ACE DUCKS Alex Mcgovern, Brett Wilson, Chris Tanner, Kenny Clarke, Lailani Kings, Nick Schaefer, Sara Tabatabaei, Tom Bouregy Agenda
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ACE DUCKS Alex McGovern, Brett Wilson, Chris Tanner, Kenny Clarke, Lailani Kings, Nick Schaefer, Sara Tabatabaei, Tom Bouregy Agenda Category Overview RTE Popcorn Segment Cracker Jack Consumers, Performance “Winning” Brands Recommendations 2 Total U.S. Salty Snack Sales Expected to Grow 21% Through 2019; Popcorn Represents the Largest Growing Segment Within the Category Total US Sales and Fan Chart Forecast of Total US Retail Sales of Salty Snacks, by Salty Snacks, At Current Prices, 2009-19 Segment, At Current Prices, 2012 and 2014 • Salty Snack Sales Reached $5.6B in 2014, » Popcorn Experienced the Largest Growth of the Increasing 15% Since 2009, Likely Attributed to Snacking Segments, Increasing 21% From 2009-2014 More Frequent Snacking Occasions with 34% Expected Growth Through 2019, Likely Due • Mintel Predicts the Category will Grow 21% to Consumer Desire for “Better-For-You” Options and From 2014-2019 Newly Trending Flavors Source: Salty Snacks – US – January 2015 Mintel Report 3 Ready-To-Eat Popcorn Outpaces Category Growth Outpacing category growth by 4x! Total U.S. Sales Growth Versus YAgo Salty Snack Category, Segments Dollar Sales % Chg YAgo Unit Sales % Chg YAgo 13.9% 8.9% 7.0% 5.5% 5.1% 3.1% 3.4% 3.6% 2.0% 1.8% 1.3% 0.2% 0.5% 0.2% 0.2% 0.2% (2.3%)(2.6%) PRETZELS PORK RINDS PORK CHIPS SNACKS CORN POTATO CHIPS POTATO CHEESE SNACKS CHEESE OTHER SALTED OTHER READY-TO-EAT TORTILLA CHIPS) TORTILLA TORTILLA/TOSTADA CATEGORY - SALTY - CATEGORY SNACKS (NO NUTS) (NO SNACKS CORN SNACKS (NO SNACKS CORN POPCORN/CARAMEL Source: IRI Reviews – Total US MULO- Latest 52 WE Jan 24, 2016 4 Trending . “Snacking is a $1.2 trillion “Sixty-seven percent of market, and it's growing Popcorn – long dismissed as Americans are skeptical of everywhere around the a mature and rather boring the health claims they see world.” – Chicago Tribune, packaged food category on products. Although 2016 with minimal growth health is important, 63 potential – has burst back to percent agree that life. The resurgence is not in indulgent foods that are “Health-conscious the mainstream microwave not all that healthy are consumers still seek sweet popcorn market or movie sometimes worth it snacks. Snacking is at an bucket this time, but in the anyway.” – CPG Matters, all time high . [and are] pre-popped ready-to-eat 2016 seeking out healthier or (RTE) popcorn segment.” – better-for-you versions of PR Newswire, 2016 their favorite sweets.” – “Health is top of mind for BakingBusiness.com, 2016 consumers, but so is indulgence . “Portion control is increasing Manufacturers should “Small is beautiful. ‘Big’ isn't in popularity with American balance their offerings what it used to be. consumers.” – USA Today, between health and Consumers are showing their 2015 indulgence to meet growing love for smaller consumers’ wide variety brands and products from of product preferences.” – smaller companies. – CPG Mintel, 2015 Matters, 2016 5 WalMart and Cracker Jacks Consumer Demographics Gender Gender Education Female/Mom Female WM: (Pen. 23.2%, Index 110) (Pen. 55%, Index 104) CJ: (Pen. 1.8%, Index 113) Education Income Income High School – (Graduated) <$24,999-$49,999 WM: (Pen. 20.7%, Index 104) $75-200K+ (Pen. 43%, Index 125) WM: (Pen. 13.4%, Index 105) CJ: (Pen. 1.7%, Index 114) CJ: (Pen. 1.4%, Index 150) Marital Status Children Race Children: Any Married WM: (Pen. 11.3%, Index 106) (Pen. 50%, Index 108) CJ: (Pen. 1.0%, Index 124) 6 Source: Simmons Summer 2015 NHCS Adult Study 06-month – 02/01/2015 – 09/02/2015 Cracker Jacks Has The Third Highest Penetration Among Top Performing Brands At Walmart… Trial : 6.7% Repeat : 6.8% Overall: 13.5% Trial: 1.1% Repeat: 0.4% Overall: 1.5% Source: CSIA – Total US – Walmart - Latest 52 WE Jan 24, 2016 7 …But Sales Are Suffering From A Loss Of Buyers Could possibly suggest consumers are switching to alternative RTE popcorn brands Buyers Change vs Product Current YA READY-TO-EAT POPCORN/CARAMEL CORN 16,398,172 (203,057) CRACKER JACK 1,825,675 (302,282) SIGNATURE BRANDS 1,871,270 SKINNYPOP 877,854 724,062 SMARTFOOD 3,931,404 1,139,814 SMARTFOOD DELIGHT 1,122,438 625,556 Source: CSIA – Total US – Walmart - Latest 52 WE Jan 24, 2016 GOURMET SELECT 8 1,347,484 12,407 Which RTE Popcorn Brands Are Driving Growth? 1. Seasonal Top 5 brands own 2. over 50% of total Better segment share For 3. You Share Dollar Share Dollar Share 4. Growth Segment/Brand of Type Chg of Type Rank YAgo 1 SIGNATURE BRANDS 10.2 10.2 Gourmet 2 SMARTFOOD 24.2 7.6 5. 3 SKINNYPOP 6.0 5.0 4 SMARTFOOD DELIGHT 4.1 1.4 5 GOURMET SELECT 6.7 1.1 6 CAPE COD 3.3 0.3 7 KATHY KAYE 2.7 (0.8) 8 CRACKER JACK 4.4 (1.3) 9 CRUNCH N MUNCH 11.2 (3.1) 10 POPCORN INDIANA 5.0 (7.9) Source: IRI Reviews – Walmart Corp RMA - Latest 52 WE Jan 24, 2016 9 What Merchandising Activity Do The Top Brands Employ? Most competitors experience the largest causal gains due to Display and TPR Cracker Jacks % Dollars, DISP Only % Dollars, Prc Red Only % Dollars Incremental: 23.3% 7.3% 22.3% % Dollars, DISP Only 24.7% % Dollars, DISP Only % Dollars, Prc Red Only % Dollars Incremental: 19.9% 12.4% 14.7% % Dollars, Prc Red Only % Dollars, DISP Only % Dollars, Prc Red Only % Dollars 15.0% Incremental: 39.2% 26.9% 31.1% % Dollars % Dollars, DISP Only % Dollars, Prc Red Only % Dollars Incremental: Incremental: 22.7% 24.3% 8.6% 11.1% % Dollars, Prc Red Only % Dollars, DISP Only % Dollars Incremental: 9.0% 3.1% 6.7% Source: IRI Reviews – Walmart Corp RMA - Latest 52 WE Jan 24, 2016 10 Recommendations 11 Cracker Jack Consumers Favor Unhealthy Goods Top 15 Unique Basket Items SNYDER OF BERLIN (121) AUNT SWEETIE'S BAKERY (121) BUD ICE (120) CLOVERHILL BAKERY (119) TANG SS (119) MEDALLION (119) MILLER GENUINE DRAFT (119) KEYSTONE LIGHT (119) NATURAL ICE (119) BUDWEISER (118) COUNTRY RICH (118) BUSCH (118) NICKLES (118) PET - IC (118) NECCO MIGHTY MALTS (118) Source: Spectra Expanded CAM Household Demographics / Total Dollars / Penetration 12– W/E 01/17/2016 Households With Children Seek Convenience, Portion-Controlled Salty Snacks • These households are also more likely to look for individual portion sizes (22%) and 100 calorie packs (15%). • They are also more prone to buying product advertised on social media/networking websites (WM: Index 113, CJ: Index 104) FIGURE 6: BEHAVIORS RELATED TO SALTY SNACKS, TOP FIVE, OCTOBER 2014 “Which of the following statements about salty snacks, including popcorn, pretzels, and cheese-flavored snacks, do you agree with?” Source: Salty Snacks – US – January 2015 Mintel Report Simmons 6-Month Study 13 Direct Merchandising Recommendations • Implement a support pallet in action alley that splits halfway with either beer (Bud Ice) or soda (depending on state restrictions) – Place pallet adjacent to bakery/bread items because Cracker Jack consumer buys all of these products in one trip • Implement a sidecap in the powdered beverage aisle where cross-merchandising is possible • Reassess distribution of top-selling SKU’s Norwalk, CT store: 14 How To Grow Dollar Sales & Share • Implement the use of Price Pack Architecture – Innovate packaging to increase consumer awareness and willingness to buy – Cracker Jack is already innovating packaging to convey patriotism and stand out in-aisle • Use 12 smaller portion-controlled, to-go bags in a larger bulk, “family size” bag – Price it at $3.99 (Smartfood is at $3.98) • Positions Cracker Jack as premium brand • Gives consumers exactly what they want • If low prices were effective, they’d be working • EDLP model takes advantage of consumer naivety • Weber’s Law • “Power of number 9” • With increase in incremental dollar, an opportunity exists to build an emotional consumer connection with a new generation of shoppers – Social Media opportunities – Better advertising – The most efficient way to grow business 15 Food for Thought . “Celebrating 120 years with 120 calories.” 16 Estimated Retailer Volume/Cost During 10 Week Ad Suggested Regular Retail: $1.99 Suggested Roll Back: $1.74 Discount: $ 0.25 % Price Discount: 13% Estimated Total Units Sold: 79,077 Units per Week Estimated Total Price Discount Cost: $19,769 Ad & Display Cost: $ 681,400 Social Media Boost: $ 3,000 Total Other Cost: $ 684,400 Estimated Base Units: 60,707 Units Sold Per Week Estimated Incremental Units: 18,370 Units Sold Per Week Estimated Lift: 30% Estimated Total Promotion Units Sold: 869,847 Units Estimated Total Promo Cost: $ 901,861 Estimated Total Dollar Sales During Promotion: $1,569,238 17 Questions? 18 Appendix 19 Top Brand Performance, Distribution, & Pricing Avg Avg Weekly Avg Avg Avg Dollar Unit Sales Weekly Items Base Weekly Promoted Weekly Dollar Sales Sales % Unit Sales % Chg Items Per Price ACV Wtd Price Per ACV Wtd Chg YAgo YAgo Per Store Per Unit Dist Chg Unit Dist Store Chg YAgo YAgo READY-TO-EAT POPCORN/CARAMEL CORN $145,507,984 10.0% 58,850,576 (1.4%) 27.4 1.6 $2.56 $2.58 100.0% (0.0) GOURMET SELECT READY-TO-EAT POPCORN/CARAMEL CORN $9,742,265 31.2% 1,979,617 12.8% 4.7 1.3 $5.05 $4.77 17.5% (8.3) CRACKER JACK READY-TO-EAT POPCORN/CARAMEL CORN $6,445,387 (14.4%) 3,575,725 (20.2%) 2.4 -0.7 $1.91 $1.99 96.4% (1.5) SMARTFOOD READY-TO-EAT POPCORN/CARAMEL CORN $35,278,376 60.2% 13,759,711 44.8% 3.5 0.5 $2.67 $2.78 98.2% 4.2 SMARTFOOD DELIGHT READY-TO-EAT POPCORN/CARAMEL CORN $6,018,157 67.9% 1,888,306 85.2% 1.7 0.1 $3.52 $3.06 66.0% 18.1 SIGNATURE BRANDS READY-TO-EAT POPCORN/CARAMEL CORN $14,799,365 1410282.0% 2,980,949 1635388.6% 5.9 5.5 $5.13 $4.76 18.6% 18.5 SKINNYPOP READY-TO-EAT POPCORN/CARAMEL CORN $8,683,110 593.3% 2,793,337 639.6% 1.8 0.4 $3.14 $2.82