CPG MARKET REVIEW AND OUTLOOK - iriworldwide.com

Part December

2021

CPG MARKET REVIEW AND OUTLOOK

Discovering Pockets of Demand 03

2© 2021 Information Resources Inc. (IRI). Confidential and Proprietary.

Executive SummaryIn this report, IRI looks back at consumer behavior and market forces

that shaped 2021 and provides an outlook for an inflationary 2022.

KEY 2021 TRENDS

• At-home CPG consumption remains strong compared to pre-pandemic levels. Away-from-home consumption improves with mobility, yet remains below 2019 levels.

• Price / mix rises steadily throughout 2021, initially due to mix shifts and reduced deals; and by year end, due to larger everyday price increases. In edible, price / mix increases offset slight volume / unit declines vs. 2020.

• Many large companies announce additional price increases to account for rises in commodity, production, packaging, transportation, and labor costs. As a result, the largest $1B+ brands outperform in 2021.

• Leading brands retained more penetration gains from COVID-19. We see evidence of increasing price sensitivity, notably where price increases are significant, such as in meat categories.

• Low-income consumers and younger cohorts continue to drive growth in CPG due to remote and hybrid work and suburban living.

• The club channel continued to grow sales and buyers, but grocery lost share as shoppers returned to stores and mass channel regains traction. Convenience channel rebounds. E-commerce continues to grow but at a slower rate than 2020.

• Consumption of breakfast, convenient meals and self-care products remains elevated, while personal care and on-the-go foods recover.

2022 OUTLOOK

• Price will drive growth in 2022, as increasing mobility and inflation puts downward pressure on at-home consumption volume. Look for balanced growth across price tiers, including mainstream and value tiers. To gain unit and volume share, CPGs and retailers will promote more often; pre-COVID-19 price cut discount levels will take a while to return.

• Away-from-home and on-the-go consumption will continue to increase. Trends of convenience, particularly around meal solutions, will continue. Demand for on-the-go options will increase. Self-care and home care will remain priorities.

• Consumers seek value in an inflationary environment and value channels and value retailers will gain share.

• Continued investment in digital vs. store assortments, including speed of delivery and consumer experience, will drive incremental share gains. Pure-play e-commerce and mass channel will continue to dominate nonedible sales.


The U.S. Economy Saw Healthy Spend in 2021, Supported by Stimulus and

Improving Economy; Expect Reduced Stimulus and Increased Costs in 2022

U.S. Macroeconomic Indicators

2021 Observations &

2022 Macro Outlook

• Tight labor market and

rising wages likely to

continue in 2020;

however, high inflation

counters real growth.

• Ending most pandemic

assistance in 2H 2021

will lead to reduced

income for 2022.

• Increased spend in

2021 expected to revert

to non-CPG areas (e.g.,

healthcare, education and

other services) in 2022.

• Some supply chain

disruptions will continue

into 1H 2022.

Actual Forecast

1. IRI Estimate for 2022. Note: 2021 projected from 2021YTD ending 10/3/21. Source: FRED, BEA, BLS, Moody’s baseline forecas t. IRI Executive Insights.

4.53.8

7.46.2

0.3

3.0

2019’13-’18

CAGR

2020 2022 2H2021YTD 2022 1H

Disposable Income — % Change vs. YA

Unemployment Rate — %, Seasonally Adjusted

5.6

3.7

8.1

5.53.7 3.4

2019Historical

Avg.

2020 2022 2H2021 2022 1H

Personal Consumption — % Change vs. YA

2.6 2.2

-3.8

4.36.3

3.6

2022 2H2019 2020’13-’18

CAGR

2022 1H2021

At-Home Food and Beverage %

Share of Total HH Expenditures1

7.4 7.18.2 8.0 7.6 7.8

Historical

Avg.

20202019 2021 2022

(Low)

2022

(High)1.5 1.8 1.2

4.5 4.4

2.5

2022 2H’13-’18 2019 2020 2021 2022 1H

Total Inflation — % Change vs. YA


Throughout 2021, At-Home CPG Volumes

Hold Strong on a Two-Year Basis

Omnichannel, % Change vs. Pre-Pandemic

EDIBLE

NONEDIBLE

2016-19 CAGR 2019-20202021 YTD

vs. ’20

2021 YTD vs. ’19

CAGR

Q1 ‘21 vs.

‘19 CAGR

Q2 ‘21 vs.

‘19 CAGR

Q3 ‘21 vs.

‘19 CAGR

Q4TD ’21 vs.

’19 CAGR

Dollars Volume

4.3

13.1

6.49.4 8.5 10.1 9.7 10.3

2.1

8.2

1.84.8 4.3 5.4 4.7 5.3

2.3

10.5

1.9

7.6 7.3 7.5 8.0 8.4

0.9

6.8

-2.0

3.9 4.3 3.5 3.4 3.2

2021 - 2YA CAGR (vs. pre-COVID-19 baseline)2021 vs. YA

In nonedible, pure play e-commerce drives volume growth as

pet and cleaning category sales are increasing online.

Note: Dollar sales-weighted price per volume and volume change across categories. Source: IRI Omnichannel, based on actual and projected channels, data ending 10/31/21; IRI Executive Insights.


Improving Mobility Brings Away-From-Home

Consumption Close to Pre-COVID-19 Levels

Food Away From Home

% Share of Total F&B Sales

Food away from home contains restaurant (incl. delivery/takeout), cafeteria, and institution.2021 full year estimated based on historical end of year trends. Source: BLS CPI, Google Mobility Data, USDA Food Expenditure Series. IRI Executive Insights.

-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

010/1/227/1/21 10/1/21 1/1/234/1/20 7/1/20 1/1/2210/1/20 1/1/21 7/1/224/1/21 4/1/22

Workplace Mobility

% Change from Pre-COVID-19 Baseline

Hybrid and remote white-

collar work continues,

driving elevated at-home

consumption

Forecast - Moderate ActualForecast - High

Inflation in Food Away From Home

Higher Than At-Home Inflation Due to Labor Shortages

% c

hg.

vs.

Jan.

–F

eb.

2020 b

aselin

e

Most service jobs

return to on-site;

schools fully reopen

Nov.: Vaccines for

young children

approved

51.7

44.6

49.7 50.0 – 52.0

2022

Low – High

2019 2020 2021

Leisure, Travel, Retail Mobility

recover faster

Mar.-June:

Vaccines

accelerate,

reaching

~60% of pop

COVID-19

Delta


Rising Inflation


2021 Ends with High, Rising Inflation,

Crossing Key Thresholds into 2022

CPG Price / Mix per Volume % Change vs. YA / Total U.S.

1.6

3.12.2

0.21.2 1.3 1.8

3.44.6 4.6

3.64.2

6.6

8.0

4.0

2.5

1.9 2.0 2.3 1.8 1.32.3

3.44.5 4.7

5.44.3 4.2

5.0

8.0

4.0

2013

2016

2020

2017

2014

2015

2018

2019

2021

Q4T

D 2

021

H1 2

022 (

F)

H2 2

022 (

F)

2.5

Q1 2

021

Q2 2

021

Q3 2

021

Ed

ible

Key Observations

• Price / mix rises steadily throughout 2021, initially from increasing mix and shifting to larger shelf price increases by year-end.

• Many large companies continue to announce price increases in Q4 and expect to raise prices into 2022.

• In 2007, 2008 and 2011, price / mix growth greater than 5% resulted in unit / volume declines.N

on

ed

ible

Note: Dollar sales-weighted price per volume change across categories. 2007-2010 based on Grocery, Drug and Mass channel excluding Walmart. Excluding perishables. 2011-current based on total multi-outlet with Convenience, including perishables. Source: IRI POS data ending 10/31/21. IRI Executive Insights.


Promotional Investment Has Yet to Return to Pre-Pandemic Levels, But

Frequency with Lower Depth Is Seeing Higher Effectiveness as Inflation Increases

Promotion Index vs. 2019 / Grocery Channel

Edible Nonedible

2019

avg.2020 Q1 Q2 Q3 Q4TD

Investment 10% 80 79 68 71 67

Frequency 29% 82 93 88 91 87

Depth 21% 98 91 84 86 70

Effectiveness 1.5 97 94 103 101 110

2019

avg.2020 Q1 Q2 Q3 Q4TD

Investment 6% 70 71 72 71 69

Frequency 19% 74 88 88 88 87

Depth 18% 96 94 90 89 63

Effectiveness 1.8 103 87 101 101 103

2021 2021

Note: Promotion Investment is value of promo markdown as a % of dollar sales, driven by both frequency and depth of promotion. Effectiveness calculated as

incremental sales / value of promo markdown. Frequency as % of base sales sold on Any Merch. Depth as % price reduction on Any Merchandising condition.

Index vs. 2019 average Index vs. 2019 average

Note: Trends exclude perishable food. Source: IRI data ending 10/31/21 POS, Grocery. IRI Executive Insights.


Expect Increasing Price Sensitivity as Demand Softens in 2022;

Early Indications Are Seen in Some Categories in 2021

Changes in Price Elasticity – Examples of Reversion / % Change in Volume

from 10% increase in Price / Grocery Channel / Average Across PPGs

Note: Time periods based on rolling periods ending February to isolate COVID impact. Source: IRI price elasticity models. IRI Executive Insights.

-9.6

-15.0

-11.7

-7.8

-10.1

-8.4-9.6

-15.5

-10.6

SoapHousehold Cleaners Paper Towels

20202019 2021

Price Sensitivity Mostly Completely

Rebounds in Categories That Saw High Demand

in 2020 and Normalized in 2021

There Is Evidence of Rebounded — or Further

Heightened Elasticity — in Established Brand

Franchises Across 30 of the Largest CPG Categories

-12.7

-16.3

-12.3

-13.7-14.1

-15.6

Brand B

Leading Franchise Core Edible

Brand

Brand A

Multi-category Edible Brand

Franchise


Key Observations

• Premiumization accelerated during the pandemic, but shows signs of deceleration in recent weeks as inflation reaches high levels.

• Consistent trends across income cohorts:

o Despite lower share of spend on premium, low-income households shift a greater share of spend to premium throughout 2021.

o Stabilization of premium in recent periods is consistent across cohorts.

Super Premium

Premium

Mainstream

Value

Store Brands

Strong Growth of Premium Products Starts to Slow at Year-End

14.2%

19.0% 18.2%

8.4%

48.9%

8.3%

Q3 ’21

15.4%

8.7%

8.4%

18.3%

49.1%

Latest 12

WE 10/31/21

49.1%

8.8%

15.6%

Q2 ’21

18.1%

8.5%

48.9%

Pre-COVID 52

WE 2/23/20

15.8%

8.7%

9.4%

Pre-COVID 52

WE 2/23/20

24.2%

9.6%

19.0%

12.8%

33.1%

18.7%

10.0%

26.4%

11.9%

19.0%

Latest 12

WE 10/31/21

10.0%

26.4%

11.7%

Q2 ’21

18.8%

11.8%

32.7%

Q3 ’21

9.9%

32.7%34.4%

26.8%

> +0.4 Share > -0.4 Share

Edible $ Share by Price Tiers Nonedible $ Share by Price Tiers

Note: Price Tiers calculated at line extension level from Subcategory Price/Vol as Super Premium >1.5*Avg. Value, Premium > 1.25*Avg, Value < .75*Avg. Store Brands includes all private label brands across retailers and price levels. Source: IRI POS, MULO, data ending 10/31/21. IRI Shopper Loyalty, data ending 10/24/21. IRI Executive Insights.


Premiumization Shifts Are Decelerating in Categories

Where Everyday Price Increases Are More Significant

Decomposition of Price per Volume % Change vs. YA High Price Growth Categories / Latest 11 WE 10-24-21 vs. Prior 12 WE 8-8-21

2 0 2 2 T r e n d s

1.8%

7.0%

4.4% 4.1%

6.3%

2.4%

3.3%

3.3%

2.6%

2.5%

1.7%

10.5%

6.4%

4.3%

2.5%

15.0%

0.9%

12 WE

8/8/21 vs. YA

0.9%

12 WE

8/8/21 vs. YA

11 WE

10/24/21 vs. YA

11 WE

10/24/21 vs. YA

0.1%

12 WE

8/8/21 vs. YA

11 WE

10/24/21 vs. YA

5.2%

13.7% 14.1%

7.8%

9.2%

Total Price /

Vol Change

Increased

Everyday Price

Reduction in

Promotion

Mix Shift /

Premiumization

Breakfast Meats Frozen Poultry Pet Food

(-0.7)

(+5.2)

(-4.1)

(+3.5)

(-1.8)

(+4.0)

Note: Everyday price at item level. Promotions includes promotion frequency and depth (driven by frequency). Mix shift refers to different in product mix vs. YA, driven by shifts to more premium brands (positive effect) countering shift to larger pack sizes (negative effect). Source: IRI POS, Grocery channel, data ending 10/24/21. IRI Executive Insights.


Top CategoriesStore Brands

$ SharePpt. Change

vs YAInflation

Shortening and Oil 41.1% +3.8 13.3%

Fresh Eggs 59.0% +2.9 15.0%

Frozen Vegetables 50.2% +2.8 1.9%

Rfg./Frozen Poultry 32.7% +2.4 9.3%

Frozen Meat 32.7% +2.3 4.3%

Store Brands Lose Share Overall in 2021,

Yet Are Gaining in High Inflation Categories

Private label is gaining share in high inflation categories such as poultry and meat.

Store Brands Edible and Beverage and Category Trends

Weighted Dollar Share Change vs. YA*

0.60.8

0.4

0.1

-0.5 -0.5

-0.1 -0.1

Q2 ’21

PP

T. C

HA

NG

E

20182017 2019 2020 Q3 ’21 Q4TD ’21Q1 ’21

0.80.9

0.7

0.0-0.2

-0.1 0.0

2018

PP

T. C

HA

NG

E

Q3 ’2120192017 Q1 ’212020 Q2 ’21 Q4TD ’21

0.0

Top CategoriesStore Brands

Vol SharePpt. Change

vs YAInflation

Rfg. Entrées 41.7% +3.8 0.2%

Frozen Vegetables 61.7% +3.3 1.9%

Rfg./Frozen Poultry 37.1% +2.6 9.3%

Pastry/Doughnuts 35.4% +2.4 6.6%

Breakfast Meats 26.7% +2.1 17.2%

Weighted Volume Share Change vs. YA*

*Dollar-weighted share change across categories. Top categories derived from top 150 F&B categories by size for latest 12 wk. period. Inflation based on PPV vs. YA. Source: IRI POS data ending 10/31/21. IRI Executive Insights.


Changing Consumer Behaviors


Shoppers Returned to Making More Trips to Store by Mid-Year,

Reducing Items in Baskets, Yet Paying Similar Cart Totals

CPG Shopping Dynamics in 2021

14.3% 15.6% 15.7% 15.1%

15.4% 15.3% 15.5% 15.5%

16.8% 16.9% 17.4% 17.1%

53.5% 52.3% 51.4% 52.3%

L122019

Quick

Trip

2020

Fill-in

2021

Pantry

Stocking

Special

Purpose

95

100

105

110

115

3/1/2021 5/1/20211/1/2021 7/1/2021 9/1/2021 11/1/2021

Trips /

Buyer

Average

Basket $

Average

Basket

Units

Shopper Trips Baskets Index to 20191

1. Index to same quad week period in 2019. Source: IRI Consumer Panel, Total Store excluding random weight fresh. IRI Executive Insights.

Trip Mission % of Total Store Trips

High inflation leaves basket dollars

similar despite fewer items


2022 Outlook

• Low-income shoppers face increased financial pressure from federal benefit cuts.

• Millennials continue to be more mobile; Gen X will be more mobile with vaccine availability for young children.

• Focus on attractive price points with a wider variety of assortment to retain valuable cohorts.

• Diversify in-store and online products and services to meet in-home and out-of-home demand.

Low-Income and Younger Consumers Drove More Growth in

CPG This Year; However, Income Pressures Are Likely in 2022

$ Growth Decomposition by Shopper Cohort and Income Level /

% of $ Growth and Fair Share Index of Growth to Size, 26 WE 10/3/2021 vs. 2YA

Millennials

Gen X

Boomers7%

7%

13%

11%

9%

11%

13%

13%

10%

29% - (112)

34% - (106)

32% - (95)

32% - (92) 36% - (91) 32% - (124)

82

90

101

87

180

151

84

97

99

High Middle LowHH Income

per Capita

16%

16%

9%

4%

10%

15%

14%

10%

6%

236

66

33

114

149

56

99

147

229

High Middle Low

40%

(184)

35%

(113)

25%

(66)

26% - (79) 42% - (105) 32% - (120)

Edible Nonedible

Color Coding

(Fair Share

of Growth

Relative

to Sales)

Green –

More than

Fair Share

White –

Fair Share

Red –

Less than

Fair Share

Note: Size of box represents share of dollar growth; Index represents share of growth relative to dollar sales size of box (i .e., fair share of growth); Other generations Gen Z and Seniors not shownSource: IRI Consumer Panel data ending 10/3/21, Total US-All Outlets. IRI Executive Insights.


Behaviors Driving

2022 Demand

Suburban Living, Return to Work / School and Increased Self-Care Habits

Will Drive At-Home and On-the-Go Convenience and Self-Care in 2022

Category Volume Growth Trajectory by Year, MULO

Source: IRI POS Data ending 10/3/21. IRI Executive Insights.

NEW HABITS

IMPACT

Migration to

suburbs vs. urban

areas

Bigger pantries and bulk shopping;

fewer options

increases convenience

at-home demand

Reduced options in school /

work cafeterias

Packing more on-the-

go foods

Increased self-care

Greater product

functionality

Unaffected

Skin Care, Laundry

Likely to Recover More

Personal Care,

On-the-Go Foods

Return

to Normal

At-Home Cooking,

Paper Products

Like to Remain Elevated

Breakfast, Convenient

Meals, Self-Care

2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022


In 2021,

Consumers

Turned Back to

Proactive

and

vs.

and

of 2020

Note: Top categories by volume growth among categories with $1.5B annual sales. Source: IRI POS data ending 10/31/21. IRI Executive Insights.

2019 2020 YTD 2021

Gro

cery

an

d A

lco

ho

l ● Dried Meat Snacks ● Frozen Seafood ● Dried Meat Snacks

● Energy Drinks ● Spices / Seasonings ● Baby Formula

● Fz Potatoes / Onions ● Baking Needs ● Energy Drinks

● Frozen Seafood ● Rice ● Non-Chocolate Candy

● Spirits / Liquor ● Frozen Meat / Poultry ● Sports Drinks

Strong Growth All 3 Years: Premixed Cocktails, Frozen Appetizers

Top Growing Volume Categories by YearConvenience Cooking Indulgences Cleaning Self Care Staples

Fre

sh

● Deli Entrées ● Fresh Shellfish ● Deli Entrées

● Deli Sandwiches ● Refrigerated Dough ● Deli Sandwiches

● Deli Dips / Sauces ● Fresh Citrus Fruit ● Meat Cheese Crkr Kits

● Fr Snacking/Salad Veg ● Fresh Fin Fish ● Deli Salads

● Deli Pizza ● Breakfast Sausage ● Deli Pizza

Strong Growth All 3 Years: Refrigerated Tea / Coffee, Refrigerated Creams / Creamers

No

ned

ible

● Frozen and Dry Ice ● Soap ● Weight Control

● Cold/Allergy/Sinus Liq ● Household Cleaner ● Nasal Products

● Adult Incontinence ● Paper Towels ● Pet Supplies

● Baby Wipes ● Foils and Wraps ● Pet Treats

● First Aid Treatment ● Vitamins ● Vitamins

Strong Growth All 3 Years: Sleeping Remedies, Drinkware


Convenience Cooking

Indulgences Cleaning

Self Care Staples

Gro

cery

an

d A

lco

ho

l ● Energy Drinks ● Dried Meat Snacks ● Chocolate Candy ● Dried Fruit

● Frozen Poultry ● Fz Apps / Snack Rolls ● Carbonated Beverages ● Cookies

● Fz Apps / Snack Rolls ● Frozen Poultry ● Dried Fruit ● Chocolate Candy

● Fz Breakfast Food ● Carbonated Beverages ● Frozen Dinners / Entrées ● Frozen Dinners / Entrées

● Dried Meat Snacks ● Energy Drinks ● Frozen Novelties ● Frozen Novelties

Millennials Generation X Boomers Seniors

Fre

sh

● Fresh Meat ● Deli Dips / Sauces ● Deli Salads ● Fresh Desserts

● Fresh Muffins ● Refrigerated Tea / Coffee ● Fresh Fruit ● Fresh Fruit

● Refrigerated Tea / Coffee ● Deli Entrées ● Deli Prepared Meats ● Deli Salads

● Deli Dips / Sauces ● Deli Side Dishes ● Deli Sandwiches ● Fresh Cookies

● Fresh Fruit ● Deli Grab&Go Lunchmeat ● Fresh Fish ● Deli Sandwiches

No

ned

ible

● Kitchen Storage ● Laundry Care ● Outdoor / Lawn Fertilizer ● Adult Incontinence

● Dental Accessories ● Cups and Plates ● Pet Treats ● Vitamins

● Air Fresheners ● Skin Care ● Gastrointestinal ● Outdoor / Lawn Fertilizer

● Skin Care ● Air Fresheners ● Vitamins ● Gastrointestinal

● Hand and Body Lotion ● Kitchen Storage ● Eye Care Products ● Eye Care Products

Millennials and

Generation X

Are Seeking

Convenience,

While Boomers

and Seniors

Look for

Indulgences

Top CPG Categories

by Generation,

YTD 2021

KEY

Note: Top categories defined among largest 150 CPG categories by $ sales, with above average growth rate, overindexing > 110 with cohort. Source: IRI Consumer Panel Integrated Fresh. All Outlets, Data Ending 10/31/21. IRI Executive Insights.


Households Are

Looking for

While

Households

Look for

and

Low Income Middle Income High Income

Gro

cery

an

d A

lco

ho

l ● Energy Drinks ● Fz Breakfast Food ● Premixed Cocktails

● Carbonated Beverages ● Non-Chocolate Candy ● Dried Fruit

● Fz Dinners / Entrées ● Fz Dinners / Entrées ● Cookies

● RTD Tea / Coffee ● Carbonated Beverages ● Dried Meat Snacks

● Fz Apps / Snack Rolls ● Frozen Poultry ● Frozen Novelties

Top CPG Categories by Income Level, YTD 2021Convenience Cooking Indulgences Cleaning Self Care Staples

Fre

sh

● Fresh Spec. Desserts ● Fresh Donuts/Pastries ● Fresh Fish

● Deli Sandwiches ● Rfg Tea / Coffee ● Deli Specialty Cheese

● Fresh Fruit ● Deli Prepared Meats ● Deli Entrées

● Rfg Tea / Coffee ● Deli Sandwiches ● Deli Dips / Sauces

● Deli Prepared Meats ● Fresh Salads ● Fresh Fruit

No

ned

ible

● Air Fresheners ● Pet Treats ● Skin Care

● Extrnal Analgesic Rubs ● Outdoor / Lawn Fert. ● Dental Accessories

● First Aid Accessories ● Extrnal Analgesic Rubs ● Outdoor / Lawn Fert.

● Culinary ● Sleeping Remedies ● Eye Care Products

● Weight Control ● Kitchen Storage ● Vitamins

Note: Top categories defined among largest 150 CPG categories by $ sales, with above average growth rate, overindexing > 110 with cohort. Source: IRI Consumer Panel Integrated Fresh. All Outlets, Data Ending 10/31/21. IRI Executive Insights.


Late ‘90s – 2000s 2005 2010 2015 2020-2021 2021-2022

Variety of tastes,

new recipes, richness

Light, low calorie

Low carb, sugar,

calories and fat,

whole grain,

disease prevention

No sacrifice of taste,

more wholesome

Local, restaurant

quality

Good fats, more fiber,

heart-healthy,

functional fortification

Convenient decadence,

eat on-the-go

Easy to understand

ingredients,

healthier for you

indulgences

Affordable

indulgence,

restaurant quality

Easy at-home

preparation;

family size

Unique/strong

flavors, pack

variety

At-home frozen meals,

nutrition shots

snack bar meals

Dietary alternatives

in dairy, meat, carbs;

functional benefits,

sustainability

Snacking, alcohol,

premium

ingredients

Immunity,

antioxidants,

anti-stress, probiotic

Innovation Turns to At-Home Easy Meals, Premium Indulgence

and Proactive Self-Care and Dietary Enhancement

Key Themes in CPG Edible Innovation Over Time

Pre-packaged

meals and snacks,

portable options

Fresh and

ready-to-eat foodsEasy meals

with a flare

COVID-19 Impact

CONVENIENCE – On the Go / Fresh Prepared At Home

Frozen Meals and Meal Replacement

SELF-CARE – “Less Of” Enhanced and

Dietary Alternatives

INDULGENCE / TASTE – Flavor Variety and TreatsBold Flavors and

Premium Indulgence

Source: Analysis of IRI Pacesetters and other innovation. IRI Executive Insights.


Source: IRI Executive Insights.

New

Innovations

Have Greater

Convenience,

Flavor and

Function

Frozen Breakfast

Organic Valley Egg Bites

At-Home and On-the-Go Convenience

Conven-ienceBreakfast

Rx Bar Oats Packet

Added Caffeine

Bubly Bounce

Multi-Benefit Bars

Jimmy! Gluten-Free Bars with Benefits

Protein

Quest Protein Chips

Morning Energy

Mountain Dew Rise

Hydration Sticks

Liquid IV

Proactive Self-Care

Nutrition Shots

Kor Organic Wellness Shots

Supple-ments

Oily

Supple-ments

NeurivaBrain Growth

Beverages with Benefits

Olipop

Avocado Oil

Orville Reden-bacher

Premium Indulgence

Party Cocktails

BuzzBallz Chillers

Flavor Variety

Aura Bora Sparkling Water (Flavors e.g., Peppermint Watermelon, Basil Berry)

Custom-izable Beauty

Function of Beauty

Low Sugar Candy

Smart Sweets

Gummies

Nerds Gummy Clusters

Botanicals

Ketel One Vodka Spritz

ILLUSTRATIVE EXAMPLES


These Trends Manifest Across Categories in Both Edible and Nonedible

Beverages Snacks Meals

Convenience

Ready to Drink Multipack Convenient Frozen

Variety PackMeal Replacement Snack Bar Meals

Indulgence / Taste

Organic Limited Ingredients Restaurant Quality

Small Batch Hot / Spicy Flavors Premium Ingredients

Botanicals Artisan

Self / Societal Care

No / Low Sugar, Calorie Low Carb Plant-Based MeatAlternativesProtein Enhanced Gluten Free

Milk Alternatives Vegetable Based

Caffeinated Non-Dairy

Antioxidants Sustainable Packaging

Edible Nonedible

Health and Beauty Household

Convenience

Effective

Indulgence / Taste

Custom, Make Your Own

Natural Ingredients

No Artificial Ingredients, Natural

Self / Societal Care

Sleep Remedies, Stress Relief, Body Immunity

Product Form

Ingredient Sourcing Sustainable Packaging

Sustainable Product Form

Source: IRI Executive Insights.


Major Holidays Summer Holidays Unofficial Holidays

With Higher Base Demand, 2021 Holidays Are

Strong, Yet Less Spikey Than Prior Years

Holiday % Lift by Week, Holiday Basket Lift and Change vs. 2019

Christmas

Easter

Thanksgiving

0

20

40

60

80

100

2019 2020 2021

40

0

20

60

80

100

0

20

40

60

80

100

$4.1B Lift+10% $ Sales

Chg. vs. 2019


Chg. vs. 2019


Chg. vs. 2019

Memorial Day

0

10

20

30

40

50

July 4th

0

10

20

30

40

50

Labor Day

30

0

10

20

40

50


Chg. vs. 2019


Chg. vs. 2019


Chg. vs. 2019

Halloween

0

50

100

150

200

Valentine’s Day

0

50

100

150

200

Super Bowl

-5

0

5

10

15

20


Chg. vs. 2019

CHARTS NOT ON IDENTICAL SCALE


Chg. vs. 2019


Chg. vs. 2019

3 Wks.

Before

2 Wks.

Before

1 Wk.

Before

Holiday

Week

Higher Base Demand in 2021 Non-Holiday Weeks Accounts for Lower Holiday Week Lift

Note: Baskets include Perishables. Source: IRI data ending 10/31/21 POS, MULO. IRI Executive Insights.


Seasonal Products Saw Earlier and Higher Sales for Holiday in Candy

Candy Lift, Seasonal Candy Share by Holiday Week

24 2944

6079

112

227

5 9 17 27 36 4929 34 41

5873

95

189

256 Wks.

Prior

4 3

141

1 Holiday

2019 2020 2021Candy Weekly % Lift

Holiday lift for candy continues to start early…

34 32 36 3853

77

215

925 23 11

4157

24 32 44 5683

210

Holiday6 Wks.

Prior

5 34

124

2 1

…with seasonal candy even earlier in 2021

0

Seasonal Candy Share of Total Candy (%)

2019 2020 2021

5.8 5.1 5.9

10.7 10.1 12.1

13.7 13.3 15.7

16.4 16.0 18.3

19.9 19.2 21.3

31.1 28.6 28.8

53.3 53.3 45.5

2019 2020 2021

11.1 11.4 15.8

13.9 13.4 18.0

15.1 14.7 19.3

17.5 16.7 22.1

21.2 19.2 24.9

25.6 21.7 27.8

31.2 27.0 30.4

6

5

4

3

2

1

Holiday

Week

Halloween

Easter

Halloween Valentine’s Day

Wks.

Prior

Source: IRI POS data ending 11/7/21, MULO. IRI Executive Insights.


Northeast

CPG Is Strongest in Regions with the Highest Population Increases

CPG Dollar Growth by Region - % Change vs. 2YA / YTD 2021

California

West

Plains

South Central Southeast

Mid South

Great Lakes

MULO Conv.

Edible 13.4% 13.6%

Nonedible 7.2% 4.8%

MULO Conv.

Edible 16.0% 15.3%

Nonedible 9.1% 6.2%

MULO Conv.

Edible 18.9% 11.1%

Nonedible 9.7% 8.4%

MULO Conv.

Edible 13.5% 9.8%

Nonedible 6.9% 1.5%

MULO Conv.

Edible 12.4% 14.3%

Nonedible 8.4% 5.5%

MULO Conv.

Edible 17.0% 14.4%

Nonedible 12.8% 10.3%

MULO Conv.

Edible 17.7% 12.4%


MULO Conv.

Edible 17.3% 15.9%


Population

+0.6%

Highest Value

Average

Lowest Value

Calculated within each

metric/channel/product

Population

+2.5%

Population

+0.8%

Population

+1.9%Population

+1.9%

Population

+1.3%

Population

-0.2%

Population

+0.2%

Source: IRI POS MULO and Conv channel dollars sales data ending 10/31//21. Population: US Census 2021 vs 2019


Source: IRI POS data through 10/31/21; IRI Executive Insights / Avg COVID cases Per 100K/% Vaccinated as of 11/12/21 – NYT / Google Mobility: Latest 30 days through 10/31/21 vs benchmark

State$ % Change

vs. YA

$ % Change

vs. 2YA

Avg COVID

Cases % Vaccinated Mobility

Total U.S. 4.9% 17.6% 22 59% -20%

Tennessee 10.0% 22.9% 13 49% -17

South Carolina 9.5% 23.0% 11 51% -15

Kentucky 8.9% 21.4% 23 51% -18

Alabama 8.6% 19.7% 10 45% -14

Mississippi 8.3% 22.0% 8 46% -16

CPG Performance by State Varies But Is Generally

Stronger in States with Lower Vaccination Rates

Top and Bottom Dollar Growth States / Edible / MULO – L12W

Vermont 1.3% 13.9% 52 72% -24%

Idaho 1.0% 20.5% 28 44% -14

California 0.8% 14.4% 15 62% -25

Minnesota 0.4% 12.5% 64 62% -19

Delaware -1.9% 18.5% 26 60% -17

To

p 5

10.0% 22.9% 13 49% -17

9.5% 23.0% 11 51% -15

8.9% 21.4% 23 51% -18

8.6% 19.7% 10 45% -14

8.3% 22.0% 8 46% -16

1.3% 13.9% 52 72% -24

1.0% 20.5% 28 44% -14

0.8% 14.4% 15 62% -25

0.4% 12.5% 64 62% -19

-1.9% 18.5% 26 60% -17

Bo

tto

m 5


Manufacturer and Brand Competition


2022 Outlook

• Increase in value seeking is likely to drive private label as inflation reaches high levels.

Larger CPG Manufacturers Take Back Share, and

Small Nonedible Manufacturers Gain Share in 2021

% Share of CPG Sales by Manufacturer Size, Ppt. Change vs. YA / Total U.S. MULO+C

49.1 47.9 46.6 47.2

14.6 14.5 14.6 14.6

12.6 13.0 13.6 13.6

8.2 8.1 8.5 8.5

15.5 16.6 16.7 16.1

2016 2019 2020 2021 YTD

-0.6

0.0

0.0

0.0

+0.6

+0.3

0.0

+0.1

0.0

-0.4

2016-19

avg/yr2020-21

+0.1

+0.4

+0.6

+0.1

-1.3

Category and Manufacturer Trends

Store Brands

Extra

Small ($<100M)

Small ($>100M)

Medium ($>1B)

Large ($>6B)

2019-20

Edible Nonedible

48.1 46.1 44.9 45.0

22.1 22.2 21.9 21.8

9.2 9.7 10.1 10.6

7.9 7.6 8.4 8.3

12.8 14.3 14.7 14.3

2016 20202019 2021 YTD

2016-19

avg/yr2020-212019-20

-0.4

0.0

+0.5

-0.1

+0.1

+0.5

0.0

+0.2

0.0

-0.7

+0.4

+0.8

+0.4

-0.3

-1.2

Note: Large is $6B+ in L52W, Medium $1-6B, Small $100M-1B and Extra Small <$100M. MULO+C includes Grocery, Mass, Club, Convenience, Drug. and Dollar channels. E-Commerce sales included when sale is through normal register i.e., store Pickup & Delivery from Brick and Mortar stores.

Source: IRI POS Data MULO+C, data ending 10-31-21. IRI Executive Insights.


Key Observations

• Large edible brands lead with price / mix growth in 2021 while holding more volume, as small and store brands see softening volume on top of 2019 and 2020 gains.

• In nonedible, store brands grow via higher price and mix as small brands continue to drive more volume across years.

Strength of Billion-Dollar Brand

Franchises Shows in 2021 in Edible

% Share of CPG Sales by Brand Franchise Size, Ppt. Change vs. YA / Total U.S. MULO+C

39.0 38.4 39.2

11.5 11.4 11.4

18.7 18.9 18.7

14.3 14.7 14.6

16.6 16.7 16.1

2019 2020 2021 YTD

Note: Brand Franchise defined on Total Store. Large is $1B+ in L52W, Medium $1B-$500M, Small $100M-$500M and Extra Small <$100M. MULO+C includes Grocery, Mass, Club, Convenience, Drug. and Dollar channels. E-Commerce sales included when sale is through normal register i.e., store Pickup and Delivery from Brick and Mortar stores.

Source: IRI POS Data MULO+C, data ending 10/31/21.

Store Brands

Extra Small

Brands ($<100M)

Small Brands

($>100M)

Medium Brands

($>500M)

Large Brands

($>1B)

2018-’19

+0.2

-0.2

+0.1

-0.1

+0.1

+0.1

+0.4

+0.1

-0.1

-0.6

-0.6

-0.1

-0.1

0.0

+0.8 41.7 40.6 40.3

10.9 11.0 11.1

19.7 19.8 20.4

13.3 13.9 13.9

14.3 14.7 14.3

2021 YTD2019 2020

-0.4

0.0

+0.6

+0.1

-0.4

+0.6

-0.5

+0.3

0.0

-0.4

+0.4

+0.5

+0.1

+0.1

-1.1

2019-’20 2020-’21 2018-’19 2019-’20 2020-’21

Surge in micro brands filling in high demand categories (e.g., soap, paper products)

Edible Nonedible


Category Leaders in 2021 Had Moderate Retention of Increased

Penetration from 2020; However, No Changes in Loyalty

Top CPG Brands Performance / Total U.S. All Outlets / % of 25 Largest Edible / Nonedible

Categories Where #1 Share Brand Gained Share, Penetration and Loyalty

1. As measured by % share of category spent on brand among category buyers. Source: IRI POS data MULO+C, Consumer Panel data All Outlets, data ending 10/3/21. IRI Executive Insights.

4448

6064

2832

60

32

56 56

44

64

2021202020192018

4852

72

60

28

40

84

3644

56

3644

2018 20212019 2020

Brand Loyalty1

Category $ Share

Household Penetration

-0.1 +0.1 +0.4 +0.2

-0.7 -0.7 +0.8 -0.2

-0.5 +0.3 -0.6 0.0

Median $ shr.

Ppt. Chg. vs. YA

Median % Household

Penetration ppt. chg. vs. YA

-0.1 0.0 +0.2 +0.7

-0.2 -0.5 +0.8 -0.3

+0.1 +0.2 -0.4 +1.2

Edible Nonedible

Leading paper and soap brands regain share from stock challenges

during 2020 demand surges.

Median Loyalty

ppt. chg. vs. YA1


BodyArmor and Dove Were Among the Top Brands to Gain Share and

Household Penetration in 2021; Leading Nonedible Brands Drove More Loyalty

Top CPG Brands Performance / Total U.S. All Outlets

Change vs. Year Ago in Category Share, Penetration and Loyalty

1. As measured by % share of category spent on brand among category buyers. Source: IRI POS data MULO+C, IRI Omnichannel, Consumer Panel data All Outlets, data ending 10/3/21. IRI Executive Insights.

EDIBLE

Brand CategoryL52 Omni

Sales

Share

Chg.

Penetration

Chg.

Loyalty1

Chg.

Sports Drinks $1.6B 4.0 -0.7

Ice Cream/ Sherbet $1.4B 0.4 0.5

Energy Drinks $6.9B 0.4 -7.1

Rfg. Juices & Drinks $0.8B 0.8 0.1

Yogurt $1.8B 0.9 0.8

Salty Snacks $2.8B 1.1 0.2

Ice Cream/ Sherbet $0.7B 0.5 0.5

RTD Tea/Coffee $2.6B 0.5 -0.2

Beer *$3.2B 0.3 2.8

Bottled Juices $0.6B 0.3 -0.2

NONEDIBLE

Brand CategoryL52 Omni

Sales

Share

Chg.

Penetration

Chg.

Loyalty

Chg.

Soap $2.1B 0.3 4.1

Skin Care $0.6B 3.0 1.9

Diapers $2.6B 0.2 4.9

Dish Detergent $1.6 -1.1 1.9

Air Fresheners $1.5B -0.3 3.4

Dish Detergent $1.3B -0.7 2.6

Paper Towels $3.7B -7.7 8.3

Household Cleaner $1.4B -4.0 2.8

Weight Control $1.3B 1.3 -2.4

Toothpaste $1.8B 0.1 -4.2

3.4

1.3

1.3

1.2

1.2

1.1

1.0

0.9

0.9

0.9

5.7

4.0

3.9

3.5

2.5

1.9

1.9

1.8

1.7

1.4

Brand gained share in 2020 and 2021

Brand gained share in 2021 only

*MULO+C


Channels and Distribution


Club Is a Key Growth Channel in Food and Beverage,

While Nonedible Leaks More to E-Commerce

Dollar Sales ($B) by Channel

Mass

12 (1.8%)

18 (2.8%)

85

(13.0%)55 (9.7%)

320

(49.1%)

665

22 (3.3%)

2020

67 (10.2%)

11 (1.7%)

139

(21.4%)

12 (2.1%) 71 (10.7%)

9 (1.6%)

309

(46.5%)

94

(14.2%)

Dollar

145

(21.8%)126

(22.2%)

Conv

82

(14.5%)

Club

12 (1.8%)

11 (2.0%)

273

(47.9%)

20212019

11 (1.7%)

652

Drug

Pure-Play

Ecom

Grocery

570

Grocery becomes more concentrated

in F&B as nonedible shifts to online

2022

OutlookF&B Nonedible

20212019

44

(9.9%)

56

(14.9%)

2020

14 (3.3%)

83 (19.3%)

37 (8.5%)

Club

Conv

59

(13.3%)

80

(18.4%)

110

(25.5%)

64

(14.8%)

13 (2.9%)

36 (8.2%)

94 (21.3%)

81

(18.4%)

115

(26.0%)

Pure-play

Ecom

Grocery

77

(20.4%)

442

12 (3.2%)

Mass

Dollar

104

(27.6%)

44

(10.3%)

53 (14.0%)

36 (9.5%)Drug

39

(10.4%)

378

432Retailer Focus Areas

• Out of stock, supplier

base diversification

• B&M and digital growth,

e-comm investment and

profitability, competing

on fulfillment

• Margin expansion to

offset increased costs

• Impact of price increases,

expiring stimulus benefits

• Digitization and

analytics to drive

operational efficiency

• Labor shortages and

rising wages

• Own brands growth

2022

Outlook

Increasing share

between periods

Decreasing share

between periods

Holding steady

between periods

Note: e-commerce Pickup and Delivery sourced from B&M retailers included in those respective channels. Pure Play ecom consists o f primarily digital-based retailers. 2021 projected from 2021 YTD ending 10/3/21. Source: IRI POS, Panel and eMarket Insights data ending 10/3/21. IRI Executive Insights.


Dollar Sales

% Change vs. YA

Trips

% Change vs. YA

% HH Buying

Ppt. Chg. Vs. YA

Trips/Buyer

% Change vs. YADollars/Trip

% Change vs. YA

2019 2020 2021 2019 2020 20212021

actual2019 2020 2021 2019 2020 2021 2019 2020 2021

Grocery 1.3% 15.0% -1.3% 1.9% 4.9% -1.4% 97.6% -0.2 0.0 -0.7 1.5% 4.1% -1.4% -0.7% 9.6% 0.1%

Mass 3.3% 4.8% 4.6% 3.2% -4.6% 2.3% 70.9% -0.3 -0.5 -0.9 2.6% -4.7% 2.9% -0.1% 8.0% 0.5%

Club 4.1% 16.4% 6.9% 4.6% 5.5% 7.2% 61.3% 0.5 0.9 0.7 3.2% 3.2% 5.2% -0.5% 10.3% -0.3%

Drug -0.9% 1.2% 0.4% -0.3% -7.4% -3.2% 71.6% -1.0 -1.0 -2.2 0.4% -6.9% -1.0% -0.6% 9.3% 3.7%

Dollar 13.0% 19.6% -1.9% 9.8% 6.9% -3.0% 65.9% 1.0 -0.3 -1.2 7.6% 6.7% -2.0% 2.9% 11.9% 1.1%

Grocery Channel CPG Trips Shifted Back to Mass in 2021, While

Club Continued to Grow Buyers and Trip Frequency on Top of 2020 Gains

Total CPG Channels Annual Growth and Drivers / 52-Week Periods

Note: Based on calendar years and 52 weeks ending 10/31/21. Source: IRI Consumer Panel data ending 10/31/21, All Outlets, Total Store excluding random weight fresh. IRI Executive Insights.


IncomeShare of Trips

Ppt. Change vs. YAGeneration

Share of Trips

Ppt. Change vs. YA

2021 2020 vs. 2019 2021 vs. 2020 2021 2020 vs. 2019 2021 vs. 2020

Low Mid High Low Mid High Low Mid High Millennial Gen X Boomer Millennial Gen X Boomer Millennial Gen X Boomer

Grocery 35.2% 39.7% 43.7% -0.2 0.9 1.2 -1.0 -1.4 -1.4 36.1% 38.0% 41.5% -0.6 0.7 1.2 -2.5 -1.3 -0.7

Mass 22.7% 21.5% 17.7% -1.6 -1.7 -1.7 0.3 -0.2 0.4 25.8% 21.8% 18.0% -2.0 -1.7 -1.6 0.3 0.1 -0.2

Club 3.6% 5.9% 8.6% 0.1 0.2 0.1 0.2 0.3 0.4 5.6% 6.5% 6.2% -0.1 0.2 0.2 0.4 0.3 0.2

Drug 7.4% 7.3% 7.8% -0.6 -1.0 -1.0 -0.5 -0.3 -0.3 7.2% 7.4% 7.4% -0.5 -1.1 -1.0 0.5 -0.5 -0.6

Dollar 11.1% 6.6% 3.8% 0.4 0.3 0.1 -1.0 -0.1 0.0 6.4% 7.1% 7.3% 1.0 0.2 0.0 -0.6 -0.3 -0.3

Channel Shifts Are Similar Across Demographic Cohorts

% Share of Total Store Trips by Cohort / 52-Week Periods Overdeveloped Underdeveloped

Source: IRI Consumer Panel data ending 10/31/21, All Outlets, Total Store. IRI Executive Insights.


Similarly, E-Commerce in CPG Becomes More Democratized

Sample Grocery Retailer – % of Retailer Shoppers Buying in E-Commerce by Demographic

Household Income Cohorts Head of Household (HOH) Age

2.9%3.8%

5.2%

4.2%

6.1%

4.6%

3.3%

6.5%

8.5%

10.9%

9.9%

11.9%

9.2%

7.7%

5.4%

6.6%

8.2% 8.2%

9.8%

7.0%

5.5%

Mid Income HOH Age

46 - 55

Low Income HOH Age

36 - 45

HOH Age

56+

High Income HOH Age

<35

+2.5

+2.8

+3.1

+3.9

+3.7

+2.5

+2.2

Q1 ‘20 (pre-COVID-19)

Q1 ’21 (peak)

Q3 ’21 (current)

Pre-COVID-19 70 90 124 102 146 110 79

Current 76 94 117 116 139 100 78

Penetration Index to all HH Average

Note: Income Levels defined as Low <$50k; High >$100k. Sample Grocery retailer offers pickup and delivery e-commerce services, including first and third party (e.g., Instacart) options. Source: Grocery Retailer Shopper Loyalty Card Data, Tracked Households, data ending 9/11/21. IRI Executive Insights.


E-Grocery Continued to See Large Gains in

2021, Dominated by Large National Brands

CPG E-Commerce Sales and Share by Retailer

Edible Nonedible 2022 Outlook

• Larger players in F&B

will realize greater

share gains with

continued

investments in

assortment, speed of

delivery and

operational efficiency.

• Some shelf-stable

food continues to shift

back to Amazon, as

Amazon and mass

channel pick up more

nonedible CPG.

Increasing share

between periods

Decreasing share

between periods

Holding steady

between periods

Note: Retailer totals include all e-commerce fulfillment models unless indicated. Instacart is based on receipts attributed to Instacart; some Instacart sales may fall under the retailer if receipt is attributed to the retailer. 2021 Estimation based on projected quarterly data through Q3 9/5/21. Source: IRI eMarket Insights data ending 9/5/21, IRI Executive Insights.

16.8%

25.0%

24.4%

8.5%

9.6%

10.9%

0.8%29.1%

2019

$66.3B

20.9%

25.5%

2.5%

17.3%

$57.1B

1.7%

1.3%

22.5%

2020

26.8%

20.6%

3.0%

8.6%

2.4%

21.7%

2021 Est.

$29.4B

OtherTarget

Major GroceryInstacart

Amazon FreshAmazon.com

Walmart

E-comm Share

of Omnichannel5.8% 9.8% 11.2%

2022

Outlook

5.5%

$120.7B

24.5%

58.0%

3.0%

32.9%

2019

6.8%

60.4%

2021 Est.

27.6%

2020

6.7%

63.4%

$66.3B

$106.0B

2.7%

2.1%

2022

Outlook

E-comm Share

of Omnichannel22.9% 31.2% 34.1%


High E-Commerce, Shelf Stable Categories Migrate Back More to Shipment,

Leaving Pick-Up / Delivery Skewed to Heavier, Larger or Crushable Products

Edible Categories Home Shipment and Pickup / Delivery % $ Share of Omnichannel

3.8

5.6

11.6

7.2

6.0

6.4

2.6

7.4

3.2

7.1

7.5

1.4

5.4

3.6

7.0

3.0

4.9

3.8

3.2

22.8

13.3

9.4

9.1

8.0

7.9

7.4

5.0

4.7

4.6

4.3

3.9

2.6

2.0

2.0

2.0

0.5

6.8

5.0

15.1

6.2

49.9

28.4

9.0

0.9

53.7

24.9

16.6

14.4

9.3

10.5

14.8

8.2

11.9

12.1

5.7

4.8

3.7

Pickup and Delivery Home ShipmentShare chg.

vs. YAE-CommShare chg.

vs. 2YA

Home Shipment Pickup & Delivery

Hig

h E

-co

mm

erc

e / H

om

e

Sh

ipm

en

t C

ate

go

ries

Lo

w E

-co

mm

erc

e /

Pic

ku

p

an

d D

eliv

ery

Cate

go

ries

Share chg. vs. YA

Share chg. vs. 2YA

4.9 18.3 -1.3 1.6

1.5 5.0 -0.7 2.8

2.3 2.9 -3.3 6.3

0.3 3.5 0.0 2.7

1.2 4.1 -1.3 1.8

1.4 2.0 -0.3 1.3

0.4 4.0 0.2 2.2

0.4 2.2 -1.1 3.4

0.3 2.4 -0.1 2.8

0.2 1.4 0.2 4.5

0.6 1.9 0.1 4.0

0.2 0.7 -2.9 3.0

0.8 2.0 -0.3 3.1

0.6 1.1 -0.4 4.0

0.2 0.6 -1.0 4.0

0.0 0.7 0.2 1.3

0.3 0.7 0.3 0.8

0.1 0.5 0.7 2.4

-0.1 0.3 -0.1 1.9

Tea - Bags/Loose

Coffee

Dried Fruit

Hot Cereal

Snack Nuts/Seeds/Corn Nuts

Popcorn/Popcorn Oil

Non-Chocolate Candy

Snack Bars/Granola Bars

Chocolate Candy

Dry Fruit Snacks

Rice/Popcorn Cakes

Energy Drinks

Cookies

Tea/Coffee - RTD

Cold Cereal

Sports Drinks

Salty Snacks

Carbonated Beverages

Juices/Drinks - Rfg

Note: Based on retailers where modality can be determined or assumed to majority classification. Omnichannel = MULO+C + Costco + other unmeasured + eCom – overlap) Source: IRI eMarket Insights, Omnichannel, data ending 9/5/21. IRI Executive Insights.


Heavy Digital CPG Buyers Continue to Develop Spend Using E-Grocery;

Less Frequent Users More Likely to Use Third-Party Services

Sample Grocery Retailer – Shopper Spend Growth for Omni Shoppers During COVID-19

800

900

1,000

1,100

1,200

1,300

600

1,600

1,400

0

1,500

700

13 Wks Dec

2020 - Feb 2021

13 Wks Dec

2019 - Feb 2020

13 Wks Mar

- May 2020

13 Wks June

- Aug 2020

Medium E-comm

Omni Buyers

13 Wks Sep

- Nov 2020

13 Wks Jun

- Aug 2021

Heavy E-Comm

Omni Buyers

Light E-comm

Omni Buyers

13 Wks Mar

- May 2021

1x

e-comm

trips

2-4x

e-comm

trips

5x+

e-comm

trips

To

tal D

olla

r S

pe

nd

at

Re

taile

r

pe

r H

ou

se

ho

ld

Heavy omni buyers are more likely

to use first-party digital services

over third-party services

Uptick of lighter users in

early COVID-19 surge

Accelerated spend among

most frequent users

Less drop off from

heavy omni buyers

Note Sample Grocery retailer offers pickup and delivery e-commerce services, including first and third party options. Source: Grocery Retailer Shopper Loyalty Card Data, Tracked Households, data ending 8/28/21. IRI Executive Insights.


Out-of-Stocks and Falling Assortment Occur Again

at End of 2021; Will Likely Persist Through 2022

Changes in Average Assortment and In-Stock / MULO

82

83

84

85

86

87

88

89

90

91

92

-16

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10-0

4-2

0

02-2

3-2

0

Avg W

eekly

Ite

ms p

er

Sto

re %

chg. vs. 2Y

A

Avg. %

In S

tock a

cro

ss c

ate

gorie

s

01-2

6-2

0

03-2

2-2

0

05-1

7-2

0

06-1

4-2

0

04-1

9-2

0

07-1

2-2

0

08-0

9-2

0

09-0

6-2

0

07-1

1-2

1

11-0

1-2

0

11-2

9-2

0

12-2

7-2

0

01-2

4-2

1

02-2

1-2

1

03-2

1-2

1

04-1

8-2

1

05-1

6-2

1

06-1

3-2

1

08-0

8-2

1

09-0

5-2

1

10-0

3-2

1

COVID-19

Stock-Up

Period

Edible Asst % Chg

Nonedible Asst % Chg

Edible In Stock

Nonedible In Stock

Left axis Right axis

Q4 2021

Significant assortment growth in energy

drinks, RTD cocktails, refrigerated entrées,

spices, pet care and vitamins

Worsening supply issues in few

categories, e.g., rfg. lunches, aseptic

juices and RTD tea / coffee where in-stock

rate is 70-80%

Persistent lower assortment on shelf

in paper products with in-stock rates in the

mid-80s

Note: Dollar-weighted averages across categories for edible / nonedible. Assortment based on average weekly items selling. Source: IRI POS data ending 10/3/21. IRI Out Of Stock. IRI Executive Insights.

2022 Outlook

• Persistence of supply chain pressure due to labor shortages.

• High demand for variety in growing categories.

• Greater pressure on food and beverage item performance as weaker SKUs are cleaned out.


2022 Outlook


Price Will Drive 1% - 5% Growth in 2022 as Increasing

Mobility and Inflation Put Downward Pressure on Volume

: 2022 Edible and Nonedible CPG Forecast / Total U.S.Omnichannel

Key Demand Drivers

• Pricing, price

sensitivity and size

of remote and hybrid

workforce are key drivers of

2022 demand.

• Volume likely to be down 1%

to 5% in 2022 vs. 2021.

Note: Dollar sales-weighted price per volume and volume change across categories. Source: IRI POS data ending 10/3/21. IRI Executive Insights.

Baseline2016-19 CAGR

2020 vs. YA2019-2020

2021 vs. YA2021 YTD vs. 2020

Forecast: 2022 vs. YA

Forecast Range

2021 vs. 2YA CAGR2021 YTD vs. 2019

Forecast: 2022 vs. 2019 (3YA CAGR)

Forecast Range

1.9

12.4

0.4

8.7

1.6 1.2 - 2.1

-2.6 -2.7 - -5.4

7.5

5.1 – 5.43.5

0.2 – 1.1

EDIBLE

NONEDIBLE

1.76.1

-0.9

1.5 2.3 3.2 - 5.3

-2.0-0.8 - -2.5

4.3 3.9 – 4.6

-0.1 -0.4 – -1.0

3.4% 4.3% 3.4% 4.0% - 8.0% 3.9% 3.9% - 5.2%

2.6% 4.5% 4.4% 4.0% - 8.0% 4.4% 4.3% - 5.6%

Price Mix % Change

Price Mix % Change

Dollars Volume


Increased Overall Share from Digital in

CPG Omnichannel Is Anticipated in 2022Most F&B in Grocery Delivery / Pickup, Shelf-Stable Food and Nonedible in Shipment

Note: E-commerce data is based on projected receipt-based sample and reported data with varying levels of granularity and accuracy available. Source: IRI Omnichannel, data ending 10/3/21. IRI Executive Insights.

5.89.9

11.7 11.5 10.4 10.3 11.2

2022 (F)20212019 2020 Q3

2021

Q1

2021

Q2

2021

L4W

12-13

20.227.3 29.9 30.6 29.6 29.0 29.8

Q3

2021

20202019 Q1

2021

Q2

2021

L4W 2021 2022 (F)

32-34

Food &

Beverage

Nonedible

High e-comm, shelf-stable categories (i.e., coffee and tea, snack bars and nuts) migrate back more to shipment,

leaving pick-up/delivery skewed to heavier, larger, or crushable products (i.e., salty snacks, beverages).

Dollar % Share of E-Commerce in Omnichannel

2022 Outlook

• Continued investments in digital vs. store assortment, speed of delivery and consumer experience will continue to drive incremental share gains for digital CPG.

• Heavy users drive increased usage, particularly of grocery delivery / pickup.

• Immediate need e-commerce continues to play a significant role where consumer is willing to pay for convenience of rapid delivery.

• Categories suited to shipment (e.g., shelf-stable food, non-bulky nonedibles) continue to expand online, as e-grocery captures more of food.


2022 Outlook

• Price will drive growth in 2022, as increasing mobility and inflation put downward pressure on volume. But expect increasing price sensitivity as demand softens. Leverage insights and analytics to more quickly spot and act on evolving demand patterns.

• Drive net price realization (e.g., real-time management of price gaps, granular consumer elasticity, targeted promotions) to offset rising costs associated with supply chain, labor.

• At-home consumption will remain elevated compared to pre-pandemic, but away-from-home and on-the-go consumption will also increase. Evolve portfolio / footprint to win market share at-home and out-of-home.

• Look for balanced growth across price tiers, including mainstream, value and private brands; some premium demand will remain. Leverage assortment to drive growth in each channel (e.g., value and premium tiers, pack-channel range architecture).

• Trends of convenience, particularly around meal solutions, will continue. Demand for on-the-go options will increase. Self-care and home care will remain priorities. Extend these cross-category trends into products and services (e.g., packaging, self-care, taste exploration).

• Continued investment in digital vs. store assortments, including speed of delivery and consumer experience, will drive incremental share gains. Drive more impulse opportunity via third-party delivery apps as well as in-store as traffic increases.

• Customize and target marketing investments with digital channels (e.g., digital Grocery, DTC, third-party delivery, retail media networks).


How IRI Can Help


IRI’s Revenue Growth Management Enterprise Solutions Are the Nexus of

World Class Predictive Price and Trade Models and Real-Time POS Data

Opportunity Alerts

and Predictors

• Delivers a fully automated personalized decision-making platform with alerts and size of the prize

• Harnesses IRI’s advanced store-level price and promo modeling to determine granular, retailer-specific impacts

• Leverages machine learning for quick identification of opportunities

Price and

Trade Advantage

• Enables price and trade strategy to maximize sales, share, and profit objectives by war-gaming multiple scenarios and comparing outcomes.

• Informs price and trade decisions based on full category results from pricing and promo actions

• Harnesses IRI’s advanced store-level price and promo modeling to determine granular, retailer-specific impacts

Pricing

Diagnostic

• Manages risk by identifying changes in sales velocity at specific price points and price gaps and identifies root causes for sales and share change

• Achieves planned price realization and avoids key competitive gap violations.

• Avoids sales losses at customers that appear threshold- and gap-compliant on average.

Action and Impact

3-5% growth in sales

Up to 5% growth in margin

Generate 3% to 5% improvement in price realization and

trade efficiencies for top-and bottom-line growth

10X+ productivity gains in determining root cause of

business trajectory and identifying areas of improvement


IRI Offers Consulting Services to Drive Revenue Growth

Assortment

Planning Strategy

• Delivers a fully automated personalized decision-making platform

• Harnesses IRI’s advanced store-level modeling to determine granular, retailer-specific impact

• Simulates full category results from assortment and space decisions, accounting for demand transfer

• Allows contingency and scenario planning, along with ongoing monitoring and tracking

Portfolio Profitability

Consulting

• Provides end-to-end guidance to strengthen value proposition

• Chooses most profitable opportunities among pricing, pack size, messaging, and innovation

• Grows both top and bottom line while also driving market share

• Builds win-win for retailers and manufacturers to drive engagement and compliance

Segment-Specific

Pricing Optimization

• Enables more strategic pricing based on securing longer-term shopper loyalty

• Targets price and promo opportunities that resonate with most valuable shoppers

• Strengthens position as a strategic advisor to retail

• Decomposes price and promo elasticity across consumer segments

Action and Impact

>2-5% sales growth

2-5% retail category growth


10-20% reduction in COGS

>5% margin gains


5 ppts gain in trade lifts

5-10% increased conversion

Up to 10% gains in basket size


IRI Offers Solutions and Services to Help

Brands and Retailers Grow E-Commerce Initiatives

eMarket

Insights

• Provides online sales and share information for a holistic view of the digital marketplace and shopper journey

• Capitalizes on e-commerce as both a sales channel and a powerful marketing tool

• Compares online and in-store sales data to understand purchase dynamics of key shopper segments

eCapability

Development

• Benchmarks current e-commerce capabilities against leading and lagging competitors within the same category or department

• Prioritizes capability investments where they will drive true differentiation or close critical gaps

• Builds a quantified business case to strengthen specific e-commerce capabilities

Online Demand

Analytics

• Calculates e-commerce- specific price elasticity and assortment incrementality for refining online pricing and assortment

• Assesses pricing leverage and portfolio gaps vs. traditional brick-and-mortar shopping, to refine offering sets

• Identifies points of differentiation in the online space to mitigate cross-channel cannibalization

Action and Impact

Identifies how shoppers are behaving online to know where to invest to drive incremental growth

of tens of millions of dollars

Drives the most effective and efficient capability build, often

saving tens of millions of dollars in achieving e-commerce potential

Builds significant online market share in what is often the fastest

growing channel while also gaining 2-5% in margins


IRI Offers Solutions and Services to Help

Brands and Retailers Grow E-Commerce Initiatives

Omnichannel

Strategy

• Sets a specific role and growth strategy for online vs. traditional brick-and-mortar channels, to meet different needs and occasions

• Shifts e-commerce from cannibalizing traditional channels to expanding shopper footprint

• Pre-empts competitive growth in e-commerce, maintaining and strengthening overall share

E-Commerce

Portfolio

• Overhauls existing offerings to build a differentiated online assortment, meeting unique demand occasions and required price points

• Introduces new items, pack sizes, and deals better tailored to the online shopper, specific to each brand

• Builds pricing leverage in a channel known for the ease of cross-shopping and price comparisons

IRI

Audiences

• Activate E-Comm ProScores across advertising ecosystem to reach households likely to purchase CPG products online.

• Identify and activate publishers, platforms, networks, dayparts, etc. where online purchases engage with media.

• Highlight attributes and craft messaging that resonates and prompts action.

Action and Impact

Avoids up to 50% of cross-channel cannibalization while driving stronger loyalty and repeat

purchases across online channels

Grows online sales by as much as 3x, while also

increasing margins and reducing cross-channel cannibalization

Reach high-propensity shoppers at scale, deliver 50%+ higher return

on ad spend vs. competitive purchase-based targets


IRI Offers a Variety of Solutions and Services

to Help Brands Succeed With Innovation

Brand Landscape

• Gives broad multi-category brand views with cross-category cultural attributes to identify and activate brand strategy initiatives.

• Easily identifies competitive set, explores specific structure segments or walking attributes to assess business performance.

• Updates dynamic structures with new products, most recent size and trend POS data plus demographic and panel measures monthly.

• Identifies macro changes to consumer demand as they happen

• Continually aligns brand portfolios against future shopper needs

Innovation Consulting

• Leverages actual shopper behavior in an integrated service from white space identification and new product concept testing through post-launch assessment.

• Allows for maximum insights and the best chance of new product success with the lowest possible risk.

TrendspottingIRI machineVantage

• Spot trends using POS, product attributes, frequent shopper purchase data.

• Connect trends to conscious and nonconscious metaphors using social, search data.

• Uncover opportunities using combination of AI/ML and deep learning techniques.

Brand Optimization Engine

• Applies augmented decision-making to prioritize growth opportunities based on size, demographics and execution difficulty.

• Assesses source of volume and incrementality to brand or category.

• Aids in choice of the right media spend, distribution and price to capture most switchers.

Social Intelligence Analytics and Brand

Value Analysis

• Provides feedback on what consumers are saying about your brand online.

• Determines which functional and emotive attributes you “own” and which are “table stakes.”

• Builds improved messaging campaigns and identifies opportunities for brand growth.

• Grows both top and bottom line while also driving market share.

ACTION AND IMPACT ACTION AND IMPACT ACTION AND IMPACT

• >10% growth in sales• Increases brand value• Enables more effective

media campaigns

• Doubles odds of new product success, dramatically cutting the cost of innovation

• Continually identifies and activates against growth opportunities

• Proactive trend-spotting to uncover innovation opportunities

• Evaluate threat of competitive new product launches

• Understand consumers on a deeper level

• Implement product innovations that are meaningful and grow business


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