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2019 New Product Pacesetters INNOVATION BEFORE the “NEW NORMAL”

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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 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2 Today’s Discussion 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 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 3 25th Anniversary New Product Pacesetters • 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 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 4 New Product Pacesetters Criteria 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 c © 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 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 9 Shark Tank Effect: Solid Products Bolstered by Endorsement, Expanded Distribution 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 Media Spend Source: Kantar Media © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 11 New Brand: No Budget. Bang Energy 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 Source: 2019 IRI EconoLink Segments © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 14 EconoLink is Based on Personal Financial Situations, Attitudes 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 Source: IRI 2020 New Products Survey © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 16 Who are Avid Early Adopters and Why are They Important? • 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 Source: 2019 New Product Pacesetters © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 18 Strategy Success Stories 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 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 19 Consumers Have an Appetite for Healthy Attributes 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 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 20 Top 10 Pacesetters 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 © 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 21 Top 10 Pacesetters 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
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