail
Lifestyle / Consumption ShiftsMeet new consumer needs across in-home consumption occasions (e.g., prepared meals, new flavors / variety)
Economic BifurcationCapture both premium / super premium and value opportunities in the K-shaped economic recovery
Valuable CohortsFocus on attractive lifetime-value cohorts (e.g., upper income, Millennials, Gen X) via targeted messaging, products and promotions
Special OccasionsIdentify and activate on new opportunities (e.g., gifts, messaging, nostalgia) as holiday and celebration patterns shift
Channel ShiftingHone price-pack-assortment and channel architecture as online, grocery, club and dollar channels gain share of wallet
Shopping Behavioral ShiftsCustomize in-store execution (e.g., displays, promotions, assortment, in-store media) as shoppers buy larger baskets, spend less time in store and assortments shrink
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 4
Unlike Past Recessions, Low Wage Earners Are More Impacted by
Unemployment, Yet Low-Income Households Have Reduced Spending Less
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 10/20/20.
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 onset of the 2020 COVID-19 pandemic, lowest earners returned to pre-COVID-19 spending levels, while higher income households reduced spending.
2020 Coronavirus Crisis2008 Recession2001 Recession1990 Recession
Job Growth / Loss Since Recession Start
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December – February vs. YA April – June vs. YA July – September vs. YA
% of spend
low-income share of wallet
vs. avg. HH
growth trend vs. prior quarter
growth trend vs. prior quarter
Health
Housing, Utilities & Fuels
Recreation
Transportation
Financial Services & Insurance
Food Services & Accommodations
HH Furnishing, Equipment, Maintenance
Food & Bev. Purchased for Off-Premise
Clothing, Footwear, Related Services
Education
Communication
All Other
SUM
TOTAL % CHANGE VS. YA +5% -10% -2%
Overall Household Expenses Are Lower During COVID-19, With Greater
Spend on At-Home Consumption, While Other Expenses Are Reduced
U.S. Personal Consumption Expenditures ($B Change vs. YA) by Major Type of Product
157
229
85
1,964
135
81
37
155
296
11
201
35
542 21% ↑
18% ↑
9% ↓
9% ↔
8% -
7% ↔
4% -
7% ↑
3% ↔
2% ↔
2% -
9% -
1,146
362
1,160
15
87
-1,298
23
341
153
663
40
326
-4,200
231
7
83
-126
311
323
412
145
102
70
547
-752
158
Higher share of spend on non-discretion-ary areas for low-income
Source: BEA, based on seasonally adjusted monthly figures through Sept 2020. Low-Income share of spend based on BLS Consumer Expenditure Survey 2019.
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After the Initial COVID-19 Surge, Low-Income Households Are Maintaining
Higher Growth in At-Home CPG Consumption than Other Cohorts
Grocery Channel Total Store Spending by Income Level / % Change vs. YA
Frequent Shopper Income Tiers – Grocery Channel / Based on 6.5M Regular Grocery Shoppers
Source:. IRI Shopper Loyalty database, Grocery channel based on 65M household sample, and 6.5 static households. Total store including edible, random weight edible and nonedible categories.
Low-income growth is less variable, and likely less impacted by switching
to away-from-home consumption
1
1719
17
1312
11
89
1
19 20
17
1110
9
68
1
23
25
20
1212
10
7
8
+1
Middle-Income
Low-income
High-Income
Post COVID-19 surge, EDIBLE accounts for 94% of low-income growth vs. YA and 97% of high-income growth (vs. 85% of sales)
High-income households were able to
STOCK UP more in the initial COVID-19 surge
52 WE2/23/20
4 WE3/22/20
4 WE4/19/20
4 WE5/17/20
4 WE6/14/20
4 WE7/12/20
4 WE8/9/20
4 WE9/6/20
4 WE10/4/20
-6
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Similar to Higher Income, Low-Income HHs Have Reduced Share of Wallet in Mass, Favoring Channels with Contactless Pay, Wide Food VarietyChannel Trends by Income Cohort / Share of Total Store Dollar Sales
E-commerce
is driving
growth in
other
channels
All Other
Dollar
Club
Mass
Grocery 37.7% 38.1%
32.6% 30.2%
7.3% 7.9%
4.9% 5.1%
17.5% 18.7%+0.3
+0.4
+0.1
+0.2
-1.0
+1.4
+0.3
+0.4
-2.4
+0.2
Trend vs.52 WE 2/23
LOW
52 WE2/23/20
26 WE10/4/20
Ppt. Chg. vs. YA
Ppt. Chg. vs. YA
44.0% 45.9%
21.9% 19.4%
15.9% 16.1%
17.2% 17.5%
1.0% 1.1%
0.0
+0.1
+0.1
-0.2
+0.1
+0.5
0.0
+0.3
-2.8
+2.0
HIGH
Trend vs.52 WE 2/23
52 WE2/23/20
26 WE10/4/20
Ppt. Chg. vs. YA
Ppt. Chg. vs. YA
Grocery is
attracting
more trips as
a one-stop
shop with
greater CPG
variety
Note: Low-income per Capita <$30k 1P + $5k per add’l person; High-Income >=70k 1P + $30k all others; All other = Drug, e-commerce, specialty, other CPG retailers; Source: IRI Consumer Panel data ending 10/4/20.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 8
Now Spending More at Home, Consumers Are Shifting More Growth to Super-Premium Brands Both in and Outside GroceryCPG Price Tier Growth by Channel / Dollar Share in Largest Categories1
Pre-COVID-1952 WE 2/23/20
26 WE10/4/20
Ppt. Chg. vs. YA
Ppt. Chg. vs. YA
Pre-COVID-1952 WE 2/23/20
26 WE10/4/20
Ppt. Chg. vs. YA
Ppt. Chg. vs. YA
Note: Similar trends for Edible and Nonedible categories. MULO x Grocery includes Mass, Club, Drug, Dollar and DeCA channels. Source: IRI POS data.
Super Premium
Premium
Mainstream
Value
PrivateLabel
16.6% 15.8%
9.0% 8.6%
47.9% 47.9%
10.2% 10.7%
16.3% 17.0%
19.3% 19.4%
10.7% 9.9%
46.6% 45.9%
10.2% 10.9%
13.3% 13.8%
GROCERY MULO xGROCERY
+1.0
+0.3
-0.2
-0.4
-0.6
+0.5
+0.3
-0.4
-0.3
-0.2
+0.6
0.0
-1.2
-0.2
+0.8
+1.0
+0.7
-1.2
-0.5
+0.1
1. Top 100 edible & nonedible Grocery CPG categories, top 40 categories for MULO xGrocery. Price tier = avg price per volume vs. subcategory. Super Premium = >+50S% above subcategory avg, Premium = +25% to +50%, Mainstream = -25% to +25%, Value = <-25%. PL includes all price tiers under retailer private brands.
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Source:. IRI Shopper Loyalty database, Grocery channel based on 65M household sample, and 6.5M static households
1. Based on 40 largest edible & nonedible categories. Price tier defined as avg price per volume vs. subcategory. Super Premium = >+50S% above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value = <-25%. Private Label includes all price tiers under retailer private brands. 2. IRI Shopper Survey 5/31/20 among 1,300 Primary Grocery shoppers.
18.4%
9.9%
48.8%
11.0%
12.0%
17.6%
8.7%
47.5%
12.1%
14.1%
16.1%
7.1%
45.7%
13.2%
17.8%
Low Household Income Is Not
a Barrier to Indulgent Purchases
Low-Income Households
Report Making Small
Indulgence Purchases at a Similar Rate
as Other Households2
The Shift to More Premium Brands Is Occurring
Even Among Low-Income Households
CPG Price Tier Growth by Income Cohort; Based on 6.5M Regular
Grocery Shoppers; Dollar Share in Largest Grocery Channel Categories1
LOW MIDDLE HIGH
0.6
0.1
0.5
-0.3
-1.0
0.6
0.0
0.2
-0.1
-0.7
0.3
-0.2
0.1
0.1
-0.3
Super Premium
Premium
Mainstream
Value
Private Label
Ppt. Chg. vs. YA Ppt. Chg. vs. YA Ppt. Chg. vs. YA
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 10
Despite Economic
Struggles, Some Low-
Income Households
Spend to Have Premium
Experiences at Home
Start-Ups Are Most Likely to Seek
Premium Items and to Replace the
Restaurant Experience with Quality
At-Home Meals
Among IRI’s EconoLink segments, Start-
Ups’ financial situations are largely the
same as YAG, but they’re still struggling.
They are focused on cutting back, but
with positive expectations for future
improvement in their financial situations.
Skews:
Gen Z / Millennials | African American,
Asian | Blue Collar | Lower Income
IRI EconoLink Survey fielded 3/20-3/22/20 among IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers; Grocery Shopping Changes Due to Restaurant/Bar/Cafe Usage Changes (P2_1)
13.4%Start-Ups
(213 Index)
6.3%Total Respondents
10/16-10/18
Buying more premium wine /
beer / liquor
15.5%Start-Ups
(272 Index)
5.7%Total Respondents
10/16-10/18
Buying more premium / specialty coffee items to try to create coffee at
home that I used to get at a coffee shop
11.8%Start-Ups
(227 Index)
5.2%Total Respondents
10/16-10/18
Buying more premium or
specialty food items to create restaurant-style meals at home
13.0%Start-Ups
(277 Index)
4.7%Total Respondents
10/16-10/18
Buying more meal kits (box of items to cook a pre-defined
recipe at home)
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In the Same Way, Regardless of Area Income
Level, Stores Exhibit Similar Premiumization Trends
CPG Price Tier Growth by Store Income Area /
Dollar Share in Largest Categories1
Pre-COVID-1952 WE 2/23/20
26 WE10/4/20
Ppt. Chg. vs. YA
Ppt. Chg. vs. YA
Pre-COVID-1952 WE 2/23/20
26 WE10/4/20
Ppt. Chg. vs. YA
Ppt. Chg. vs. YA
Note: Similar trends for Edible and Nonedible categories. Source: IRI POS unprojected store level data for MULO channels..
Super Premium
Premium
Mainstream
Value
PrivateLabel
LOWER INCOME AREA STORES HIGHER INCOME AREA STORES
1. Top 40 edible and nonedible CPG categories. Price tier defined as avg price per volume vs. subcategory. 2. Lower income area stores are <$50k median HH income in area. Higher income >$50k. Super Premium = >+50S% above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value = <-25%. Private Label includes all price tiers under retailer private brands.
20.5% 20.1%
10.7% 9.9%
46.5% 46.1%
10.0% 10.8%
12.3% 13.1% +1.1
+0.7
-0.9
-0.6
-0.3
+0.6
+0.2
-1.1
-0.3
+0.6 17.5% 17.2%
8.3% 7.9%
45.7% 45.2%
11.6% 12.3%
16.9% 17.4%+0.8
+0.2
-1.2
-0.2
+0.4
+1.0
+0.5
-1.0
-0.3
-0.2
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 12
Premiumization Is Contributing to
Price Growth in Many Categories
Decomposition of Price per Volume % Change vs. YAGrocery Channel / 26 WE 10/4/20
2.3%
1.6%
2.8%
2.5%
2.9%
1.8%
0.6%
1.2%
1.4%
1.6%
1.1%
1.4%
5.0%
4.7%
4.4%
3.7%
5.6%
5.1%
4.3%
4.0%
3.9%
2.1%
11.4%
6.3%
4.2%
4.7%
4.9%
4.0%
5.3%
4.4%
3.6%
2.9%
3.6%
Dish Detergent
9.9%
15.1%
Luncheon Meats
BBQ Sauce
Spices / Seasonings
9.0%
Fz Meats
Rice
IncreasedShelf Price
Spaghetti Sauce
11.4%
Reduction in Promotion
Cups and Plates
Sports Drinks
Ice Cream
6.8%Bottled Water
Mix Shift / Premiumization
8.4%
12.9%
11.6%
11.5%
11.5%
11.0%
ILLUSTRATIVE EXAMPLES
Total Price / Volume Change
Source: IRI POS data ending 10/4/20. IRI Strategic Analytics
Note: Shelf Price refers to changes in everyday price at item level. Promotions includes promotion frequency and depth (driven by frequency). Mix shift refers to difference in product mix vs. YA, driven by shifts to more premium brands (positive effect) countering shift to larger pack sizes (negative effect).
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Many Categories Experienced Acceleration
of Premium Brands Growth…
Top Categories Experiencing Premiumization1 After Onset of COVID-19
Grocery Channel, 12 WE 10/4/20
EDIBLE
Category
Premium2
Share
Premium Share
Ppt. vs. YA
Spaghetti/Italian Sauce 26.1% 5.2
Spirits/Liquor 45.0% 4.6
Frankfurters 39.7% 3.6
Frozen Meat 30.5% 3.5
Beer/Ale/Alcoholic Cider 35.0% 3.2
Mexican Foods 53.6% 3.1
Sports Drinks 12.1% 3.0
Energy Drinks 37.8% 2.9
Wine 51.6% 2.7
Coffee 29.6% 2.2
Processed Cheese 26.8% 2.1
Ready-to-Drink Tea/Coffee 35.4% 2.0
Frozen Breakfast Food 22.9% 2.0
Yogurt 22.7% 1.7
Non-Chocolate Candy 24.2% 1.7
NONEDIBLE
Category
Premium2
Share
Premium Share
Ppt. vs. YA
Soap 32.9% 10.1
Household Cleaner Cloths 15.7% 8.8
Facial Tissue 38.2% 7.5
Household Cleaner 37.2% 6.5
Paper Towels 45.4% 6.1
Fabric Softener 11.6% 5.2
Laundry Care 36.1% 4.4
Candles 69.1% 3.9
Hair Conditioner 47.5% 3.5
Shampoo 37.8% 3.1
Toothpaste 48.4% 3.0
Cleaning Tools/Mops/Brooms 41.1% 2.8
Pet Food 48.8% 1.9
Dish Detergent 55.5% 1.9
Diapers 25.5% 1.8
TREND VS.
PRE-COVID-19
Accelerated
Decelerated
Similar
Large shifts in
some cleaning
and paper
products
driven by
supply
constraints
and COVID-19
demand (e.g.,
ingredients
that are more
effective
against germs)
Source: IRI POS data
1. Highest share growth of Super Premium & Premium price tiers among top 60 largest edible and top 40 largest nonedible CPG categories. Price tier = avg price per volume vs. subcategory. Super Premium = >+50% above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value = <-25%. Private Label includes all price tiers under retailer private brands. 2. Includes Premium & Super Premium price tiers.
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…With Low-Income Households Following Similar Category Trends
Top Categories Experiencing Premium & Super Premium1 Acceleration During COVID-19
Grocery Channel, 12 WE 9/6/20; Based on 6.5M Regular Grocery Shoppers
EDIBLE
Category
Low-Income High-Income
Premium2
Share of
Category
Ppt
Change
vs. YA
Premium2
Share of
Category
Ppt
Change
vs. YA
Spirits / Liquor 33.6% 4.2 40.9% 3.5
Ice Cream/Sherbet 36.3% 3.1 48.6% -0.4
Bottled Water 36.9% 2.8 37.6% 0.5
Frozen Dinners /
Entrees20.0% 2.6 30.2% 1.6
Wine 21.5% 2.0 38.0% 0.8
NONEDIBLE
Category
Low-Income High-Income
Premium2
Share of
Category
Ppt
Change
vs. YA
Premium2
Share of
Category
Ppt
Change
vs. YA
Soap 12.5% 7.8 35.6% 9.4
Dish Detergent 45.7% 2.3 57.1% 3.6
Household
Cleaner15.5% 1.3 44.2% 10.7
Cups & Plates 22.6% 1.2 35.5% 2.7
Vitamins 1.9% 0.8 29.2% 1.9
Source:. IRI Shopper Loyalty database, Grocery channel based on 65M household sample, and 6.5M static households.
1. Based on 40 largest edible and nonedible categories. Price tier defined as avg price per volume vs. subcategory. Super Premium = >+50% above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value = <-25%. Private Label includes all price tiers under retailer private brands. 2. IRI Shopper Survey 5/31/20 among 1,300 Primary Grocery shoppers.
TREND VS.
PRE-COVID-19
Accelerated
Decelerated
Similar
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In Pasta Sauce, Rao’s and Other Premium Brands Saw Accelerated Share
Performance During COVID-19, a Nod to Elevating the At-Home Dining Experience
Case Study: Pasta Sauce
Ppt. Chg. vs. YA
Super Premium
Premium
Mainstream
Value
PrivateLabel 10.0% 9.7%
20.4% 17.4%
48.2%46.7%
19.5%23.9%
2.2%
Pre-COVID-19 During COVID-19
1.8%
1.9
0.3
-0.5
-1.7
0.0
4.9
0.3
-1.5
-3.0
-0.7
Ppt. Chg. vs. YA
3X premium to the category+3.3 ppts share during COVID-19 (+2.0 ppts pre-COVID-19)
Natural, locally positioned brand2X premium to the category+0.5 ppts. share during COVID-19 (+0.1 ppts pre-COVID-19)
Certified keto and plant-based4X premium to the category +0.4 ppts. share during COVID-19(no share gain pre-COVID-19)
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
$ Share in Pasta Sauce1Sample Brands Driving Premium Acceleration
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Alcohol, Wine and Spirits Saw Accelerated Trends Toward
Super Premium, While Hard Seltzer Continued to Grow in Beer
Case Study: Alcohol Category
Ppt. Chg. vs. YA
Super Premium
Premium
Mainstream
Value
Ppt. Chg. vs. YA
Premium and emerging hard seltzer and cocktail brands and line extensions
Premium Wine and Sparking Wine
Large brand premium tequila and cognac and small players like Skrewball peanut butter whiskey 9.2%
27.8% 27.4%
55.8% 20.6%27.4%
24.6%
17.8%11.4%
10.4%
33.9% 33.7%
WineBeer Spirits
0.4
2.8
-1.6
-1.5
2.4
0.3
-0.9
-1.8
4.5
0.1
-0.7
-3.9
$ Share in Alcohol Category
Ppt. Chg. vs. YA
Sample Brands Driving Premium Acceleration
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In Frozen Dinners, Indulgent, Convenient and Better-for-You
Brands Saw Accelerated Share Growth During COVID-19
Case Study: Frozen Dinners
Ppt. Chg. vs. YA
Super Premium
Premium
Mainstream
Value
Private Label
Pre-COVID-19 During COVID-19
Ppt. Chg. vs. YA
Natural / Better-for-You2X premium to the category+0.2 ppts. share during COVID-19 (+0.1 ppts pre-COVID-19)
2X premium to the category+0.4 ppts. share during COVID-19 (+0.3 ppts pre-COVID-19)
2X premium to the category +0.1 ppts. share during COVID-19(no share gain pre-COVID-19)
11.1% 10.8%
58.3% 56.7%
5.4% 5.6%
22.7% 24.3%
2.5% 2.6%
0.8
0.3
-1.0
-0.3
0.1
1.5
0.2
-1.3
-0.4
0.1
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
$ Share in Frozen Dinners1Sample Brands Driving Premium Acceleration
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In Hair Care, Premium and Natural Brands Saw Accelerated Share
Growth During COVID-19, With Self-Care Moving to In-Home
Case Study: Hair Conditioners
Ppt. Chg. vs. YA
Super Premium
Premium
Mainstream
Value
Private Label
Pre-COVID-19 During COVID-19
Ppt. Chg. vs. YA
2X premium to the category+0.5 ppts. share during COVID-19 (+0.1 ppts pre-COVID-19)
3X premium to the category+0.5 ppts. share during COVID-19 (no share gain pre-COVID-19)
2X premium to the category +0.4 ppts. share during COVID-19(+0.2 ppts pre-COVID-19)
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
18.5% 17.8%
37.0% 34.1%
43.2% 46.4%
0.5% 0.5%
0.9%1.1%
1.7
0.1
-0.6
-1.4
0.3
3.4
0.1
-3.4
-0.2
0.1
Note: Shampoos also saw growth in super premium with +2.6 share point gain during COVID-19 vs. YA
$ Share in Hair Conditioners1 Sample Brands Driving Premium Acceleration
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In Chocolate Candy, the Affordable Luxury of Premium Brands Such as Lindt
and Ghirardelli Saw Accelerated Share Performance During COVID-19
Case Study: Chocolate Candy
Ppt. Chg. vs. YA
Super Premium
Premium
Mainstream
Value
Private Label
Pre-COVID-19 During COVID-19
Ppt. Chg. vs. YA
2X premium to the category+0.2 ppts. share during COVID-19 (no share gain pre-COVID-19)
2X premium to the category+0.1 ppts. share during COVID-19 (-0.1 ppts pre-COVID-19)
2X premium to the category +0.1 ppts. share during COVID-19(no share gain pre-COVID-19)
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
14.9% 13.1%
55.7% 60.3%
9.5%7.9%
17.4% 16.1%
2.6% 2.7%
0.0
0.6
-0.8
0.2
0.2
0.5
0.1
-0.1
-0.5
0.0
$ Share in Chocolate Candy1 Sample Brands Driving Premium Acceleration
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 20
Premium Brands Across Soup Types Gained Share
Case Study: Soup
Ppt. Chg. vs. YA
Super Premium
Premium
Mainstream
Value
Private Label
Pre-COVID-19 During COVID-19
Ppt. Chg. vs. YA
Wet Soup & Broth1.5X premium to the category+0.1 ppts. share during COVID-19 (-0.2 ppts pre-COVID-19)
Dry Soup4X premium to the category+0.2 ppts. share during COVID-19 (no share gain pre-COVID-19)
Ramen2X premium to the category+0.3 ppts. share during COVID-19 (-0.1 ppts pre-COVID-19)
1. Pre COVID-19 timeframe is 52 weeks ending 02-23-20. during COVID-19 timeframe is 12 weeks ending 10/04/20; Source: IRI POS data. IRI Consulting analysis.
12.2% 11.8%
7.8% 8.3%
58.9% 57.1%
8.2% 7.8%
13.0% 15.0%0.3
-0.1
-0.3
0.5
-0.4
2.0
-0.7
-0.6
-0.6
-0.1
$ Share in Soup1Sample Brands Driving Premium Acceleration
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E-Commerce Previously Skewed High on Super Premium Products, But Is Trending More Mainstream With the Surge of New Shoppers During COVID-19
CPG Price Tier Growth in E-Commerce1 / $ Share in Largest Categories2
Pre-COVID-1952 WE 2/23/20
26 WE10/4/20
Ppt. Chg. vs. YA
Ppt. Chg. vs. YA
Pre-COVID-1952 WE 2/23/20
26 WE10/4/20
Ppt. Chg. vs. YA
Ppt. Chg. vs. YA
Source: IRI eMarket Insights. IRI Consulting analysis.
Super Premium
Premium
Mainstream
ValuePrivate
Label
TOTAL E-COMMERCE PURE PLAY E-RETAIL
1. e-Commerce includes Click & Collect, home delivery and home shipment models. 2. Top 25 largest edible and top 15 largest nonedible CPG categories. Price tier defined as avg price per volume vs. subcategory based on Brick & Mortar classification. Super Premium = >+50% above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value = <-25%. Private Label includes all price tiers under retailer private brands.
9.3% 11.9%
7.1% 7.3%
32.4%34.5%
8.1%8.1%
43.1% 38.3% -4.8
-0.2
+2.2
+0.2
+2.6
-3.2
+0.1
+1.3
+0.2
+1.67.7% 9.1%
28.7%31.5%
8.4%8.0%
50.4% 46.5%
4.8% 4.9%
-3.5
-0.4
+2.8
+1.1
0.0
-1.6
0.0
+0.6
+0.4
+0.5
Changing buyer and category mix also contributes to the acceleration of mainstream and value in e-commerce
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 22
Exhibiting Lower Sales in Mainstream than Brick & Mortar,
E-Commerce Is Developing More Mainstream and Value Brands
Top Categories Experiencing Mainstream & Value (M&V) Acceleration in E-Commerce
E-Commerce and MULO, 12 WE 10/4/20
EDIBLE
Category
E-Commerce1 MULO
M&V
Share of
Category
Ppt
Change
vs. YA
M&V
Share of
Category
Ppt
Change
vs. YA
Frozen Pizza 39.5% 7.1 68.3% -0.1
Soup 49.0% 3.9 65.7% -1.1
Frozen Seafood 11.3% 3.0 30.8% -2.3
Cold Cereal 73.1% 2.6 87.9% 0.3
Fresh Eggs 8.2% 2.3 13.3% 1.2
NONEDIBLE
Category
E-Commerce1 MULO
M&V
Share of
Category
Ppt
Change
vs. YA
M&V
Share of
Category
Ppt
Change
vs. YA
Weight Control 46.1% 11.5 72.2% -0.5
Internal Analgesics 48.7% 7.7 37.9% 2.4
Soap 38.0% 7.2 63.4% -6.5
Pet Food 35.5% 4.7 51.5% -1.4
Pet Treats 22.5% 3.3 44.7% -0.9
Source: IRI eMarket Insights & POS data. IRI Consulting analysis.
1. E-commerce includes Click & Collect, home delivery and home shipment models. 2. Top 25 largest edible and top 15 largest nonedible CPG categories. Price tier defined as avg price per volume vs. subcategory based on Brick & Mortar classification. Super Premium = >+50% above subcategory average, Premium = +25% to +50%, Mainstream = -25% to +25%, Value = <-25%.
TREND VS.
PRE-COVID-19
Accelerated
Decelerated
Similar
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To Capture the Premium Opportunity, Many Manufacturers Have
Recently Launched New Premium Products in the Last Six Months
Häagen-Dazs HeavenLight Ice Cream Ice cream with fewer calories and no artificial flavors
Bud Light SeltzerHard SeltzerLow calories and sugar
Tide Plus Downy FreeLiquid Laundry DetergentFor sensitive skin, no irritants such as dyes and perfumes
NoosaGreek YogurtFresh, natural ingredients
Starbucks NitroCold Brew CoffeeCold brew infused with nitrogen microbubbles
L'OréalMagic Root Cover UpRoot touch-up spray
Evol Plant-BasedFrozen MealsNo antibiotics, artificial colors or flavors
Fever-TreeMixerSparkling Pink Grapefruit
Birch BendersPaleo Pancake MixOrganic, Gluten Free, Paleo and Keto friendly
New product launches in the last 6 months / Source: IRI Consulting analysis.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 24
• CPG brands should promote sales of premium and super premium products, even in lower income trading areas.
• Tailor messaging for premium products: for Millennials, for example, promote the “experience” of premium products. Low-income households might define special occasions as associated with specific premium products, an opportunity to expand the occasion with different premium products.
• With an increase in e-commerce adoption, marketers will have to use the right search words to draw attention to premium offerings as consumers increasingly purchase more mainstream offerings online.
• Promote relevant attributes that mark a product as premium (e.g., health and wellness, immunity, hygiene, indulgence and convenience).
• Tailor price-range architecture and assortment to meet the unique needs of your shoppers by channel.
• Retailers should drive sales of premium and super premium products, even in lower-income trading areas.
• Tailor messaging for premium products: for Millennials, for example, promote the “experience” of premium products. Low-income households might define special occasions as associated with specific premium products, an opportunity to expand the occasion with different premium products.
• Know which attributes resonate with your most valuable shoppers and promote relevant attributes that mark a product as premium, e.g., health and wellness, immunity, hygiene, indulgence and convenience.
• As online shopping continues to escalate, use the right search words to draw attention to premium offerings.
• Target and tailor messages to purchase-based premium audiences (e.g., premium brand, non-price sensitive, non-promotion sensitive).
MANUFACTURERS IMPLICATIONS The Premium
Opportunity
RETAILERS
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 25
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
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 26
(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
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 27
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™
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 28
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