New Product Introductions November 2019 NEW PRODUCTS REPORT | 2019 1 Contents • Objectives and Approach • Executive Summary & Metrics Dashboard • New Product Introductions Topline - Total U.S. - Honey & Competing Sweeteners • Introductions by Category - Cereal and Bars - Bakery - Alcoholic Beverages - Sugar and Sweeteners - Spreads - Sauces & Seasonings (new) - Cold Beverages NEW PRODUCTS REPORT | 2019 2 2019 Report Objectives & Approach • Objective: Track new product introductions to assess honey’s role and inclusion in product innovation. • Approach: Report on the following KPI’s as identified in the strategic plan: • Total New Product Introductions with honey • Honey’s share of key category introductions: - Cereal - Bakery - Spreads - Sweeteners - Alcoholic Beverages - Sauces & Seasonings - Cold Beverages • For all categories we will report: - Total number of products with honey - Percent change of products with honey from the previous year - Honey’s share of category introduction NEW PRODUCTS REPORT | 2019 3 Methodology & Considerations How to read this report: • This report includes the following core honey derivatives (among other nuance forms not listed, within specific categories): - Honey Flavor - Natural Honey Flavor - Pure Honey • Data is based on new introductions only (distribution or sales is unknown); therefore, the findings should NOT be used to project volume. • New honey product introductions are tracked where honey (and the derivatives above) are listed as an ingredient, with the exception of the alcoholic beverage category. • Because many alcoholic beverages do not list ingredients, this section tracks all products that state the word “honey” anywhere on pack. For this reason, honey introductions in this category may be slightly overstated as honey is often used to describe the color or smell of a product when it in fact, does not include honey as an ingredient. • Innova also does not capture all craft brewery introductions as brands may not distribute at major retailers. • Indicates data reflects national new product introductions • Indicates data reflects new product introductions with honey NEW PRODUCTS REPORT | 2019 4 Methodology & Considerations Data in this report is obtained from Innova Market Insight Food & Beverage Database (Innova). About Innova: Database Optimization: Innova is the world’s biggest food industry database and Data in this report is updated year over year, and contains over 120 million unique records on food absolute numbers shift as Innova performs general products, brands, ingredients, claims, packaging, etc. database maintenance. Over 275,000 new products are added to the database For example, the sugar and sweetener category was every year. revised in 2017 to include more synonyms for sweeteners Innova monitors 78 major markets in detail and has full- and ingredients with multiple names. This expands the time employees in all major markets reporting on trends number of products appearing in any given search for as well as undertaking store, product and brand honey. assessments. Innova also created 65 new product subcategories from August 2018-Feb 2019 for the benefit of our users, in order to present the data in a more granular and insightful way. Definitions were updated to existing product subcategories, as categories are also dynamic, and they have to track and capture the changes. NEW PRODUCTS REPORT | 2019 5 Executive Summary NEW PRODUCTS REPORT | 2019 6 New Product Introductions Total new product introductions in the U.S. experienced its highest growth since 2014. Manufacturers & retailers are continuing to invest in developing new products, more so than last year. Indicating opportunities to present unique solutions to drive growth through innovation. NEW PRODUCTS REPORT | 2019 7 New Honey Introductions New products with honey represent a 3.8% share of all introductions in 2018. This is a slight decline in honey introductions and share, down from 4.3% in 2017. There is a is significant opportunity to source volume from other new product introductions in strategic categories. NEW PRODUCTS REPORT | 2019 8 Key Category Movement We see a lot of innovation progress in key categories essential to honey, such as bakery, sauces, alcoholic beverages (each 8-9% of all NP introductions). Additionally, snacks, cold drinks and to a lesser extent cereal reflect 3-6% of all NP launches. Unfortunately, new products with honey are down year-over-year in all these categories, except alcoholic beverages. In many cases we are competing with granulated/cane sugars and we are seeing Stevia, Maple Syrup, or other carb neutral sweeteners (Monk fruit and Coconut Sugar) gaining share. Honey is a natural, better for you sweetener vs. many of the new entrants, we need to re-establish our value to gain back lost New Product share. NEW PRODUCTS REPORT | 2019 9 Implications 1. Honey is losing new product share in many of the top categories where we have historically shown strength, we need to refocus efforts on cereal, bakery, and cold drinks. 2. In the bakery category specifically, there is crossover within snacking (e.g., crackers, cookies, etc.) making this category increasingly more important to focus on. 3. Opportunity to capture more share in sauces & seasonings and snack categories as both are categories with high share in new introductions for total food and honey. 4. Besides sugar, honey’s competition is primarily coming from stevia, maple syrup, and monk fruit. This aligns with the trends today as low-calorie sweeteners continue to grow in popularity. NEW PRODUCTS REPORT | 2019 10 Honey Share of Categories Share of All Share of all Category % Honey % Sweetener Growing Sweetener Category Honey Food Intros Change Change Competitor Competitor Introductions Sugar – Granulated, Bakery 9.8% 2% 16.4% -4% Stevia & Maple Syrup Cane & Brown Sauces & Sugar – Granulated, 8.8% 2% 8.4% -1% - Seasonings Cane & Brown Cereal 3.7% 3% 22.1% -7% Granulated Sugar Stevia & Coconut Sugar Sugar – Granulated, Snacks 6.7% 12% 8.4% 10% Maple Syrup & Stevia Cane & Brown Cold Drinks 6.2% 20% 4.6% -17% Sugar & Stevia Monk Fruit Maple Syrup & Brown Spreads 2.2% 9% 8.3% 18% Granulated Sugar Sugar NEW PRODUCTS REPORT | 2019 11 Metrics Dashboard – 2017 Data Updated with 2018 Report Key Tracking Metrics YOY Key Tracking Metrics YOY 2017 2018 2017 2018 New Products with Honey Sauces and Seasonings with Honey Total New Product Introductions with Honey 1734 1667 Hot Drink Products with Honey 141 140 Percent Change from Previous Year +4% -4% Percent Change from Previous Year -10% -1% Share of Total U.S. Introductions 4.3% 3.8% Share of Category Introductions 3.6% 3.6% Cereal with Honey Cold Drinks with Honey Cereal Products with Honey 396 369 Cold Drink Products with Honey 92 76 Percent Change from Previous Year +13% -7% Percent Change from Previous Year +39% -17% Share of Category Introductions 24.7% 22.3% Share of Category Introductions 4.0% 2.8% Bakery with Honey Sweeteners with Honey Bakery Products with Honey 283 273 Sweetener Products with Honey 6 3 Percent Change from Previous Year +8% -4% Percent Change from Previous Year -40% -50% Share of Category Introductions 6.9% 6.6% Share of Category Introductions 3.1% 1.9% Spreads with Honey Alcoholic Beverages with Honey (honey anywhere on pack) Spread Products with Honey 114 138 Alcoholic Beverages with Honey 224 244 Percent Change from Previous Year -21% +18% Percent Change from Previous Year -12% +9% Share of Category Introductions 13.0% 14.4% Share of Category Introductions 7.3% 6.8% NEW PRODUCTS REPORT | 2019 12 Deep Dive NEW PRODUCTS REPORT | 2019 13 Total New U.S. Products Total New Honey Products NEW PRODUCTS REPORT | 2019 14 National Food Introductions In 2018, total new product introductions in the United States saw a 10% increase from 2017. Total U.S. Introductions (2012-2018) 44,229 40,813 40,188 37,873 36,162 27,070 28,308 2012 2013 2014 2015 2016 2017 2018 % Change YOY 5% 28% 5% 8% -2% 10% NEW PRODUCTS REPORT | 2019 15 National Food Introductions – By Category Beverages and snacks experienced double digit new product introductions vs YA. These categories, in addition to bakery, sauces, and to a lesser extent cereals are launching ~ 3.000-4000 new products annually. U.S. Food Introductions by Category: Change from 2017-2018 Share of All % Change New Category 2012 2013 2014 2015 2016 2017 2018 2017-2018 Introductions in 2018 Bakery 2,671 2,603 3,509 3,767 3,664 4,091 4,160 2% 9.4% Sauces & 1,641 2,188 2,843 3,691 4,134 3,806 3,879 2% 8.8% Seasonings Alcoholic 1,499 2,094 2,202 1,764 2,816 3,064 3,593 17% 8.1% Beverages Snacks 1,471 1,406 2,063 2,560 2,446 2,625 2,951 12% 6.7% Cold Drinks 1,703 2,616 2,490 2,497 2,353 2,280 2,735 20% 6.2% Cereals 1,053 985 1,434 1,510 1,621 1,606 1,656 3% 3.7% Desserts & Ice 1,125 996 1,141 1,189 1,206 1,178 1,275 8% 2.9% Cream Spreads 473 520 798 913 887 878 959 9% 2.2% Sugar & 109 150 198 228 193 193 159 -18% 0.4% Sweeteners Total 27,070 28,308 36,162 37,873 40,813 40,188 44,229 10% 100.0% NEW PRODUCTS REPORT | 2019 16 National Honey Introductions New honey product introductions experienced a slight decline in growth in 2018 (-4% pts). U.S. Honey Introductions (2012-2017) 1,690 1,666 1,734 1,667 1,515 1,070 1,003 2012 2013 2014 2015 2016 2017 2018 % Change YOY -6% 51% 12% -1% 4% -4% NEW PRODUCTS REPORT | 2019 17 National Honey Introductions Of the ~44,000 new products introduced in 2018, ~4% (1,667) had honey as an ingredient, a slight decline from 2017.