Part October

2020

HOME FOR THE HOLIDAYS

COVID-19

The Changing Shape of the CPG Demand Curve 30

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

EXECUTIVE SUMMARYWith fall spikes of confirmed cases of COVID-19 as well as low-level consumer confidence, traditional holiday plans that include

large gatherings are being shelved. Americans are finding new ways to celebrate holidays, which presents opportunities for retailers

and manufacturers that extend beyond 2020.

Halloween Sales Not Spooky

• Halloween candy sales surged in July, an early start to the season compared to previous years.• July - October sales vs. YA are up 12% for holiday seasonal sales of chocolate and 4% for non-chocolate.• Despite solid sales, more consumers report they’ll curb participation in trick or treating this year.

Outlook for Thanksgiving

• IRI proprietary research shows that fewer consumers will host or attend a Thanksgiving meal with extended family, down from nearly half in 2019. Traveling out of state is less likely in 2020, as Americans will opt to stay home and celebrate with immediate family.

• 2020 Thanksgiving turkey sales are projected to be strong, with an emphasis on smaller birds and cuts. Retailers should promote chicken and other cuts of meat to appeal to smaller gatherings.

• Retailers and manufacturers have an opportunity to help consumers create excitement for the holidays by providing recipes, merchandising and seasonal entertainment suggestions.

Winter Holidays Outlook

• Early indications for December holiday celebrations and growth spending suggest a similar impact as Thanksgiving, with the exception that a segment of consumers plan to spend less on December holiday gifts than last year.

• Retailers with omnichannel capabilities will be the beneficiaries of holiday spending, both for gifts and groceries.• In anticipation of uncertain holiday spend, retailers have started the holiday season earlier this year. Winter displays

and assortment are widely available as of mid-October. • Typical celebratory on-premise consumption will suffer due to socializing restrictions. CPG retail will benefit from the

shift to in-home celebrations. • Retailers have an added opportunity to support gift-giving this year as consumers seek to give the gift of a celebration

with gourmet and specialty items. Items such as candy, baking and liquor will contribute to seasonal sales lift.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 3

of Consumers Surveyed in October Expect the Length of the Health Crisis to Last More Than 12 Months

With COVID-19 Cases Surging and Consumer Confidence

Low, Holidays in the U.S. Will Look Different in Late 2020

Late October daily cases of

COVID-19 hit record highs:

85K+ on October 24.

Q3 consumer sentiment is

74.9, down from a Q4 2019

level of 97.2.

28% of consumers surveyed

October 16-18 are more

concerned about COVID-19

than they were last week,

double the rate seen in mid-

September.

6%12%

20%25% 26%

6%

22%

35%

41%42%

W2 3/20-3/22 W7 4/24-4/26 W12 5/29-5/31

W17 8/7-8/9 W21 10/16-10/18

7-12 more months More than 12 months

Source: IRI Survey fielded 3/20-3/22 to 10/16-28/2020, among National Consumer Panel representing Total U.S. Primary Grocery Shoppers; https://www.moodys.com

Q: How long do you expect this health crisis to last before health concerns return to normal? Please select your best estimate based on your own opinion as of today; Base=Total Respondents

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 4

Halloween Candy Sales Started

Early and Remain Healthy

Sales Spikes of Nearly 200% for Seasonal

Halloween Chocolate Candy Occurred in July

and Remain Above 2019 Levels

Source: IRI POS Total U.S. MULO + C

Seasonal Chocolate Halloween Candy

Seasonal Non-Chocolate Halloween Candy

Halloween YTD (7.26 – 10.4)

Halloween YTD (7.26 – 10.4)

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 5

Source: IRI Survey fielded 10/16-28/2020, among National Consumer Panel representing Total U.S. Primary Grocery Shoppers.

Who Will Eat the Candy?

of households with kids aged 6-12 will go trick or treating to a similar number of homes as they did last year, and even fewer in cities

say they won’t go at all due to COVID-19, and some others will only go to a few pre-planned homes

plan to give out treats to trick-or-treaters this year; two-thirds of those who usually buy candy / treats are going to buy less this year, with city dwellers even more likely to buy less

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 6

-10%

-5%

0%

5%

10%

15%

20%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%

2019/2020 - NYE

2015-2019 Holiday CAGR (%)

% H

olid

ay S

ale

s L

ift

in M

UL

O2020 - Father’s Day

2019 - Christmas

2019 - Easter

2019 - Father’s Day

2019 - Halloween

2019 - July 4th2019 - Labor Day

2019 - Memorial Day

2019 - Mother’s Day

2020 - Super Bowl

2019 - Thanksgiving

2020 - Valentine’s Day 2020 - July 4th2020 - Labor Day

2020 - Memorial Day

2020 - Mother’s Day

Pre-Pandemic, Fall and Winter Holidays See Strongest Sales Lift Across Total

Store; With Fewer On-Premise Options in 2020, CPG Sales Will Increase

Since COVID-19, Large Gathering Holidays Saw Slightly Lower Lift

vs. YA, While Mother’s Day / Father’s Day Were Bigger for CPG Sales

Holiday Total Store Growth and Lift / MULO

Total Tracked 5yr

CAGR = +1.6%

Source: IRI POS Data. MULO. IRI Consulting analysis.

Holiday Lift is defined as % difference between average holiday week and 52 week average for pre-COVID holidays. For post-COVID holidays, Lift defined as % difference between average holiday week and average of two prior weeks for post-COVID holidays. Easter 2020 excluded due to timing at the start of the pandemic.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 7

Resetting the Holiday Table: COVID-19 Is Dampening the Holiday Spirit, With More

Indicating They Are Not Looking Forward to the Holidays Than Are This Year

State of Mind About November / December Holiday Season This Year

32%

31%

11%

22%

17%

11%

26% among those currently

furloughed / laid off

Source: IRI Survey fielded 9/4-9/6 among National Consumer Panel representing Total US Primary Grocery Shoppers

Worried that celebrations will cause a spike in COVID-19 cases

Not looking forward to the holidays the way I usually would, since I won’t

be able to celebrate with others as much as usual due to COVID-19

Worried about whether I’ll be able to afford the type of celebration I usually have

Looking forward to having something to celebrate after a stressful year

Feeling about the same as last year; not expecting the holidays

to be any different this year

Feeling optimistic that things will be back to normal by then

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 8

Only 29% Expect to Host or Attend a Thanksgiving Meal With

Extended Family Who Do Not Live With Them vs. 48% in 2019

Median Number of People at the Main Thanksgiving Meal

Is Expected to Be 5 This Year, Down From 8 Last Year*

48%

27%

9%

7%

29%

34%

4%

3%

Host or attend a meal with extended family

who do not live with me

Prepare a special meal just for myself / my household

Travel out of my state to attend a celebration at someone else's home 2019 2020

Q: Next, please think about the Thanksgiving holiday. How did you celebrate it last year, and how are you likely to celebrate this year (although it's still a couple months away)?Base=Total Respondents

Thanksgiving Last Year vs. This Year

Host or attend a “Friendsgiving”’ meal with friends

Source: IRI Survey fielded 9/4-9/6 among National Consumer Panel representing Total US Primary Grocery Shoppers; *10/16-18/2020 survey.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 9

Higher Prices

and Home

Cooking Will

Mean Steeper

Grocery

Spend for

Some,

But a Greater

Percentage

Report They’ll

Spend Less

Because They

Won’t Host

Source: IRI Survey fielded 9/4-9/6 among National Consumer Panel representing Total US Primary Grocery Shoppers; *10/16-18/2020 survey.

Expect to Spend MORE on Groceries for Thanksgiving

Expect to Spend LESS on Groceries for Thanksgiving

Expectiingprices for

groceries to be higher than

in the past

Celebrating at home rather than going

to a relative / friend's house

Creating a full meal myself

(last year others provided parts of the meal)

Will not host any guests this year

Will be making a full meal on a

budget because budget is tight

Will likely host a smaller gathering this year

1 in 5 plan to shop over 3 days earlier than last year, either to avoid crowds or out-of-stocks.*

22% of those who plan to spend less will buy a smaller turkey and 15% will not buy a whole turkey.*

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 10

Smaller, Higher Quality Birds Offered in 2019; 2020 Promises More

of the Same, With Many Households Cooking a Feast for the First Time

Total Year

2019

November 2019

(Thanksgiving Season)

Oct. – Dec. 2019

(Year-End Holidays)

Pandemic Period

2020 (26 WE 9-6-20)

TOTAL TURKEY

% Change vs. YA

-1.1% 2.0% 0.1% 30.7%

TURKEY WHOLE BIRD

% Change vs. YA

-1.8% 0.8% -1.2% 99.8%

$2,380MM

$670MM $1,040MM $1,090MM

Source: IRI Multi-Outlet sales data including both random and fixed weight items, fresh and frozen

$570MM $450MM $540MM$40MM

In 2020, roasting meats have seen a boom during the pandemic, with turkey enjoying some of that bounce especially early-on. During the pandemic, more households buy whole bird turkeys, with strongest growth among younger and lower-income.

Total CPG – Dollar Sales Trends

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 11

2020 Could Mean a New Generation of Thanksgiving Hosts and Ample

Opportunity for Years to Come to Reinstitute Traditions Centered on Turkey

• Multiple celebrations, as only 29% of consumers

expect to gather with extended family for the fall

holidays

• Emphasis on traditions, including turkey, as

cornerstone of the Thanksgiving season; 22% of

Americans are looking forward to having something

to celebrate

• Turkey sales are expected to be strong, with focus on

smaller birds and/or cuts. Retailers should also

promote chicken and other cuts of meat for smaller

holiday meals

• Turkeys and roasting meats also mean value to many

consumers looking to stretch their meal dollar;

marketing messages should focus on leftovers and

multiple meals out of one meat purchase

Source: IRI Survey fielded 9/4-9/6 among National Consumer Panel representing Total US Primary Grocery Shoppers

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 12

As With Thanksgiving, Americans Are Most Likely to Stay Home

and Celebrate With Immediate Family for December Holidays

December Holidays

48%

39%

35%

27%

10%

8%

6%

32%

31%

31%

32%

5%

4%

5%

Host or attend a celebration just with friends

Host or attend a celebration with extended family not living with me

Buy gifts for others outside my household

Buy gifts for myself/my household

Prepare a special celebration just for myself / my household

Travel out of my state to attend a celebration at someone else's home

Look for new products / inspiration to make an extra special out-of-

the-ordinary holiday meal

2019

2020

Source: IRI Survey fielded 9/4-9/6 among National Consumer Panel representing Total US Primary Grocery Shoppers; 10/16-18/2020 survey.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 13

While Prices

and Increased

Consumption

Will Have

Some

Spending

More for

Holiday

Groceries, a

Greater

Percentage

Report They’ll

Cut Back to

Save Money

Source: IRI Survey fielded 9/4-9/6 among National Consumer Panel representing Total US Primary Grocery Shoppers

Expect to Spend MORE on Groceries for December Holidays

Expect to Spend LESS on Groceries for

December Holidays

Expect prices to be higher than

in the past

Will be at home more, in general

Will do more cooking at home rather than eating out for the main

holiday meal

Cutting back to save money

Will not host any guests this year

Will likely host a smaller

gathering this year

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 14

With Smaller

Gatherings and

Less Travel, Many

Consumers Report

They’ll Be Spending

Less on Gifts for

December Holidays

This Year

Source: IRI Survey fielded 9/4-9/6 among National Consumer Panel representing Total US Primary Grocery Shoppers; Q: You mentioned you'd be buying gifts for yourself or others for the holidays in December this year. Do you expect to spend more, about the same, or less on gifts compared to last year? Base=Those Buying Gifts for December Holidays

14%expect to spend MORE than last year

25%expect to spend LESS than last year

Gourmet and specialty food items are great gift options for any size budget. Manufacturers can adopt seasonal,

festive packaging for greater gifting appeal. Merchandising is a

way for retailers to

showcase their offerings and should

promote multiple items for gift baskets.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 15

In Large Format Stores, Baking, Liquor, Meat and

Gifts Are Big Drivers of Year-End Holiday Sales

Year End Holiday Sales Lift Drivers Contribution to Total Uplift

THANKSGIVING

Aisle$ sales

% uplift

% contrib. to

Total lift

Total 7.0%

Baking 73.8% 23.5%

Dairy 19.9% 19.7%

Turkey 990.0% 18.1%

Liquor 18.3% 11.1%

Smoked Ham 354.0% 7.7%

Meals – Stuffing Mixes

& Soup17.7% 7.4%

Foils, Wraps, Bags 52.3% 5.9%

Misc. General Merch –

Cookware & Candles34.5% 5.5%

Bakery 13.0% 5.3%

Condiments & Sauces 15.8% 4.6%

CHRISTMAS

Aisle$ Sales

% Lift

% Contrib.

to Total Lift

Total 13.5%

Candy 70.8% 12.7%

Liquor 38.0% 11.9%

Dairy 20.0% 10.2%

Baking 62.2% 10.2%

Beef 31.0% 5.4%

Misc. General Merch

– Cookware, Candles55.2% 4.5%

Fragrance 357.5% 4.3%

Smoked Ham 367.4% 4.1%

Cookies & Crackers 19.2% 2.7%

Carbonated Soft

Drinks14.3% 2.6%

Source: IRI POS Data, MULO. IRI Consulting analysis; Holiday Lift = % difference between average holiday wk and 52 wk average for pre-COVID-19 holidays. 2019 holidays. Thanksgiving = 2 WE 12-1; Christmas = 2 WE 12-29,

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 16

c

Shoppers Plan to Spend Less Across Channels, Especially

Drug and Local Small Businesses; E-Commerce Will Gain

December Holiday-Related Spending on Groceries,

Decorations and Gifts vs. Last Year by Retailer Type

19%

17%

14%

17%

15%

18%

15%

11%

11%

8%

7%

18%

Source: IRI Survey fielded 9/4-9/6 among National Consumer Panel representing Total US Primary Grocery Shoppers

Mass Merchandise

Grocery

Independent / Small Shops

Online

Club

Dollar Stores

Drug

Spend MOREThan Last Year

Spend LESSThan Last Year

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 17

Pre-COVID-19, Foodservice Accounted for More Than Half the Food Dollar;

Even in a Good Year, More Holiday Spending Shifts to At-Home Consumption

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

Index to Prior Year Monthly Average

FAFH 94 94 108 104 111 109 109 111 102 105 101 106

FAH 98 90 102 100 106 102 105 106 98 103 107 115

TOTAL 96 92 105 102 108 106 107 109 100 104 104 110

Index to Prior Year Monthly Average

FAFH 94 95 76 50 68 81 85 88

FAH 98 95 119 104 112 107 111 109

TOTAL 96 95 97 76 89 94 98 98

Source: USDA Monthly Sales of Food with taxes & tips; Includes food sales across store types; IRI Consulting analysis.

Food away from home will take an additional hit as cold weather meets indoor maximums imposed under COVID-19. COVID-19 resurgence means greater restrictions on bars and restaurants. Expect at home to benefit from reduced away from home and desire to indulge after a stressful 2020.

Food Away From Home Food At Home

January February March April May June July August September October November December

January February March April May June July August September October November December

2019

2020

summer peak away from home holiday peak at home

64(50%)

64(50%)

$128B

65(49%)

67(51%)

$122B$139B $135B $140B $133B $138B $138B $146B$144B $142B $144B

$132B $131B $133B$105B

$129B$123B $135B $135B

79(60%)

62(46%)

68(52%)

63(48%)

54(40%)

61(45%)

71(55%)

35(34%)

69(66%)

48(39%)

75(61%)

57(45%)

74(55%)

73(54%)

75(52%)

68(48%)

58(48%)

64(52%)

73(53%)

74(53%)

71(52%)

64(48%)

75(52%)

68(48%)

66(47%)

74(52%)

69(48%)

69(52%)

64(48%)

71(52%)

67(48%)

69(50%)

69(50%)

66(47%)

74(51%)

72(49%)

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 18

Typical Spike in Restaurant Visits During Holidays and Winter Months Won’t Happen

This Year, But Takeout Can Still Play Important Role in Smaller Celebrations

Source: IRI On-Premise Daily Data; Index current dollars to benchmark of October 2019. Total Menu, Total U.S., All Day Parts; Casual Dining and Upscale/Fine Dining

AverageDwell Time

100.0 100.4 112.9

91.395.4

49.3

16.5

33.4

50.9 52.756.6

51.3

40

50

60

70

80

90

100

MonthEnding

10-31-2019

MonthEnding

11-30-2019

MonthEnding

12-31-2019

MonthEnding

01-31-2020

MonthEnding

02-29-2020

MonthEnding

03-31-2020

MonthEnding

04-30-2020

MonthEnding

05-31-2020

MonthEnding

06-30-2020

MonthEnding

07-31-2020

MonthEnding

08-31-2020

MonthEnding

09-30-2020

Dollar Index vs. Oct 2019 Average Dwell Time

• U.S. Market: Restaurant sales down 85% from March 18 forward.

• Over 60% of restaurants closed. Recovery began in June, but sales are at 55% of pre-COVID-19 run rate.

• Reduced dwell time reflects higher incidence of food to go.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 19

Opportunities Are in Season for Manufacturers and Retailers

• Offer special holiday packaging; promote

products as giftable.

• With many grappling with economic hardship,

promote holiday essentials; at the same time,

premium products will appeal to shoppers

looking to enhance holiday experiences.

• Online resources should include search engine

optimization for holiday themes, including

recipes and cooking tips, entertainment ideas,

and budgeting tips.

• Consider cross-promotions with other holiday

items, including complementary categories,

cooking implements or tableware.

• Make the most of in-store displays; utilize online

platforms to promote holiday marketing

messages.

• CPG retailers have opportunity to capture

dollars that would have gone to on-premise

celebrating during the winter holiday season.

Promote at-home entertainment ideas.

• With on-premise dining curbed, retailers have

an opportunity to partner with local restaurants

for meal fulfilment or offer their own restaurant-

style meals.

• Promote giftable food and drinks; upsell with

“build-your-own-basket” items.

MA

NU

FA

CT

UR

ER

SR

ETA

ILE

RS

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 20

Vivek Sankaran

President & CEO, Albertsons Companies

August 25, 2020

Ram Krishnan

Global Chief Commercial Officer, PepsiCo

August 17, 2020

Brian Cornell

CEO of Target

July 16, 2020

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 21

Insights and Strategic

Guidance for Better Decisions

IRI’s Online Resources Include Real-Time

Updates and Weekly Reports That Track

the Impact of the Virus on CPG and Retail

The IRI COVID-19 lmpact

Includes COVID-19 impact analyses, dashboards

and the latest thought leadership on supply chain,

consumer behavior and channel shifts for the U.S.

AND international markets.

IRI CPG Economic Indicators, Including

the IRI CPG Demand Index™, IRI CPG

Supply Index™ and IRI CPG Inflation

Tracker™

Accessible through the insights portal

to track the daily impact of COVID-19.

This includes top-selling and out-of-stock

categories across the country and

consumer sentiment on social media.

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 22

(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

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 23

The IRI CPG Demand Index™ provides a

standard metric for tracking changes in spending

on consumer packaged goods. It measures

weekly changes in consumer purchases, by

dollar sales, against the year-ago period across

departments, including fixed and random weight

products, grocery aisles and retail formats. The

IRI CPG Demand Index™ is available for eight

U.S. regions, all U.S. states, UK, France, Italy,

Germany and the Netherlands.

CLICK HERE FOR MORE!

IRI CPG Demand Index™NOW INCLUDES

U.S., UK, FRANCE, ITALY, GERMANY & NETHERLANDS

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 24

The IRI CPG Channel Shift Index provides a

standard metric for tracking changes (migration)

in spending on consumer packaged goods across

select channels. The index measures weekly

changes in consumer purchases by dollar sales

and product trips against the year-ago period for

edible and non-edible products. The index is

available for seven geographies—All Outlets,

Grocery, Club, Dollar, Drug, Mass and Total E-

Commerce.

CLICK HERE FOR MORE!

IRI CPG Channel Shift Index™

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 25

The IRI CPG E-Commerce Demand Index provides a standard metric for tracking changes in spending on consumer packaged goods purchased online. The index measures rolling quad-weekly changes in consumer purchases by dollar sales against the year-ago period across releasable edible and non-edible departments. The index is available for three channels--Total E-Commerce, Brick & Mortar E-Commerce and Online E-Commerce, and two fulfillment types –Click & Collect and Delivery / Shipment.

CLICK HERE FOR MORE!

IRI CPG E-Commerce

Demand Index™

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 26

Want to Be the First to Know?

Registered Users Get New

Thought Leadership from IRI’s Research, Data &

Analytics Experts

www.iriworldwide.com/en-US/Insights/Subscribe

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 27© 2020 Information Resources Inc. (IRI).

Confidential and Proprietary. 27

CONTACT US FOR MORE

INFORMATION

IRI Global Headquarters

150 North Clinton Street

Chicago, IL 60661-1416

IRI@IRIworldwide.com

+1 312.726.1221

Follow IRI on Twitter: @IRIworldwide