harvesting the fruits of innovation done...

HARVESTING THE FRUITS OF INNOVATION DONE RIGHT

Larry Levin, Executive Vice President

May 2, 2017

Copyright © 2017 Information Resources, Inc. (IRI). Confidential and Proprietary. 2

Defining the Best of the Best What is a Pacesetter: IRI’s New Product Pacesetters Criteria

New or Extended Brand, or

Existing Brand in a New Category

30% Distribution

Starts the Clock on Year-1

30%+ Distribution

at Year-1 Completion

Top 100 Brand

Launches in Food and

Beverage and Non-Food

New Products that Completed

their First Year in

Calendar Year 2016


Seven Deadly Sins of New Product Innovation

Forecast F Assortment A Incremental I Languish L Unclear U Retread R Elusive E

90% of Launches Fail to Meet Critical Milestones


12,000 new brands were launched in 2016

200 of these brands made IRI NPP

status

8 of these brands

achieved >$100M

Though blockbuster products are few and far between


Blockbuster Products are Few and Far Between…

Million

37%

37%

46%

67%

41%

38%

37%

22%

8%

14%

6%

4%

11%

9%

8%

3%

4%

4%

5%

[VALUE]

2013

2014

2015

2016

<$20

$20-$39

$40-$59

$60-$99

>$100

Note: Numbers may not add to 100% due to rounding

Year-One Dollar Distribution


Beverage Manufacturers delivered 22 Pacesetters with a stronger revenue performance, including three over $100 million

67%

71%

55%

22%

16%

14%

4%

6%

14%

3%

2%

0%

[VALUE]

5%

14%

2016 Pacesetters

2016 Food and Beverage Pacesetters

2016 Beverages

<$20 $20-$39 $40-$59 $60-$99 >$100

Note: Numbers may not add to 100% due to rounding


WHAT’S WORKING?


Small Manufacturers Represented Almost Half of NPP Manufacturer Companies This Year

While We See Innovation Coming from Small and Large Manufacturers…

small

large

medium

Small Companies as % of Total NPP Companies

NPP 2012

31%

46%

23%

mediu

m

sm

all

larg

e

NPP 2013

28%

35%

38%

mediu

m

sm

all

larg

e

NPP 2014

26%

38% 37%

mediu

m

sm

all

larg

e

NPP 2015

26%

44%

29%

mediu

m

sm

all

larg

e

NPP 2016

20%

34%

46%

mediu

m

sm

all

larg

e


Giving Rise to a Proliferation of New Brand Innovations, Particularly Across Food and Beverage Aisles New Brand Introductions as a % of NPP Brands

Food & Beverage

12%

2004

to

2016

14%

2015

39%

2016

8%

2004

to

2016

14%

2015

13%

2016

Non-Food


2016 Dollar Sales excludes private label sales

<$100M

$100M - $1B

$1B - $5B

>$5B

…and Helping Smaller Manufacturers Capture a Larger Share of Industry Sales Dollars

57.2% 54.6% 54.1%

19.9% 20.3% 20.3%

14.0% 15.1% 15.3%

8.9% 9.9% 10.3%

2011 2015 2016

Extra Small

Small

Midsize

Large

Source: IRI/BCG 2016 Growth Leaders / numbers may not add to 100% due to rounding

CPG Dollar Sales by Company Size

-3.1 pts

+2.7 pts


PERSONALIZATION PREVENTION

Three Key Themes are Resonating with Consumers

PERSONALIZATION PREVENTION


Who are the engineers of 2016’s bridges to growth?


Beverages that Make Life Exciting and Engaging are Hitting the Mark

Milk

$1,163.1M

Coffee

$204.1M

Beer/Ale/Cider

$114.6M

Beer/Ale/Cider

$50.3M

Wine

$49.7M

Artesano DairyPure 1 Dunkin’ Donuts K-Cup Pods

Not Your Father’s Root Beer

3 Henry’s Hard Soda

4 5 2

Body Armor Sports Drink

Red Bull Summer Edition

6 BAI 5 Bubbles 8 Coney Island Hard Root Beer

9 10 7 Best Damn Root Beer

$44.3M $44.7M

$26.1M $25.3M

$23.7M


And, of course, Beverages drive success into the C-Store channel!

Milk

$385.9M

Energy Drinks

$149.0M

Snack/Granola Bar

$78.4M

Snack Nuts

$60.2M

Sports Drink

$55.0M

BODYARMOR DairyPure 1 Red Bull – The Summer Edition

Quest Bar 3 Nut Harvest

4 5 2

Rockstar Freeze

Rockstar BOOM!

6 Not Your Father’s Root Beer

8 Monster Energy Ultra Black

9 10 7 AMP Energy Zero

$53.3M $51.7M

$44.2M $39.5M

$25.0M


WILL YOU STILL LOVE ME TOMORROW?

PROTECT THE 2ND YEAR


BEING A PACESETTER DOES NOT ENSURE LONG-TERM SUCCESS… YEAR 2 PRINCIPLES

Minimally Retain Distribution and Tell People You Are There

Variety is the Spice of Life

Repeat, Repeat, Repeat

Do Not Underspend


Support in Year Two Drives Disproportionate Success

WHILE UNSUPPORTED PRODUCTS TRULY HAD TROUBLE FINDING THEIR WAY

4%

4% of New Products

Achieve $20M in U.S. Food & Maintain ACV

in Year 2

Sales Decreased

64%

Sales Increased

36%

76% Decreased Media in Year 2 76%

24% Maintained or

Increased Media in Year 2

24%

Sales Increased

71%

Sales Decreased

29%

Maintained ACV: Y2 ACV +/- 10% Y1 ACV Maintained Media: Y2 media spend > than -5% Y1 media spend


Questions & Answers


Larry Levin [email protected] 818.450.7614

Thank You!

© 2

017

Min

tel G

roup

Ltd

. All

Rig

hts

Res

erve

d.

Con

fiden

tial t

o M

inte

l.

How trendy are consumers willing to be? Beverage Forum, April 28, 2017

2

Understand the why behind the buy

Mintel’s new tool Purchase Intelligence surveys consumers about every new US food and beverage product uploaded into GNPD since January 2016. The survey helps to answer product development questions such as: • How likely are consumers to buy my new

product? • What attributes are connecting with

consumers? • What is motivating a purchase? • What price should we charge? • Do consumers think this product will succeed?

Source: Mintel.com/purchase-intelligence

3

The preference for natural, simple and flexible diets will drive further expansion of plant-focused formulations

4

GLOBAL HEAT MAP: Power to the Plants

Source: Mintel’s Better for you Eating Trends: Spotlight on Real – US, September 2016

of US adults plan to buy more vegetarian or plant-based food products in the next year.

33%

5

Consumers are open to plants in a number of places

Lipton Cranberry Pomegranate Superfruit Green Tea “Fruitilicious” relaunch is made with hibiscus and

chamomile flowers, cinnamon, licorice root and lemon peel. It has a 62% purchase intent* vs. 30% for hot and

RTD teas launched from January-March 2017.

Tropicana Essentials Peach Passion Fruit Probiotic Beverage

Flavored juice blend with added probiotics and vitamin C has a 50% purchase intent* vs. 33% of

juices launched from January-March 2017.

*Statistically significant Sources: Mintel Purchase Intelligence

6

*Statistically significant; Source: Mintel Purchase Intelligence; Bases: Dairy alternatives base: 12,900 respondents; Dairy milk base: 13,000 respondents

Plant-based milk keeps pace with dairy milk – except for taste

62 60

49 48 47 45 45 41

56 53

43 40

36

48

35 30

Healthy Natural Trustworthybrand

Quality Premium Tasty Exciting Unique

% C

onsu

mer

Per

cept

ion

Consumer perception scores of dairy alternative beverages vs. dairy milks, US, January 2016-March 2017

Dairy alternative beverages Dairy milks

* * *

*

Silk Dark Chocolate Almond Milk has a 51% purchase intent* vs. 31% purchase intent of plant-based milks

launched in 2016

* *

* *

7

Popularity of almonds influences spirits

Bailey’s Almande Almondmilk Liqueur Liqueur made with sweet almond oil and almond essence extracted from crushed almonds along with cane sugar,

purified water and real vanilla.

• Bailey’s Almande liqueur has a 37% purchase intent* compared with 26% for liqueurs launched in 2016.

• Tasty is the product attribute with the highest correlation to purchase of liqueurs. Bailey’s Almande has a 58% Tasty rating* compared with 42% for liqueurs overall.

Verbatim responses: • “I love Baileys so I would like to try this product and see if

it was as good as some of their other products,” Female, age 35-54 from Southern US

• “It might be interesting to try, but I don’t usually drink this brand,” Male, age 21-34, Western US

• “It is targeted to women according to the packaging,” Male, age 21-34, Southern US

• “I don’t know what I’d mix it with,” Female, age 35-54, Northeastern US

* Statistically significant Source: Mintel Purchase Intelligence

mintel.com © 2

017

Min

tel G

roup

Ltd

. All

Rig

hts

Res

erve

d.

Con

fiden

tial t

o M

inte

l.

THE WORLD’S LEADING MARKET INTELLIGENCE AGENCY Our expert analysis of the highest quality data and market research will help you grow your business.

Jenny Zegler Global food and drink analyst [email protected]

Thank you!

The Road to New Product Development | 2SPRING DESIGN PARTNERS, INC.

Innovation for the beverage category needs to live beyond

the liquid and the package.


Imagine if…


Yesterday Today


How?


#1 Commit to Your Brand


#2 Listen to Your Consumer


#3 Collaborate with Your

Consumer


#1 CommitOver commit to your brand

#2 ListenBe close to the ground

#3 InviteCollaborate with your consumer

Innovating beyond liquid and package.


MEGHAN [email protected]@MeghanLabot646 224 7889

harvesting the fruits of innovation done...

Documents