Continuing and Expanding on Bakery Success – IBIE 2013

BAKERY’S OPPORTUNITY:
HOW TO CONTINUE
AND EXPAND SUCCESS
OCTOBER 2013
Presented by Jonna Parker
www.PerishablesGroup.com
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
ABOUT THE NIELSEN PERISHABLES GROUP
Industry Expert in Fresh Food Consulting: offering a full spectrum of products
and services geared toward complete fresh food market and category understanding
What is Fresh? Produce, deli, meat, seafood and in-store bakery departments at stores
where fresh food is sold (grocery, mass, club, supercenter)
OUR SOLUTIONS
Performance
Consumer
Application
2
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
TODAY’S FOCUS…
CONSUMERS
BAKERY
OPPORTUNITY
PERFORMANCE
APPLICATION
3
WHY SHOULD THIS MATTER TO YOU?
PAST
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
• Long-term and
consistent growth
• Innovative products
capture sales
PRESENT
FUTURE
• Increased competition
• Shoppers splitting
bakery ticket
• Shoppers substituting
baked goods across
store
• Millennials: The next
generation
4
WHAT FUELS
BAKERY’S GROWTH?
FRESH AND ITS SHOPPERS ARE INCREASINGLY
VALUABLE TO STORES
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
29%
FRESH FOODS’
CONTRIBUTION TO TOTAL
STORE FOOD SALES
1.5 TO 2.0
TIMES LARGER
WITH FRESH
39%
32%
16%
MEAT
PRODUCE
DELI
8%
BAKERY
Source: Nielsen Perishables Group FreshFacts®;2013; Homescan, TSV 52 weeks ending June 2013
5%
SEAFOOD
6
WHY EVERYONE SHOULD CARE ABOUT FRESH
8%
6% 6%
5%
5%
4%
FRESH AS A:
4%
4%
4%
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
2%
Meat
Produce
Deli
Dollars
Bakery
Volume
2%
Seafood
•
•
•
•
•
•
•
•
Partner
Substitute
Complement
Threat
Growth driver
Trend setter
Strategic play
New frontier
1%
Total Store
Source: Nielsen Perishables Group FreshFacts® Total U.S. (FCA) weeks ending 7/27/2013 vs. Year Ago and Total U.S. - All Outlets Combined, plus Convenience ending 8/3/2013 (UPC only)
7
CONSUMERS ARE SPLITTING THEIR TICKET
MORE THAN EVER
Shoppers are responding to the ubiquity of fresh baked goods across channels
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
TARGET
7 ELEVEN
41%
Bakery Household
Penetration by Outlet
Nielsen Homescan, 52 weeks ending 6/29/13
Remaining Market
WALGREENS
STARBUCKS
GAS STATIONS
33%
68%
97%
Club
Mass/SuperCenter
Grocery
8
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
NEW AND CONTINUED TRENDS SUPPORT IN-STORE
BAKERY GROWTH
Portion control
Expanding flavor
palates
Smaller package sizes
Hybrid mania
Fresh at your
convenience
Gourmet indulgence
and nostalgia
Source: Nielsen Perishables Group FreshFacts®
9
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
UNPRECEDENTED GROWTH FOR IN-STORE BAKERY
$
Volume
Cakes
Breads
Rolls
MINI
pies, brownies,
cookies
Cookies
Donuts
Sweet Goods
Pies
Muffins
PREMIUM
specialty rolls,
specialty dessert
cakes
Bagels
Brownies and Dessert
Bars
Other Misc.
CONVENIENCE
cupcake cakes, takeand-bake breads
Specialty Desserts
Source: Nielsen Perishables Group FreshFacts®, 52 Weeks Ending 7/27/13; Total U.S. FCA
10
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
SLOW SHIFTS IN BAKERY DOLLAR SHARE
Bakery category dollar share
All Other
4%
Breads
16%
Category share changes
compared to the prior year:
Muffins
4%
Pies
6%
- 0.4 points
Rolls
13%
BREADS
Cookies
10%
Cakes
30%
Donuts
8%
Sweet Goods
7%
Bagels
+ 0.5 points
ROLLS
2%
Source: Nielsen Perishables Group FreshFacts®, 52 Weeks Ending 7/27/13; Total U.S. FCA
11
ANALYZING THE PURCHASE PATTERNS OF
BAKED GOODS SHOPPERS
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
HOW PEOPLE SHOP THE FRESH BAKERY
13
trips per year on
average
$61
spent per household
annually
Source: FreshFacts® Shopper Insights powered by Spire; 52 weeks ending 8/10/13
2. Nielsen Homescan, 52 weeks ending 6/29/13
2
97%
household penetration
12%
of bakery trips included more
than one type of bakery
product
13
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
REDEFINING THE COMPETITION
Category
Competition
Baked Goods
Shoppers
Store-wide
Competition
and Beyond
Department
Competition
14
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
FRESH GROWTH OUTPACING NON-BAKERY
Success differences Success differences
within department
across store
Success differences
across store
Dollars
Volume
Fresh Bakery
Breads
Fresh Bakery
Rolls
Non-Bakery
Breads/Rolls
Fresh Bakery
Donuts
Non-Bakery
Donuts
15
HEAVY INTRA-DEPARTMENT OVERLAP CAUSING
MORE COMPETITION
•
Fresh Breads and Rolls
BAKERY BREADS AND ROLLS BUYER OVERLAP
FRESH BAKERY BREAD
18%
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
EXCLUSIVE
BUYERS
FRESH BAKERY ROLLS
42%
$3 BILLION
17%
EXCLUSIVE
BUYERS
EXCLUSIVE
BUYERS
77% HH
penetration
Source: Nielsen Perishables Group FreshFacts® ; FreshFacts® Shopper Insights powered by Spire, 52 weeks ending 8/10/2013
16
HEAVY OVERLAP AMONG BAKERY AND
COMMERCIAL BUYERS
•
Rolls Across the Store
FRESH AND COMMERCIAL ROLLS BUYER OVERLAP
FRESH BAKERY ROLLS
NON-BAKERY ROLLS
8%
30%
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
EXCLUSIVE
BUYERS
51%
$2 BILLION
EXCLUSIVE
BUYERS
EXCLUSIVE
BUYERS
Total store sales
89% HH
penetration
Source: Nielsen Perishables Group FreshFacts® ; FreshFacts® Shopper Insights powered by Spire, 52 weeks ending 8/10/2013
17
ANALYZING THE BAKED GOODS BUYER
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
GROUPS WITH HIGHEST SHARE OF BAKERY AND
TOTAL STORE SALES
44%
of sales attributed to households seeking
products across the store that satisfy three
primary need states:
HEALTH
CONVENIENCE
Bakery buyer characteristics:
• Couples and families
• Wide income range
• Cook quick meals
• Health-conscious
PREMIUM
Yet these groups under-spend their fair share of bakery sales
Source: FreshFacts® Shopper Insights powered by Spire; 52 weeks ending 8/10/13
19
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
MEETING THE NEEDS OF BAKERY ENTHUSIASTS
BAKERY ENTHUSIASTS
30%
BAKERY ENTHUSIASTS SEEK
• Multi-cultural/ethnic products
26%
• Convenient options
• Simple solutions
• Smaller portions
• Affordable pricing
Dollar Share of ISB Sales Dollar Share of Total Store
Sales
Different bakery categories are important to different groups
Source: FreshFacts® Shopper Insights powered by Spire; 52 weeks ending 8/10/13
20
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
DO YOU KNOW YOUR CATEGORY’S ENTHUSIAST?
23%
1%
of muffin sales
of muffin buyers
.
account for
Source: FreshFacts® Shopper Insights powered by Spire, 52 weeks ending 8/10/13
.
.. ..
21
HOW ARE MILLENNIALS SHAPING THE FUTURE?
FRESH BAKERY SHOPPER METRICS:
MILLENIALS VS. GEN-X AND BABY
BOOMERS
Lower trip frequency
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
Lower dollars per trip
How do we
engage Millennials
and re-imagine
categories to drive
excitement and
meet their needs?
Lower annual ISB spend
Source: FreshFacts® Shopper Insights powered by Spire; 52 weeks ending 8/10/13
22
Copyright ©2013 The Nielsen Company. Confidential and proprietary.
DEFINING SUCCESS
The top 10 fresh bakery retailers achieve 94% more average bakery sales
than the competition, but retailers that understand total store dynamics
achieve:
The benefits of being a top fresh bakery retailer:
Highest rate of converting shoppers to buyers
Capture more total store sales
Highest equity marks from shoppers
Source: Nielsen Homescan 2012
23
THANK YOU
Jonna Parker
Director, Nielsen Perishables Group
Jonna.Parker@nielsen.com