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Nielsen

Nielsen. Watch & Buy Presentation for TAM Ireland. 1. The Economic Environment and Consumer sentiment. The gloomy state of the economy in Ireland is well documented. €9.44bn Exchequer deficit June 2012 (€10.8b LY). GDP -1.1% Q1 2012 vs Q4 2011. Retail Sales Index -0.1%

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  1. Nielsen Watch & Buy Presentation for TAM Ireland

  2. 1 The Economic Environment and Consumer sentiment

  3. The gloomy state of the economy in Ireland is well documented. €9.44bn Exchequer deficit June 2012 (€10.8b LY) GDP -1.1% Q1 2012 vs Q4 2011 Retail Sales Index -0.1% May 2012 vs April 2012 CPI + 1.7% June 2012 vs 2011 Unemployment @ 14.9% June 2012

  4. It’s no surprise that consumer confidence is low, but it is stable, in line with sentiment throughout 2011. Ireland Consumer Confidence Index Q2 2012 % pt +/ -1 +6 -1 -8-1 -12 -19 -14+3 +1 +1- -3 -4 +3 - -4 +4 - Source: Nielsen – Global Online Survey Consumer Confidence Q2 2012 – Ireland results

  5. The Economy Job Security Debt Fear of Rising Bills Childrens’ Welfare / Education Fuel Prices Health Parents Welfare/Happiness Worklife Balance Food Prices IRELAND The economy, job security, and debt remain our biggest concerns. 19% 16% 16% 10% 9% 7% 5% 5% 4% 2% Biggest Concerns “Q – What are your biggest concerns over the next 6 months?” Q2 2012 Source: Nielsen – Global Online Survey Consumer Confidence Q2 2012 – Ireland results

  6. Irish consumers continue to tighten their belts on both domestic and lifestyle spending. Lifestyle DOMESTIC Save on gas & electricity 68% (+0%) Spend less on new clothes 66% (+2%) Switch to cheaper grocery brands 67% (+2%) Cut down on take-aways 58% (-2%) Cut down out of home entertainment 57% (-3%) Cut down on telephone expenses 46% (-5%) Cut down on holidays/ short breaks 52% (+3%) Delay replacement of major appliances 43% (+1%) (% Chg Diff vs Q1 2012) Use my Car less often 38% (-2%) Cut down / buy cheaper brands of alcohol 34% (+4%) Delay upgrading PC or mobile 43% (+0%) “Q. Compared to last Quarter Q1 2012, which of the following actions have you taken in order to save on household expenses?” Source: Nielsen – Global Online Survey Consumer Confidence Q2 2012 – Ireland results

  7. Some volume growth returns for FMCG to give good nominal growth, despite the easing inflation. Ireland - Fast Moving Consumer Goods market dynamics – Q2 2012 growth rates (versus Q2 2011)

  8. Consumer sentiment is stable • Q1 volume growth amongst the best in Europe • Shoppers cope with increased spend by: • Cutting back • Switching brands • Buying on deal

  9. 2 Changing Shopping Behaviour

  10. 35% Shoppers say their average monthly grocery spend has increased by about 12% in the last year, mainly on Fresh. Average Monthly Spending(Food, Grocery & Personal Care vs. Fresh Food Only) Base: All Supermarket shoppers (2010 n=1016 , 2011 n = 998) Ref: Q9a/b Source: Nielsen – ShopperTrends 2011 Ireland results

  11. Irish shoppers keep shopping around, with an average of 3.3 different stores visited in past 4 weeks, though this is slightly down on 2010. Number of Supermarket/Hypermarket Used- Stores Used in Past 4 Weeks (2011) Base: All supermarket shoppers (n=939) Ref: Q13b Source: Nielsen – ShopperTrends 2011 Ireland results

  12. Even in these difficult times shoppers are open to trying new things, New Product Development can still be a good hook. Adoptiveness Base: Hypers/Supers (n= 959) Ref: Q26 Source: Nielsen – ShopperTrends 2011 Ireland results

  13. On-line grocery shoppers are small in number but are increasing their buying occasions and do so for convenience. More are checking out offers on-line. Reasons for Visiting Supermarket/Hypermarket Website Base : All have visited Supermarket/hypermarket in last month (n=284) Ref: Q129 Source: Nielsen – ShopperTrends 2011 Ireland results

  14. 3 The Search for Value – price & promotions trends

  15. Shoppers perceive increasing grocery prices, particularly outside of Dublin. Variation of food prices across banners By HH income By Region Base: All Supermarket shoppers (n = 959) Ref: Q79 Source: Nielsen – ShopperTrends 2011 Ireland results

  16. Only 1/3 of shoppers claim to be on auto-pilot when choosing their grocery store. Most are engaged and open to experimentation. 40% are influenced by promotions or advertising. Level of adoption Base: All Supermarket shoppers (n = 959) Ref: Q25 Source: Nielsen – ShopperTrends 2011 Ireland results

  17. Shoppers still claim to be highly aware of price changes. Base: All Supermarket shoppers (n = 959) Ref: Q24 Source: Nielsen – ShopperTrends 2011 Ireland results Ref: Q24

  18. Shoppers are becoming more promotionally sensitive prompting more shoppers to change stores and brands for promotions. Promotion Sensitivity Base: All Supermarket shoppers (n = 959) Ref: Q23 Source: Nielsen – ShopperTrends 2011 Ireland results

  19. Make your promotions work much harder82% of shoppers will change brands or stores based on promotions66% of shoppers agree that:The decision on which store to shop at for household groceries is an important decision and it pays you to put effort into getting it right.40% of shoppers agree that:I often change stores because of interesting advertising or Promotions.TELL THEM ABOUT IT

  20. Categories such as Deodorant are now selling almost half on promotion, and promotion levels have increased in many categories. Source: Nielsen ScanTrack Multiples - UNITS

  21. Price is the key driver of profit Margin conceded will be very hard to recover later Price cuts can be matched & neutralised by competitors Lower prices erode consumer perceptions of value Narrower profit margins lead to reduced investment in innovation and brand building Resist Temptation To Chase Price Sensitive Shoppers Everywhere. Source: Nielsen AAC Checkout Conference 2010

  22. Continue To Invest In Retaining Buyers As Well As Attracting New Ones. • Successful brands build sales through attracting new buyers and retaining existing ones • Attract new buyers through advertising, promotions and innovation • Retain existing consumers through strong product delivery and brand equity • Successful brands need high equity to retain consumer loyalty during a downturn • Brands in the Hair and Beauty categories showing strength against Private Label - Still Retain 88% share • Sector has increased spend in Irish advertising by 20% this year. Image Source: Paul Sapiano Photography; licensed under Creative Commons Source: Nielsen AAC Checkout Conference 2010, Nielsen Scantrack, Nielsen Ad Dynamix

  23. 4 The Search for Value –Discounters continue to grow

  24. Discounters still win on lowest priced store perceptions, but Tesco has regained ground. Lowest Price Store Base: All Supermarket shoppers (2010 n=1008, 2011 n = 959) Ref: Q20 Source: Nielsen – ShopperTrends 2011 Ireland results

  25. Discounters have reached 13% value share, but they perform even better in many categories. €10.6n Specialist off licences includes Alcohol sales only Independents includes Confectionery, Cigarettes, and Alcohol sales only Scantrack categories only ie excludes fresh, random weighted etc Source : Strategic Planner June 2012, Total Available Coverage

  26. Aldi and Lidl media spending increase for first six months of 2012. +25% increase in media spend (v. 2011) TV spend 20% of total +32% increase in media spend (v. 2011) TV now 12% of total spend Source: Nielsen Ad Dynamix (Jan to June 2012)

  27. 5 The Search for Value – Private Label continue to grow

  28. Branded playing in a 79%Arena Branded products Worth €8.4 billion Private Label in Numbers €2.2 billion the MAT Value of Private Label 21% the Value Share Private Label currently has €99.8 million the amount Private Label has grown in the last year +4.7% the rate of Value Growth of Private Label Year on Year Branded declining at -1.2% value Year on Year Categories included are – Alcohol, LAD, Sprits, Bakery, Cigarettes, Canned Food, Grocery, Chilled/Frozen Food, Household, Health & Beauty, Confectionery and Tobacco Source : Strategic Planner June 2012, Total Available Coverage

  29. Increased advertising of Private Label by the retailers, focussing on quality and value for money. The new Supervalu Range Aldi – ‘Like brands. Only cheaper.’ Own Label “brand building” by the Retailers focussing on qualityand value for money Tesco – new ‘Everyday Value’ range Lidl – ‘Quality for Less’ Source: Nielsen Media 2012

  30. Household 35% Share Bakery 24% Share Grocery 35% Share Frozen 52% Share Private Label remains weakest in Health & Beauty and Alcohol, categories where there is some of the highest investment in brand equity. Confectionary 17% Share Wine 16% Share Health & Beauty 12% Share Source : Strategic Planner June 2012, Total Available Coverage

  31. Shoppers plan to buy more Private Label, particularly in categories where Private Label is already strong. Buy Buy Buy more the same less Categories store brands bought past 12 months Base: All Supermarket shoppers (n = 426) Ref: Q119, Q120 Source: Nielsen – ShopperTrends 2011 Ireland results

  32. Trends in the media sector showed an increase in media spend by supermarkets & grocery chains in 2011 9% increase in media spend (2011 v 2010) for the Supermarket & Grocery chain sector In 2011, TV spots in sector reached 98.7% Adults 15+ 99% Hskprs 1 or more times… 37% increase in TV spend 6% increase in Press spend €99.8 million Increase Private Label 5% Value Growth of Private Label Source: Nielsen – AD Dynamix 2011 v 2010 (ex UTV/Ch4) & Nielsen/TAM Ireland Jan-Dec 2011, All spots on ROI (ex UTV/Ch4) channels for Supermarket and Grocery chain sector) Consolidated

  33. 5 Winning Categories in the Recession

  34. Trends in the Top 20 fastest growing categories show consumers looking for value @ home options. cooking dinner @ home (meal kits, meat extracts, Oils) Cheaper options: loose tobacco Nesting: Home Baking, Home cleaning, Ignition products preparing lunch @ home (peanut butter, spreads) Source :Nielsen Strategic Planner June 2012, Total Available Coverage (exc H&B)

  35. On to Off-trade switch continues as consumers cut back on big night out for big nights in. 1% fall in consumption of LADs overall. On-Trade-6% (LAD: beer, cider, perry, spirit mixers, wine alter) Total OnTrade MAT to May 2012 VOL Off-Trade+6% (LAD: beer, cider, perry, spirit mixers, wine alter) Total Off incl Dunes MAT to May 2012 VOL

  36. There is still a place for Premium though, as trends in Ice Cream and Pet food show. Ice Cream Cat Food Coffee +1% +0% +11% TOTAL TOTAL TOTAL +27% +24% +31% SUPER PREMIUM SINGLE SERVE SUPER PREMIUM SINGLE SERVE Source: Nielsen Total Scantrackinc Discounters April 2012

  37. Currently 63% of Irish people feel they are overweight, higher than the EU average of 58%. Ireland • Underweight (5%) • About the right weight (31%) • A little overweight (42%) • Somewhat overweight (15%) • Very overweight (6%) European Union • Underweight (5%) • About the right weight (37%) • A little overweight (38%) • Somewhat overweight (16%) • Very overweight (4%) At the moment do you consider yourself?Ireland Source: Nielsen – Global Online Survey Q3 2011

  38. And Healthy products continue to perform ahead of their category in many cases. Source: Total Scantrackincl Discounters to 17/06/12 Value MAT % Chg

  39. Categories showing growth Off-Trade – Fuelled by the switch to the Big Night In Super Premium brand extensions – Everyone deserves a treat Healthy Option brand extensions – driven by the overweight perceptions

  40. 6 Winning Brands in the Recession

  41. Some brands have successfully gained share in tough times – New Product Development, promotions, and media investments are the drivers. BEN & JERRYS TAKE HOME ICE CREAM +3.0% BIRDSEYE IN FROZ FISH+3.2% MC CAIN IN FROZEN CHIPS +2.5% DOVE IN DEODRANT +2.7% KNORR IN STOCK CUBES +2.8% KENCO IN SOLUBLE COFFEE + 2.2% PERSIL IN LAUNDRY DETERGENT +3.9% ORAL B IN TOOTHPASTE +7.0% VALUE share points gained MAT to May 2012, Scantrack

  42. Investment in Irish media part of strategy – TV strong player Ben & Jerry’s Ice Cream TV – 82.0% (Ads15+ - 86.2% 3+ Reach) Cinema/Press – 18% McCain (Crispy/Oven/Home Chips) TV – 59.5% Outdoor/Radio/Press – 40.5% BIRDSEYE (Cod Fillets/Fish Fillets/ Fish Fingers /Simply Bake) TV – 83.4% Outdoor/Press – 16.6% Dove Deodorant TV – 74.1% (Wmn 15+ - 91.2% 3+ reach) Press – 25.9% Knorr (Stock Cubes & Stock Pot) TV – 100% KENCO (coffee/refill/Millicano/Smooth roast) TV – 84.6% Radio/Press – 15.4% PERSIL (Persil/with Comfort/2 in 1/Small & Mighty) TV – 51% Press/Radio/Outdoor – 49% ORAL B (Pro Expert Toothpaste) TV – 68.7% Press – 31.3% Source: Nielsen Ad Dynamix (May 11-Apr 12)/Nielsen/TAM Ireland – Mon-Sun All Day, Consolidated May 11-Apr 12,

  43. 7 Viewing Trends

  44. Average daily viewing time for 2011 per individual Ireland 3hr 25min USA 4hr 53min Europe 3hr 48 min INCREASE OF 20MINS IN 10 YEARS WORLDWIDE Based on Consolidated viewing Q1 2012 viewing @3hr33min day remains dominated by live TV. IRE Avg daily viewing time 3hr 33min Inds 4+ 2hr 27min Child 4-14 3hr 57min Wmn 15+ 92% of content is watched live 97% of content is viewed on same day as live 99% of content has been watched by day 3 Adults preferred viewing day is Sunday, Children prefer Saturday Source: Nielsen /TAM (Ireland) Inds Mon-Sun All Day, Jan-Mar 2012Eurodata TV - One TV Year In the World report

  45. In 2011, subscribing channels broadcast 351,659 programmes To a potential audience of 4,086,000individuals 4+ 4,293,773 spots for4,580 brands Reaching 99.3% of individuals 4+ 2012 Subscribing channels – RTE1, RTE2, TV3, 3e, TG4, UTV, Setanta, Ch4, E4, E4+1, MTV, Nick, Nick Jr, Com Cent, Com Cent +1, Comedy Central Ex, Discovery, E!, Sky One, Sky News, Sky Sp 1, Sky Sp 2, Sky Sp News, Sky Living, Sky Living +1, Sky Atlantic Nielsen/TAM Ireland – Mon-Sun All Day, 01/01/2011-31/12/2011, Consolidated

  46. Average daily live reach of subscribing channels remains strong Nielsen/TAM Ireland – Mon-Sun All Day, Live 01/01/2009 to 31/05/2012 1+ min

  47. 8 Advertising Trends

  48. Irish consumers place higher trust in advertising such as TV and press ads than the EU average. Q. To what extent do you trust the following forms of advertising/recommendation? 89 96 64 65 Recommendations from people I know 44 56 Consumer opinions posted online 47 66 Branded Websites 39 57 Editorial content such as newspaper articles EU AVERAGE IRELAND AVERAGE 31 42 Emails I signed up for 29 44 Brand sponsorships 28 43 Ads on TV 29 41 Ads in magazines 29 45 Billboards and other outdoor advertising 26 45 Ads in newspapers 25 40 Ads on radio 23 31 Ads before movies 30 30 TV Program product placements 22 24 Ads served in search engine results 22 24 Online video ads 19 18 Ads on social networks 18 22 Online banner ads Display ads (Video or banner) on mobile devices (smartphones, tablet devices - i.e., ipad) 17 22 Text (SMS) ads on mobile phones Percentage of respondents answering "trust completely" or "trust somewhat") Source: Nielsen Global Trust in Advertising Online Survey 2011

  49. Irish consumers are still highly influenced by TV and Press ads when making purchase decisions in FMCG. Q. Which of the below media influence you when making purchase decisions for the following types of products? Ireland HOME ELECTRONICS FMCG H&B CLOTHES INSURANCE CAR ENTERTAINMENT MEDIA INFLUENCES 49% 44% 47% 34% 35% 39% 27% TV COMMERCIAL 37% 34% 37% 37% 31% 37% 28% NEWSPAPER/MAGAZINE AD 48% 40% 38% 36% INTERNET OR ONLINE REVIEWS 25% 29% 26% DOES NOT APPLY 27% 22% 23% 22% 21% 21% 12% RADIO COMMERCIAL 20% 14% 12% 15% 19% 13% 21% OUTDOOR BILLBOARD 15% 15% 13% 15% 9% 12% 10% WEBSITE BANNER AD 7% 8% 11% 10% 12% 9% 9% ONLINE VIDEO AD 6% 7% 7% 11% 7% 8% 7% MOBILE AD 3% 3% 2% 4% 3% 2% 4% Source: Nielsen Global Trust in Advertising Online Survey 2011

  50. In conclusion… • Price promotions are important but brands growing share are those investing in advertising and in particular TV • Brand equity has big value • Retailers growing in share are investing in compelling marketing for their pricing and private label ranges • Brand owners must continue to brand build – need to differentiate from private label to succeed • Live TV viewing still dominates • TV is a trusted source and key influencer of consumers

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