WAWGG Grower Caucus Presenter: Steve Lutz 11/11/ : Market, Retail and Consumer Realities. The State of the Consumer.

Transcription

1 11/11/11 PG Background 1: Market, Retail and Consumer Realities November, 11 Retail Data Conventional Supermarkets All Perishable Depts. 13, Stores/Historical to Access to Nielsen center store reports Consumer +/- 5, Consumer Interviews Multiple Focus Groups Other Sources Nielsen Household Panel (1,+) Spire loyalty card data (3 million households) Aftermath of the Great The State of the Consumer.3 million lost jobs Nearly million foreclosed home Record low consumer confidence Frugal shopping shifts become permanent Recovery is weak Expect lengthy recovery period, 1, 13K Monthly Job Gains/Losses , -3K -7K -15K -17K -, -33K -31K -7K -3K -3K -, -59K -5K -19K -, -K -7K -K -79K Dec-7 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun MM jobless Recovery 7, 5K 5, 19K 77K 171K 93K 15K 19K 19K 17K 3, K 53K K 117K 1, -1, -55K -39K -35K -9K -59K -9K -3, -13K -31K-3K -1K -19K -5, -3K Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul Job Loss Index recession:. years 1 recession: 3. years Source: Seasonally Adjusted U.S. Non Farm Employment, Bureau of Labor Statistics U.S. Department of Labor 5 Source: New York Times 1

2 11/11/11 Consumer Confidence Six Year Gas Price Seattle vs. U.S Source: The Conference Board - Nine census regions, 5, US households; 195 = 1 5 Monthly Household Expense Impact: $.1 increase: $1.5 $.5 increase: $5.5 $1. increase: $15. $. increase: $ When Will Jobs Return? In addition to replacing 7. million lost jobs, the economy needs an additional 1, jobs a month to keep up with population growth. If the job market returns to the rapid pace of the 199s adding.5 million private-sector jobs a year, double the 1-7 pace the U.S. wouldn t get back to a 5% unemployment rate until late 17, Rutgers University economist Joseph Seneca estimated. The new economic recovery. U.S. Consumer is becoming more polarized Wall Street Journal October 5, The Consumer Hourglass Theory Polarized Consumers: wealthiest exited the recession A wide swath of American companies are convinced that the consumer market is bifurcating into high and low ends and eroding in the middle the consumer hourglass is more pronounced now than ever. (Proctor and Gamble) The world's largest maker of consumer products is now betting that the squeeze on middle America will be long lasting. "It's required us to think differently about our product portfolio and how to please the high-end and lower-end markets," says Melanie Healey, group president of P&G's North America business. "That's frankly where a lot of the growth is happening. Wall Street Journal September 1, % % % % -% -% -% -% -1% -1% < $K $K - $9K $3K - $39K $K - $9K $5K - $9K $7K - $99K $1K + 1% of US HHs Shopping Trips Shopping Dollars Household Income Source: Nielsen Homescan, 5 w/e 7//11 versus 7//9 excludes gas-only or Rx-only trips year trend 1% of US HHs 1

3 11/11/11 Affluent households buying, others not so much Unemployment & Misery Index % Change in All U.S. Channel Shopping Trips 11//9 1//9 1/3/1 //1 3//1 /17/1 5/15/1 /1/1 7/1/1 /7/1 9//1 1//1 1/3/1 11/7/1 1/5/1 1//11 /19/11 3/19/11 /1/11 5/1/11 /11/11 7/9/ Jun. 1 Ages to years Jul. Aug.Sep.Oct.Nov.Dec.Jan. Feb.Mar.Apr.May Jun. 11 High school graduates, no college 1 1 Jun. 1 Age 55 and over Jul. Aug.Sep.Oct.Nov.Dec.Jan. Feb.Mar.Apr.May Jun. $7K $3 to $9.9K 1 1 < $9K 1 1 Jun. Jul. Aug.Sep.Oct.Nov.Dec.Jan. Feb.Mar.Apr.May Jun. Jun. Jul. Aug.Sep.Oct.Nov.Dec.Jan. Feb.Mar.Apr.May Jun. * Latest Period week period ending Misery Index Source: Nielsen Homescan, Source: = unemployment U.S. Bureau of Labor rate Statistics; + inflation excludes gas-only or Rx-only trips; versus year ago CPI non-seasonally adjusted, unemployed. rate seasonally adjusted Bachelor's degree and higher Job situation will impact products & services differently It s tough out there.even for college grads Race/Ethnicity Asian 7.7% White.1% Hispanic 11.3% Afr-American 15.9% Education Less than high school diploma 15.% High school grad; no college 9.3% Some college, or assoc degree.3% Bachelor degree and higher.3% Age Group - 1.% % % % 55+.9% Gender (adults +) Women 7.9% Men 9.% July 11 Unemployment Rates Seasonally Adjusted Source: Seasonally Adjusted U.S. Non Farm Employment, Bureau of Labor Statistics Department of Labor U.S. U.S. Retail 15 Trends 1 Pragmatic behavior will continue, but less intense in 11 But it s not all bad news Did This Past Year % save on gas & utilities 3% reduce entertainment 59% reduce grocery spend 57% spend less on clothes 5% reduce take-out 51% use car less Will Continue To Do 5% save on gas & utilities 37% reduce take-out 3% reduce grocery spend 3% reduce entertainment 3% use car less 9% spend less on clothes Source: Nielsen Global Online Consumer Confidence & Opinion Survey Q

4 11/11/11 There is some good news. Some major retail departments grow Retail sales rose in September by the most in seven months, on a year over year basis, up %. Restaurant sales have increased by the most since 7. Auto sales were strong with a 3.% gain, most since March 1. This all suggests that consumer spending was an important contributor to 3 rd quarter GDP. The beige book report on the economy suggests that the slow growth economic scenario is continuing Fresh Dairy Pkg d Produce Meat 3. Alco Bev % Dollar Growth (FDM w/walmart) Dry Frozen Non General.1. Deli Grocery Foods Food Merch Fresh HBA -.1 Meat Bob Brinker Marketimer Monthly Report November 3, Latest 5 Weeks weeks ending /11/11 (vs. prior year); UPC-coded Alcoholic Beverages - - The shining star of departments /11/11 5/1/11 /1/11 3/19/11 /19/11 1//11 1/5/1 11/7/1 1/3/1 1//1 9//1 /7/1 7/1/1 /1/1 5/15/1 /17/1 3//1 //1 1/3/1 1//9 11//9 1/31/9 1/3/9 % Change % Change Unit Sales Weeks Ending vs Year Ago week increments (vs. prior year); UPC-coded (major categories) 1 Top 1 Fastest Growing Categories (Dollar% Change vs YAGO) 5-Wks Ending June 1, 1 % 5-Wks Ending June 11, 11 % Canning/Freezing Supplies 3. Seasonal Gen Merchandise 11. Tobacco & Accessories 9. Snacks/Spreads/Dip-Dairy 11.1 Sugar/Sugar Substitutes.1 Butter & Margarine. Vitamins 7.9 Breakfast Foods-Frozen. Nuts. Yogurt.5 Snacks/Spreads/Dip-Dairy. Coffee. Yogurt. Milk 5. Vegetables-Canned 5.5 Wine 5.7 Wine 5.3 Fresh Produce. Pizza/Snacks-Frozen 5. Packaged Meat.5 food & beverage categories 5 week increments (vs. prior year); UPC-coded; 117 major category groupings Top 1 Fastest Growing Categories (Unit % Change vs YAGO) 5-Wks Ending June 1, 1 % 5-Wks Ending June 11, 11 % Frozen Novelties 9. Liquor 9. Canning/Freezing Supplies.3 Snacks/Spreads/Dip-Dairy.9 Fragrances - Women 7. Wine. Nuts 7.3 Seasonal Gen Merchandise.1 Seafood-Canned.3 Juices Drinks-Shelf Stbl 5. Vitamins. Breakfast Foods-Frozen.9 Yogurt 5. Vitamins.9 Juices & Drinks-Refrig 5.3 Tea.5 Fresh Produce.9 Bottled Water 3.9 Pizza/Snacks-Frozen. Candy 3. food & beverage categories 5 week increments (vs. prior year); UPC-coded; 117 major category groupings 3 Cost Consumer = Price Value Consumer = Benefits/Price Mainstream Remaining Roma Excluding Yogurt Health Hot House Vine Mainstream Mid-Tier Coffee Toothpaste Coffee Super Value Value -% 3% Avg Price +11% +% higher Dollar Unit Sales Avg Avg. Price Price 1% higher +3% 1% Avg Avg Price Price % % higher 3% 57% higher +1% % % +.1% % -3% Dollar Sales % +% Unit Sales 3% % 115% Dollar Sales 9% 3% +1% Volume Unit Sales Unit Pound Sales -% -1% Sales 1% Unit Volume Sales 5% +% Unit Sales 99% Unit Pound Volume Sales Sales 1% 5% +5%

5 11/11/11 Value Consumer = Price Value Consumer = Benefits/Price Mainstream Remaining Excluding Yogurt Health Roma Mainstream Mid-Tier Coffee Toothpaste Hot House Vine Coffee Super Price Value Mainstream Remaining Excluding Yogurt Health Roma Mainstream Mid-Tier Coffee Toothpaste Hot House Vine Coffee Super Value Value -% 3% Avg Price +% +11% higher Unit Avg Avg. Price Price 1% higher +3% 1% Avg Avg Price Price % % higher 3% 57% higher +1% % % +.1% % -3% Dollar Sales % +% Unit Sales 3% 115% Dollar Sales % 9% 3% +1% Volume Unit Sales Unit Pound Sales -% -1% Sales 1% Unit Volume Sales 5% +% Unit Sales 99% Unit Pound Volume Sales Sales 1% 5% +5% -% 3% Avg Price +11% +% higher Dollar Unit Sales Avg Price 1% higher +3% 1% Avg Avg Price Price % % higher 3% 57% higher +1% % % +.1% % -3% Dollar Sales % +% Unit Sales 3% 115% Dollar Sales % 9% 3% +1% Volume Unit Sales Unit Pound Sales -% -1% Sales 1% Unit Volume Sales 5% +% Unit Sales 99% Unit Pound Volume Sales Sales 1% 5% +5% Value Consumer = Benefits/Price Mainstream Remaining Excluding Yogurt Health Roma Hot House Vine Mainstream Mid-Tier Coffee Toothpaste Coffee Super Value Value Value is not about price, it s about the balance between price & benefits Value Consumer = Price Value Consumer = Benefits/Price Mainstream Remaining Excluding Yogurt Health Regular Eggs Specialty Eggs Mainstream Mid-Tier Coffee Toothpaste Coffee Super Toothpaste Pod Designer Coffee Eggs -% 3% Avg Price +% +11% higher Unit Avg Price 1% higher +3% 1% Avg Price Avg Price Price % % higher 3% 57% higher +1% % % +.1% % -3% Dollar Sales % +% Unit Sales 3% 115% Dollar Sales % 9% 3% +1% Volume Unit Sales Unit Pound Sales -% -1% Sales 1% Unit Volume Sales 5% +% Unit Sales 99% Unit Pound Volume Sales Sales 1% 5% +5% -% 3% Avg Price +11% +% higher Dollar Unit Sales Sales +3% -1% Avg Avg Price Price 1% higher +71% 1% Avg Avg Price Price 3% 57% ``` % % higher higher +11% Carton Sales % % -% % -3% Dollar Sales % +1% Unit Sales 3% 115% Dollar Dollar % Sales Sales 9% 3% +11% Unit Sales Unit Pound Sales -% Sales Unit Carton Sales Sales 5% +% Unit Sales 99% Unit Pound Carton Sales Sales Sales 1% 5% +11% Challenges 1. WHAT DOES IT MEAN? Clue: It s not who has the cheapest product U.S. Consumers remain under pressure, but situation improving ary impacts not evenly distributed leading to polarized consumer segments/products At home food and beverages are increasingly important choice for a majority of U.S. households Consumers seeking out experience items Huge opportunities to drive performance with high value products Plays directly to the strengths of the Washington Wine industry

6 11/11/11 Success 1. As value shifts, consumer priorities changed Understand the implications of the new polarized purchase behavior for your wines Even more important to quantify value for your consumers: Local/appellation Expertise Heritage Legacy Obstacles Self-discovery Awards Other recognition Consumer Preference Thank you!