Unlocking Growth in Convenience. Mr. Larry Levin IRI Worldwide

Transcription

1 Unlocking Growth in Convenience Mr. Larry Levin IRI Worldwide

2 Unlocking Growth in Convenience Larry Levin, Executive Vice President, Thought Leadership

3 Today s Discussion Performance Impact of trip decline Consumer Views Innovation Driving continued growth

4 C-Store revenues surpass $151 billion and outpacing total CPG in dollar growth and matching -.3% decline in total unit sales Convenience Multi-Outlet $781.1 $560.0 $221.3 $151.3 $78.0 $73.6 TOTAL CPG EDIBLE NON-EDIBLE

5 Allowing the channel to drive 1.6% dollar increase, nearly a half-percentage point ahead of total CPG although a quarter is attributed to cigarette dollar growth 1.6% 1.2% Total Store Growth Dollar Growth C-Store Growth

6 C-Store Channel increased its total share of CPG revenue, driving over 16.3% of dollars Convenience 16.3% 16.1% 2017 SHARE OF DOLLARS 2016 SHARE OF DOLLARS

7 C-Store Top 5, nearly $100B, 66% of sales $56.5B $18.7B $8.8B $8.6B $6.8B Cigarettes Bev/Al Energy Drink Carb. Bev. Smokeless Tobacco $99.6B 65.8% +1.2B versus 2016; 1/3 linked to Cigarettes

8 Categories Driving 2017 Growth $449M +7% $375M +13% $365M +7% $289M +36% $154M +5.4% Smokeless Tobacco Cigars Salty Snacks Electronic Smoking Devices RTD Tea/Coffee

9 Trip Shifts: C-store saw trips decline, impacting total share of visits Total Trips +0.4% Food 37.8% +0.8% Walmart 16% +3.6% Club 4.7% +2.2% Online 2.7% +10.2% Dollar 2.3% +6.1% Drug 5.4% -6.1% Mass 4.0% -5% Conv 2.4% -3.5%

10 C-Store trips declines are correlated to losing at a faster rate to other channels for key category purchases Beer: C-store: +1.2% MULO: +1.5% Energy Drinks: C-store: +2.3% MULO: +4.7% Bottled Water: C-store: +3.5% MULO: +6.1% Chocolate Candy: C-store: +1.6% MULO: +2.5% Snack Nuts: C-store: -2.7% MULO: +1.5% CONSUMERS CONFIRMING

11 To learn more about opportunities to fuel growth and learn about barriers 1745 recent C-store shoppers interviewed: Generation Z 7% Millennials 22% Gen X 22% Boomers 38% Silent Generation 11%

12 Over six in ten shopped in the past three months; Millennials and Gen Z comprise a sizeable share of shoppers, while Boomers are declining; 100% 90% 80% 38% 40% 70% 35% 37% 60% 50% 30% 25% 32% 40% 30% 47% 20% 15% 21% 20% 10% 10% 15% 5% 0% Survey Participants (n=1745) 0% Heavy Medium/Light Lapsed Shopper Heavy Medium/Light Lapsed Shoppers Percent Millennial/Gen Z

13 One in three heavy shoppers have increased, but a similar proportion of moderate-to-light shoppers have reduced 32% Heavy shoppers are shopping more than a year ago 29% Light to Medium Shoppers have reduced

14 A strong proportion of the US shopping population has visited C-Stores in the past month, but opportunities are ripe to engage a strong proportion of nonvisitors 46% Visited a C-store in the past month 26% Go at least once per week 38% Have not visited in three months

15 Not surprisingly food and drinks are the catalyst to visit! 60% Bought drinks 41% Bought food items 28% Bought lottery tickets 12% Bought tobacco

16 And even more profound amount heavy users who are motivated to buy food, drink, tobacco and trying their luck with the lottery! 68% Fountain drinks +11 points versus other shoppers 50% Food +12 points 24% Tobacco +16 points 33% Lottery ticket +7 points

17 Among those increasing their patronage in the channel.it s largely because they feel.. It s so easy to get in and out and I am driving more now Smoking more and working more hours It s my trusted store for eggs, milk and produce It s close and has what I need CVS stopped selling tobacco My store has great sandwiches

18 But, an issue the industry faces is that a quarter are going less, with half of them going a lot less often 26% Go less often than last year 55% Go less often are going much less than before

19 But, for some price and convenience of other channels wins over C-store s offerings 52% Too expensive 35% Shopping More at Grocery 28% Walmart and other Mass Merchants 12% Going to Club More

20 Consumers are seeking healthier alternatives and for some there s not enough promotion.others are just not driving as much 21% Trying to eat healthy; weak alternatives 16% Don t drive as much Uber impact? 12% Not enough sales

21 Barriers and opportunities to change perceptions include Easier to buy online or in a grocery store Prefer fast food restaurants No reason to go as its products are not healthy Expensive and don t have what I need Buy sodas at grocery stores Only go when I am traveling and need gas and coffee I quit smoking

22 Away from home consumption continues to spark growth Over half of total consumer spending +4.6% Annual growth; faroutpacing CPG Tax cuts expected to fuel further growth

23 Fresh foods offerings are beginning to drive dramatic growth in Convenience $429.8M.3% share C-store Scanned Fresh Dollars +6.6% Annual growth; +1.2% of total MULO+C 2% Contribution to total Perimeter Growth

24 Fresh assortment helps to gain trial and repeat with a continued love of snacking across America 2.7 avg. number of snacks consumed daily 46% snack 3+ times/day Up 5 points in one year 25% of US Consumers Eat on the Go 37% Of millennials eat on the go

25 Snacking Sparks Key Growth Leaders for C-Store $365M +7% $1.4B +12.9% Salty Snacks $220M +12.1% $76.4M +3.9% Entrees Appetizers Non-Chocolate Candy

26 Not surprising, Heavy C-Store shoppers evaluate the quality of fresh and prepared foods and coffee to be great. Lighter and lapsed shoppers would go if quality is improved 30% 60% 25% 20% 15% 10% 21% 24% 14% 50% 40% 30% 20% 52% 57% 28% 38% 5% 9% 6% 10% 17% 0% 3% Heavy Medium Lapsed Shopper 0% 5% Heavy Medium Lapsed Shopper Great Quality Fresh/Prepared Foods Percent using c-stores for food when in hurry Percent Citing Great Quality Coffee Would go more if quality improved

27 Quality of food and coffee has room to improve in the minds of our shoppers, only one in ten find it great 44% Quality of c-store food can be improved 20% Coffee could be better ~10% Food and coffee quality is great 30% Buying less made-to-order coffee at C-stores than before

28 C-stores need to shift consumer mind sets! 77% Not in consideration for fresh food buying 25% Don t see the food as fresh 46% Prices are too high 42% Easier to shop at grocery channel 40% Not top of mind for fresh foods

29 C-Store: A Catalyst to New Product Innovation

30 Innovation is Oxygen! 9% Pepsi s reliance on Innovation to drive revenue A I L U R E assortment incremental languish unclear retread elusive

31 Though blockbuster products are few and far between ~12,000 new brands were launched in of these brands made IRI NPP status 4 of these brands achieved >$100M

32 Food and Beverage Products are the Scaffolding for Building a Healthy Lifestyle 37% of Consumers Say FOOD is Just As Powerful as MEDICATION Better for You Removal of Less Desirable Ingredients Simpler Ingredients Natural & Organic Antibiotic-Free Non-GMO Healthful Ingredients Omega-3s Fiber Protein Fruits & Vegetables Superfoods

33 Who are the engineers of 2017 s bridges to growth?

34 Brands That Bring Unique Consumer Experiences are Resonating in the Convenience Channel 1 Red Bull 2 Pepsi Green Edition LIFEWTR 3 Monster 4 Hershey s 5 Mutant Super oda Chocolate Layer Crunch Mountain Dew Pitch Black Milk $ 110.7M $ 107.6M $ 42.3M $ 40.9M $ 38.6M 6 Four Loko Gold 7 Mountain Dew 8 Sprite Tropical Mix 9 Kit Kat Big Kat 10 Pepsi Black Label Cherry Vanilla $ 34.7M $ 32.8M $ 32.4M $ 30.8M $ 25.0M TOP 10

35 Winning in the future Focus assortment and understand expectations of Millennials and Gen Z as the new wave of C-store Shoppers

36 Winning in the future Stay true to your core values to continue to preserve that 65% that your top-five categories drive

37 Winning in the future Focus growth, promotion and assortment across categories C-store is not winning at the pace of total CPG: Beer Energy Drinks Bottled Water Chocolate Candy Snack Nuts

38 Winning in the future Leverage promotions and healthy eating to drive lost trips; continue to build on the great momentum of the perimeter!

39 Winning in the future Continue to be the leader in driving onthe-go consumption with fun and engaging new products

40 Winning in the future Channel is an incubator for niche innovation to drive product development; both type of assortment and serving sizes

41 Thank you! Larry Levin