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What global trends mean for the future of the protein industry

What global trends mean for the future of the protein industry. Bruce Axtman Nielsen Perishables Group . agenda. Consumer and economic trends U.S. demographic shifts Evolving shopper behaviors Promoting for maximum impact with consumers Fresh is in Winning in today’s retail environment.

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What global trends mean for the future of the protein industry

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  1. What global trends mean for the future of the protein industry

    Bruce Axtman Nielsen Perishables Group
  2. agenda Consumer and economic trends U.S. demographic shifts Evolving shopper behaviors Promoting for maximum impact with consumers Fresh is in Winning in today’s retail environment
  3. consumer and economic Trends
  4. HOVERING NEAR THREE YEAR AVERAGES Global Consumer Confidence Index Source: Nielsen Global Omnibus Consumer Confidence Survey 3Q2012
  5. Source: Nielsen Global Omnibus Consumer Confidence Survey 1Q13 SECOND WAVE OF “RECOVERY” UNDERWAY Nielsen U.S. Consumer Confidence Index Recession 93 92 92 85 83 83 83 80 1Q13 1Q12 1Q11 1Q10 1Q09 1Q08 2005 - 2007 2008 - 2Q 2009 2010 - 1Q 2013 Pre-Recession Post-recession
  6. U.S. GROWTH SLOWED Actual and Projected U.S. GDP Growth (2006-2017) Forecast for 2013 Slow Growth Actual Forecast v 3.4% 2006 2007 2008 2010 2011 2012 2013 2014 2015 2016 2017 2009 Source: IMF World Economic Outlook, Oct 2012; 2012-2014 from Wells Fargo forecasts as of Dec 21 2012; TCG Analysis
  7. What we DISCUSS Today PREPAREs US FOR TOMORROW Actual and Projected U.S. GDP Growth (2006-2017) Forecast for 2013 Slow Growth Actual 3.4% Forecast 2006 2007 2008 2010 2011 2012 2013 2014 2015 2016 2017 2009 Source: IMF World Economic Outlook, Oct 2012; 2012-2014 from Wells Fargo forecasts as of Dec 21 2012; TCG Analysis
  8. Seemingly A LOT HAS CHANGED IN TWO YEARS Spring 2011 Spring 2013 +2.3% RETAIL SALES +1.6% RETAIL SALES Source: Nielsen
  9. What are your biggest concerns over the next six months: Source: Nielsen Global Omnibus Consumer Confidence Survey 1Q13 ECONOMIC CONCERNS Remain in the forefront of consumer minds
  10. IS THIS THE NEW NORMAL? DECLINING HOUSEHOLD INCOMES CONSUMERS LIVING PAYCHECK TO PAYCHECK Source: U.S. Census Bureau; Reuters Sept 2012 surveyThe New York Times & USA TODAY/Sentier Research 2007 $53,768 2008 $52,546 68% 2009 $52,195 2010 $50,830 2011 $50,054
  11. u.s. demographic shifts
  12. “oldest old” crowd growing rapidly Source: USA TODAY (Feb. 4, 2013)
  13. Older more trips; younger bigger baskets Total Retail Channels Millennials Gen X Boomers Greatest Gen Millennials Gen X Boomers Greatest Gen Millennials Gen X Boomers Greatest Gen Millennials Gen X Boomers Greatest Gen Source: Nielsen Homescan, Total U.S. 52 weeks ending 12/29/2012, excludes gas only or Rx only trips; *UPC-coded products Millennials more deal prone
  14. Ethnic will be majority by 2050 Distribution of the U.S. Population 54% 35% Source: U.S. Census
  15. Hispanic buying power Hispanic consumer market in the U.S. is larger than the entire economies of all but 13 countries in the world UGA Selig Center Multicultural Economy study, May 1, 2012 $1.7 trillion $1.5 trillion $1.2 trillion $1.0 trillion $488 billion $210 billion Source: Selig Center for Economic Growth, University of Georgia, Athens
  16. Who are u.s. Seafood consumers? Highest indexing consumer characteristics 78% live in affluent urban and suburban areas and downscale urban areas Young Transitionals White consumers make up 56% of seafood sales in top stores, but African American, Hispanic andAsianconsumers index well No children, 35 or younger $75K+ HH Income College graduates Source: Nielsen Spectra
  17. Shopper behaviors are evolving
  18. UNDERSTAND EVOLVING SHOPPERs Eating but not cooking Engaged in food and cooking
  19. EATING BUT NOT COOKING
  20. Strongest fresh growth in convenience NOT JUST FOR FAMILIES CONVENIENCE STAPLES 19% 62% CONTRIBUTION TO FRESH DOLLAR SALES Source: Nielsen Perishables Group FreshFacts® Total U.S. 52 weeks ending 9/29/2012 vs. Year Ago; Products in each group are not mutually exclusive FreshFacts Powered by Spire/Consumer Essence Segmentation
  21. Convenience product innovations for different day parts Smaller Meal Occasion:Snacking & Smaller HH Source: MultiAd Kwikee & company websites
  22. PACKAGING INNOVATIONS MEETING Convenience NEEDS Source: MultiAd Kwikee & company websites
  23. ENGAGED with FOOD AND COOKING
  24. ENGAGED WITH FOOD Food & cookingwebsites67 to 91million uniquemonthly visitors Spend morethan averageon both freshand center store Source: Nielsen BookScan; Nielsen NetView, Home & Work; Nielsen Online Views Survey – March & April 2012 (n= 50,643)
  25. CREATIVE restaurant quality meals at home increasingly SOPHISTICATED and global palates PASSIONATE about understanding food INTRIGUED by sourcing: production and processing methods EDUCATED on health Food Technology, January 2012
  26. Categories with key attributes are driving growth PREMIUMINDULGENT MULTICULTURALGLOBAL HEALTHY 37% 9% 3% CONTRIBUTION TO FRESH DOLLAR SALES Source: Nielsen Perishables Group FreshFacts® Total U.S. 52 weeks ending 9/29/2012 vs. Year Ago; Products in each group are not mutually exclusive
  27. Healthy label claims Growing Sales range from $70B for fat claims to $64M for health claims Label Claims Dollar Sales and Unit Change Fat presence Natural +4% Preservative Presence +3% Organic +9% Salt or Sodium Presence+.5% Protein Presence +10% Iron Presence +4% Hormone Antibiotic Free +12% Source: Nielsen Scantrack & Nielsen Label Trends; UPC-coded; Total U.S. - All Outlets Combined
  28. Organics going strong, especially in meat Natural/ Organic Dollar Sales % Change vs. Year Ago Sources: Nielsen Scantrack & Nielsen Label Trends Total U.S. - All Outlets Combined; Photo Sources: Company websites
  29. Promoting for maximum impact with consumers
  30. Retailers offering fewer promotions, shallower discounts Declining promotions playing out in both circular ads and discount strategies CIRCULAR PRINT AD COUNT (TOTAL PERISHABLES) PROMOTIONAL AVERAGE RETAIL PRICE(TOTAL PERISHABLES) -0.6% +2% SALE SALE Source: Market Track Promotional Data (Grocery channel only) 52 weeks ending 9/29/2012 vs. Year Ago; Nielsen Perishables Group FreshFacts® (FCA), 52 weeks ending 10/27/2012 vs. Year Ago
  31. Promotions Flat or down Across Fresh SEAFOOD Produce Promotional volume down in 8 of 14 seafood categories Meat Seafood Deli Bakery Source: Nielsen Perishables Group FreshFacts®, Total U.S. – Fresh Coverage Area; 52-weeks ending 2/23/20123 (vs. year ago)
  32. paradigms are shifting Today the predominant promotional strategy in fresh categories involves suppliers offering cost savings per box in exchange for circular ads, but printed retailer circulars are shrinking or disappearing altogether TRADITIONAL SEGMENTATION MOBILE ADDITIONAL OUTLETS Direct to consumer from retailers or suppliers/manufacturers CIRCULAR AD TV ONLINE LOYALTY CARD FSI RADIO SOCIAL MEDIA DIRECT MAIL
  33. Fresh Is in
  34. Fresh foods drive sales and store choice FRESH FOODS COMPRISE 30%-60% OF TOTAL GROCERY SPENDING GLOBALLY FRESH FOODS: Contribute a healthy percentage of total grocery spending Drive strong retailer equity Boost high-traffic volume Constitute a staple for a healthy diet Source: Nielsen Global Survey of Fresh Foods, March 2013
  35. Shoppers splitting their fresh ticket Source: Company websites
  36. Fresh department contribution 29% 7% 39% 32% 5% 16% Meat Produce Deli Bakery Seafood FRESH FOOD CONTRIBUTION TO TOTAL STORE SALES $52 $54 $74 $52 $70 Meat Bakery PRODUCE DELI SEAFOOD Source: Nielsen Perishables Group FreshFacts®;2012
  37. fresh purchases remain strong while non-fresh categories fight declines Source: Nielsen Perishables Group FreshFacts® Total U.S. 52 weeks ending 2/23/2013 vs. Year Ago
  38. Fresh seafood joining momentum of frozen Source: Nielsen Perishables Group FreshFacts®, Total U.S. – Fresh Coverage Area; Stable Stores; Nielsen Scantrack, Total U.S. – Food + WMT + Sam’s + Target
  39. Fresh Seafood retail performance Overview After recession-related decline, fresh seafood is making a comeback 3-year History YTD through March Source: Nielsen Perishables Group FreshFacts®, Total U.S. – Fresh Coverage Area; 52-weeks ending 2/23/20123 (vs. year ago)
  40. Fresh Seafood Driving Growth Sales growth was positive across seafood varieties Fresh seafood driving department dollar and volume growth Seafood Department, Total U.S. GROWTH DRIVERS: Crabs Salmon Lobster Tilapia Sea Bass Source: Nielsen Perishables Group FreshFacts®, Total U.S. – Fresh Coverage Area; 52-weeks ending 2/23/20123 (vs. year ago)
  41. salmon Strong supply bolstered the top-selling fin fish Salmon purchased by 16% OF U.S. HOUSEHOLDS (+1 pt from a year ago) Source: Nielsen Perishables Group FreshFacts®, Total U.S. – Fresh Coverage Area (vs. year ago); Nielsen Perishables Group FreshFacts® Shopper Insights
  42. tilapia Tilapia purchased by 18% OF U.S. HOUSEHOLDS (+1 pt from a year ago) Source: Nielsen Perishables Group FreshFacts®, Total U.S. – Fresh Coverage Area (vs. year ago); Nielsen Perishables Group FreshFacts® Shopper Insights
  43. shrimp Shrimp supplies expected to decline in 2013 Source: Nielsen Perishables Group FreshFacts®, Total U.S. – Fresh Coverage Area (vs. year ago); Nielsen Perishables Group FreshFacts® Shopper Insights
  44. Canned tuna Suffering due to price increases Source: Total U.S. – Fresh Coverage Area; Stable Stores; Nielsen Scantrack, Total U.S. – Food + WMT + Sam’s + Target
  45. Winning in today’s retail environment
  46. How seafood can win in today’s retail environment Opportunities that seafood may adopt that are winning in other fresh departments. Consumer targeting Different offerings for different consumers Product development Convenience Premium New varieties/flavors Strategic promotions Connecting to consumers lifestyles Aggressively leveraging health Expanded distribution New channels
  47. Questions? For more information:Bruce Axtman Bruce.Axtman@nielsen.com
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