2019 New Product Pacesetters INNOVATION BEFORE the “NEW NORMAL”

2019 New Product Pacesetters INNOVATION BEFORE THE “NEW NORMAL”

Joan Driggs and Larry Levin

June 2020 Today’s Presenters

JOAN DRIGGS LARRY LEVIN Vice President EVP, Market and Thought Leadership Shopper Intelligence

New Product Pacesetters is developed with tremendous input from IRI colleagues: Ryan Stredney, Senior PR Analyst, Marketing and Claudia Burgos, Client Insights

1 – 25th Anniversary Pacesetters 2 – Big is Back 3 – From Specialty to Mass 4 – Telling the Story 5 – Who is Buying What, and Why 6 – Strategy Success 7 – Pacesetter Scorecard

• 25 years of IRI tracking new product innovation • Identifying the successes of today (New Product Pacesetters) and tomorrow (Rising Stars) • Future insights based on historical data to invent and reinvent categories • Ultimate benchmark in successful innovation

New Products Top30%+ 30%100Existing Brand DistributionDistribution Brand Launches Newthat or Completed Extended TheirBrand Startsinatin F&BYear athe New -and 1Clock Completion Category Non on-Food Year-1 First Year in 2019

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 5 2018 2019 2% 5% 5% 11% 4% 7% 9% Big is Back: 33% 17% Blockbuster 20% 25% Rebound 15% 8% $100+ in 2019 14% $60-$100 24% $40-$60 $20-$40 The Impact of 22% 66% <$20 $100MM+ Launches is 58%

Clearly Accentuated in 33% 2019’s Dollar Share 23%

% of Pacesetter % of Pacesetter % of Pacesetter % of Pacesetter Dollars Products Dollars Products

Note: Numbers may not add to 100% due to rounding. Source: IRI Market Advantage™ © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 6 $100 Million+ Blockbusters Are a Small Percentage of New Product Launches, But They Make a Huge Impact Ten Products in Multi-Outlet Channels Achieved Sales of $100MM+; Eight Products Achieved Blockbuster Status, Marking a Major Shift Among Pacesetters

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 7 Medium-Sized Companies are Caught in the Middle Innovation From Big and Small Companies Puts Pressure On Medium Companies to Get the Distribution Just Right – Everywhere Isn’t Always The Answer % of Total Count % of Total Dollars

4% 8% 8% 7% 12% 13% 10% 12% 15% 14% 14% 11% 23% 23% 29% 16% 19% 38% 37% 19% 26% 26% 34% 34% 41% 28% 37% 22% 30% 49% 30% 27% 46% 44% 35% 38% 35% 31% 30% 23% 62% 60% 52% 49% 52% 43% 46% 36% 31% 28% 26% 26% 24% 19% 20% 19%

2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019

Big Companies >$5.5B Medium Companies $1B - $5.5B Small Companies $100M- <$1B Extra Small Companies <$100M

Source: 2019 New Product Pacesetters © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 8 The Road from Specialty to Mass: Leverage Specialty Brands for Mass Appeal Critical to Maintain Unique, Targeted Appeal; Focus on Appropriate Distribution, Appropriate Merchandising

Three 2019 New Product Pacesetters Boast the “Shark Tank” Effect, 53% of 2019 Pacesetters Gaining the Support Needed to Thrive in a Broad Marketplace → small companies Innovation + flexibility = strong likelihood of success Shark Tank mentality requires a niche product to have broad recognition Niche innovation can translate to large $$$

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 10 Telling the Story: Big Brands Tend to Have Big Marketing Budgets ~25% of sales dollars are Traditional brand marketing is not always the right often spent on approach. Social media platforms play a HUGE advertising to role, garnering uncalculated exposure. support significant brand launches

Gatorade 1.2MM Instagram Followers

#fans #influencers

Traditional brand marketing is not always the right approach. Social media #1 F&B Pacesetter platforms with Only ~$2K on play a Traditional Media HUGE role, garnering uncalculated exposure. 1.5MM Instagram Followers

Media Spend Source: Kantar Media © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 12 Who is Buying What, and Why Not a New Concept: Build the Right Product, Give it the Right Attributes, Put it in the Right Place, Get it to the Right Consumer

• IRI EconoLink segmentation buckets six groups of consumers to explain: – Mindset – Behaviors – Economic perspectives • Invaluable tool to understand how economic outlook impacts consumer behavior toward new products

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 13 EconoLink® Segmentation Spectrum EconoLink Identifies Which Shoppers Are Gravitating to Products, Attributes, But Now There’s a New Lens: COVID-19

Cautious & Savvy Downtrodden Start-Ups Optimistics Carefree Worried Shoppers 9% 23% 10% 30% 13% 15%

MINDSET = CAUTIOUS / NEGATIVE MINDSET = POSITIVE / OPTIMISTIC Economically Fragile & Cautious & Negative Economically Stable & Positive

About Economic Conditions and Shopping,\ and Known Behavior

INFO SEARCH

PRODUCT USAGE Demos Views on TRIP Financial Economy PREPARATION Situation & & Gas Outlook prices

Purchase: Attitudes Channel, toward BRAND Aisle & Shopping & Deals Lifestyle CHOICE STORE

SELECTION SEGMENTATION INPUTS SEGMENTATION

IN-STORE INFLUENCES

Note: Distributions may shift slightly due to static, timing and type of analysis being run © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 15 Consumer Survey: Consumer New Product Survey Avid Early Adopters New Product Enthusiasts Laggard Gauging Consumer Enthusiasm for 7% New Products 17% 2019 Combining New Product Pacesetter 76% consumer survey results with EconoLink segmentation, we gauge new product enthusiasm. 8% The connection between new product adoption and economics is IMPORTANT 17% 2020 Results point to a powerful consumer 75% group: Avid Early Adopters

• Mid-40s • Kids at home • Moderate income levels • Willing to take some risks • Small, but mighty → only 8% of population, but highly committed to new products • One in 12 U.S. consumers see themselves as Avid Early Adopters

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 17 Downtrodden Cautious and Worried Start-Ups Optimistics Not all Early Carefree Savvy Shoppers Adopters Share 14% Economic Outlook 15% 19% 16%

13% Critical to know where and how to focus 18% 13% 19% as the commitment to new products is

shared among Early Adopters, but not 31% 27% 31% 25% the economic confidence

10% 8% Understanding the distinctive economic 14% 14% mindsets and underlying financial 22% 24% conditions that drive early adoption 12% 18% behavior is critical for product 9% 11% 8% 9% innovation decision-making Total Avid Early New Product Laggard Respondents Adopter Enthusiast 2020

ENFAMIL NEUROPRO #2 Food & Beverage Pacesetter • $230M+ in MULO • Imitates mother’s milk more closely than any product • Huge market potential: parents • Revolutionary nutrition advancement in R&D

SCHMIDT’S Niche Brand, Big Reach • 2018 acquired by Unilever • Grabbed mass distribution; $26M+ in MULO • Established brand and grew • Lifestyle brand for consumers with strong commitment to natural

3 of Top 10 and 25 of Top 100 F&B Pacesetters → non-GMO benefits

2 of Top 10 and 25 of Top 100 Non-Food Pacesetters → Natural / Simple Ingredients

ENERGY DRINKS BABY FORMULA SPORTS DRINKS SPARKLING WATER FRESH BREAD & ROLLS Arnold/Brownberry Bang Enfamil G Zero Bubly /Oroweat Vital Pharma NeuroPro PepsiCo PepsiCo Sandwich Thins 1 $299.4 M 2 Reckitt Benckiser 3 $154.4 M 4 $116.3 M 5 Grupo Bimbo $230.5 M $103.2 M

BEER SALTY SNACKS SNACK BARS & WEIGHT CONTROL FROZEN PROCESSED POULTRY TOASTER PASTRIES Corona Cheez-It SlimFast Perdue Pop-Tarts Premier Snap’d Keto Simply Smart Bites Organics 6 Constellation 7 Kellogg’s 8 Glanbia 9 10 Kellogg’s Brands Perdue Farms $88.7 M $76.2 M $68.3 M $101.8 M $70.7 M

PET FOOD TOOTHPASTE TOILET TISSUE SHAVING & PERSONAL CARE DIAPERS & BABY WIPES Blue Colgate Scott Harry’s Pampers Buffalo Total SF ComfortPlus Harry’s Pure 1 General Mills 2 3 Kimberly-Clark 4 5 Colgate Palmolive $169.8 M Collection $313.3 M $241.6 M Procter & Gamble $243.1 M $72.4 M

TOOTHPASTE & MOUTHWASH COFFEE MAKER CAT LITTER EYE CARE EXTERNAL ANALGESIC RUBS Crest Gum Keurig Fresh Step LUMIFY Theraworx Collection K-Select Clean Paws Bausch + Relief Lomb 6 Procter & Gamble 7 JAB Holding 8 The Clorox 9 10 Avadim Health Company Company $62.1 M $48.2 M $47.1 M $55.0 M $48.8 M

ELECTRONIC SMOKING DEVICES ENERGY DRINKS HARD SELTZER ELECTRONIC SMOKING DEVICES CIGARETTES JUUL Bang White Vuse Marlboro Juul Labs Vital Pharma Claw Alto Ice 1 $2,354.6 M 2 $723.6 M 3 Mark Anthony 4 British 5 Altria Group American Tobacco $189.0 M $344.8 M $225.6 M

ENERGY DRINKS ELECTRONIC SMOKING DEVICES SPORTS DRINKS ELECTRONIC SMOKING DEVICES CANNED JUICES Red Bull Vuse G Zero Myblu Mtn Dew Amp Coconut Ciro PepsiCo Imperial Game Fuel Brands 6 Red Bull 7 British 8 $136.5 M 9 10 PepsiCo North America American Tobacco M $91.2 $86.3 M $141.3 M $136.7 M

• Rising Stars on path to Pacesetters, but… COVID-19 • Major market disruption • However, they reflect lasting trends: – Treating pets like family – Indulgence – Energy to get through rigors of daily life

Food & Beverage Rising Stars LISTED ALPHABETICALLY Energy Drinks Are Powering Their Way to Pacesetter Status

Monster Energy My/Mo Planet Oat Red Bull Peach Reign Ultra Paradise Mochi Ice Cream HP Hood Edition Monster Beverage Monster Beverage Company Milk Red Bull North Energy Drinks Energy Drinks Frozen Novelties America Energy Drinks

Ruffles Double 7 Smithfield Prime Spindrift Talenti Gelato Wonderful No Shells Crunch Fresh Delicatessen Spindrift Layers Flavored Pistachios PepsiCo Smithfield Foods Beverage Co. Unilever The Wonderful Salty Snacks Luncheon Meats Sparkling Water Ice Cream Company Snack Nuts

Non-Food Rising Stars LISTED ALPHABETICALLY Pet Products Are Well Poised for Pacesetter Status

Greenies L’Oréal Infallible Mr. Clean Native Neuriva Mars Fresh Wear Clean Freak Procter & Gamble Reckitt Benckiser Pet Treats L’Oréal Procter & Gamble Deodorant & Personal Vitamins Facial Cosmetics Household Cleaner Care

Pampers Cruisers 7 Sensodyne Pronamel Swiffer Pet Tidy Cats Viva Multi-Surface 360° Fit Intensive Enamel Procter & Gamble Free & Clean Cloth Procter & Gamble Repair Cleaning Tools Nestlé Kimberly-Clark Diapers GlaxoSmithKline Cat Litter Paper Towels Toothpaste

• Historical Precedent from Past Recessions • Current Momentum – Sustainability – Natural – Health and Wellness – Indulgence • Guide Future Innovation – Personal Health and Safety – Economic Considerations

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 27 Premiumization was a With a Recessionary Response Fueling “Value Key Winner in 2008-2010, for the Money” Creating Better-Life Experiences

Top New Product Pacesetters delivered IN-HOME PROFESSIONAL QUALITY at premium prices.

An array of at-home DIY SERVICES including nail care, dental care and skin care products were an AFFORDABLE TRADE-OFF to professional services.

Source: IRI New Product Pacesetters Archived Reports. © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 28 Multi-Serving Products Were Not Only Focused on Price Value; Many Were Led by New Technology to Create a More Premium Experience

Multi-serving products helped consumers see VALUE FOR THE MONEY, but often delivered a MORE PREMIUM PRODUCT, including Bertolli’s Oven Bake Meals and Stouffer’s Easy Express. Technology supported advancements in microwaveable fare. Plant-based dairy alternatives and a new wave of enhanced beverages also emerged.

CO-BRANDED, MULTI-BENEFIT PRODUCTS were embraced by consumers looking to consolidate purchases during the recession.

DUAL-FUNCTION PRODUCTS were, and continue to be an important innovation platform to fuel consumers’ need for SPEED AND EFFICIENCY.

Premiumization More is More Brand Expandability Pack Size Innovation Private Label The Great Recession saw Multi-serve food products Leverage brand equity to Package innovation can High quality private a new product evolution satisfied a financial need expand into adjacent be just as important in a brands are an important that brought professional with high quality food and categories and make the recession as brand new innovation platform as services home, including indulgent products. most of growth pockets. products. Estimate the retailers enhance their restaurant-branded Products trending now Alcohol has been demand for multi-pack, commitment to shoppers. frozen entrées and include multi-serving multi-serving or larger identified as a category Emerging categories teeth whitening. premium chocolates and sizes as a way to answer ripe for innovation. include plant-based meats For the current recession, non-chocolate candy. Traditional spirit brands consumer demand. Beer and dairy alternatives, as and cereal are just two premiumization will take Multi-function laundry and can adapt to at-home well as CBD products. examples of recent large the form of restaurant- home care with sanitizing cocktail machines a la quality meals for home properties and perceived Keurig Drinkworks, or pack innovation shifts that feed a need to consumption and convenience will become develop branded frozen “pantry stock.” personalized DIY kits increasingly important in slushy concoctions. for services including the coming months. hair treatments, nail care and color.

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