FMI is the trade association that retail. We assist food ... Transparency... · FMI is committed to the growth and success of fresh companies and their partners. FMI provides resources

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FMI is the trade association that

serves as the voice of food

retail. We assist food retailers in

their role of feeding families and

enriching lives.

The Association

ASSET

PROTECTION EDUCATION RESEARCH

FOOD SAFETY & DEFENSE

GOVERNMENT RELATIONS

SUSTAINABILITY

SUPPLY CHAIN

HEALTH & WELLNESS

PRIVATE BRANDS

FRESH FOODS INFORMATION SERVICE

CENTER STORE CONSUMER &

COMMUNITY AFFAIRS INDEPENDENT

OPERATOR

COMMUNICATION WHOLESALER

TECHNOLOGY

Our members are food retailers, wholesalers and suppliers of all

types and sizes.

FMI provides comprehensive programs, resources and advocacy

for the food, pharmacy and grocery retail industry.

Fresh @ FMI Fresh Foods

Emphasis on fresh

• Produce

• Meat

• Seafood

• Deli/In-store, fresh

prepared foods and

assortments

FMI is committed to the growth and success of fresh companies and their partners. FMI provides resources and networks that support the interests of member companies throughout the global, fresh produce supply chain, including family-owned, private and publicly traded businesses as well as regional, national and international companies.

Rick Stein, Vice President, Fresh

Foods

Food Marketing Institute

[email protected]

202.220.0700

mailto:[email protected]

In-depth information, trends and insights to foster innovation, take

advantage of new opportunities and help develop winning

strategies

Share ideas, explore best practices and develop

business relations

Understand what is going on in Washington and make your voice heard

FMI Fresh Foods

FMI Fresh Executive Committee John Ruane (Co-Chair)

Ahold USA

Rick Steigerwald (Co-Chair)

Lund Food Holdings, Inc.

Tom DeVries (Past Chair)

Giant Eagle, Inc.

Jason Anderson

Affiliated Foods Midwest Cooperative, Inc.

Bill Artman

Giant Eagle, Inc.

John Beretta

Albertsons, LLC

Dave Bornmann

Publix Super Markets, Inc.

Scott Bradley

Target Corporation

David Bridges

Publix Super Markets, Inc.

Jerry Chadwick

Lancaster Foods, LLC

Alex Corbishley

Target Corporation

Chris Darling

Albertsons, LLC

Jerry Edney

Associated Wholesale Grocers, Inc.

Mary Fuhrman

Lomar Distributing

John Haggerty

Burris Logistics

Mark Hilton

Harris Teeter LLC

Christopher Lane

Wakefern Food Corporation

Pete Leung

Brookshire Grocery Company

Dan Murphy

Unified Grocers, Inc.

Pat Pessotto

Longo Brothers Fruit Markets Inc.

Jerry Suter

Meijer, Inc.

Geoff Waldau

Delhaize America

Blaine Bringhurst*

Price Chopper Supermarkets

Steve Mayer*

Schnuck Markets, Inc.

Nicole Wegman*

Wegmans Food Markets, Inc.

* Silent members

Fresh Foods

The FEC seeks to

• identify areas of

collaboration across all

fresh foods

departments

• promote

understanding and

cooperation

throughout the industry

and with sister fresh

associations

• maximize common

learning’s between

fresh categories and to

create a vision of

leadership for the

entire fresh category.

FMI Fresh Foods Leadership Council

John Ruane (Co-Chair)

Ahold USA

Rick Steigerwald (Co-Chair)

Lund Food Holdings, Inc.

FEC Members

FMI Fresh Executive Council

Chris Dubois

IRI

Michael Eardley

International Dairy-Deli-Bakery

Association

Jim Ethridge

National Cattleman's Beef

Association

Sherry Frey

Nielsen Perishables Group

Paul Mastronardi

Sunset Grown Produce

Jeff Oberman

United Fresh Produce Association

Janet Riley

North American Meat Institute

Tristan Simpson

Ready Pac Foods, Inc.

Tom Super

National Chicken Council

Jarrod Sutton

National Pork Board

Joe Watson

Produce Marketing Association

Joe Weber

Smithfield Foods Inc.

Art Yerecic

Yerecic Label

Fresh Foods

The FFLC is comprised

of FMI Member

companies, industry trade

association and fresh-

focused knowledge

partners.


Fresh Top Trends in


1

3

2

4

5

Definition

Size

Why It Will Continue

3 – 5 Year Projection/Implications

Top Trends in Fresh Foods Overview


Perimeter growing twice as fast as Total F&B

1.0%

1.4% 2.0%

3.8%

5.4%

1.7% 2.2%

4.5%

$426 $61 $53 $175 $30 $140 $108

52-week Department Sales and % Growth ($ billions)

Source: IRI FreshLook POS data, MULO, 52 weeks ending 11/29/2015

$335

2X


Perimeter

departments all

growing

$6.4B

+1.9%

$2.7B

+4.8%

$6.2B

+6.3%

$10.8B

+9.7%

$49.1B

+4.5%

$60.4B

+3.7%

$4.6B

+5.4%



Our study focused on finding the keys to outperformance

multi-year impact

presence across multiple fresh departments

critical to long term success

not reliant on legislation

multi-faceted

Trend Criteria

industry interviews data analysis secondary research

Trend Validation


Consumer Demands

Industry Response 5

Trends


Critical for long-term success

Trends still in early stages of growth

Embracing these trends drives sales

outperformance

Requires strategic planning across

categories and departments

Foundation for next generation of retail

business success


Food Transparency 1


Our Definition

The consumer desire to know how and where food was grown or made. The consumer expectation for clarity, accuracy and usefulness of food related information from the companies that produce and sell it.


Primary Claims Likely Growers

Seafood

Sustainability

Fair

Wage/Food

GMOs Animal

Welfare

Organic Produce

$4.5B

+13% Sales

Deli NAE Meat

+29% Sales

Deli Organic Cheese

+66% Sales

NAE Meat

$2.9B

+23% Sales

Organic

Meat

$582M

+32% Sales



Primary Claims are Gaining Critical Mass

Chicken Produce Deli

12% of sales are

antibiotic free

3% of sales are

organic

31% combined

annual growth

+8% of sales are

organic

+10% 9 categories

> 10% in sales

13% sales

growth

40% of sales are

major brands with mixes of key attributes



Primary Claims Contribution to 2015 Sales Growth

67% 30% 8%

NAE Chicken contribution to

total chicken $ sales growth

Organic produce contribution

to total produce $ sales

growth

NAE and Organic deli

meat contribution to

total deli $ sales growth



Likely Grower: Consumer interest in GMOs remains high

GMO Salmon

news released

Source: IRI Social Advantage Monitoring and Analysis, November 16, 2015 to January 4, 2016

10K-15K GMO postings per day (40 MM Internet sites tracked)

Avg. daily GMO post volume is nearly

3X Gatorade and

1/3 of Coca Cola

Spikes are typically

linked to news flow


GMOs: For Most Consumers the “Jury Is Out”

• Debate about GMOs is ongoing and

dynamic

• Many consumers just want a “right-

to-know”

• There is opportunity to help shape

consumer conversations with

thought-leadership

• Negative sentiment is NOT targeted

at retailers



GMO Labeling is Biggest Consumer Concern

10% All Other includes • Cancer

• Non-GMO Project

• Meat

• Fruit

• Regulation

• Toxins

• Gene transfer Sub-topics

of GMO

Conversations 34% Labeling

23% Monsanto

10% Herbicides/

Pesticides

10% Vegetables

7% Ban

6% Allergies



Likely Grower:

Seafood Sustainability

1,290 posts/week avg.

61% microblog

28% news

2% social sites

8% blogs

1% message boards

Key Insights

More conversations are focused on

restaurants, but grocery is growing

Consumers are concerned about

environmental health and their own

health

“Aquaculture” is a rising theme – is it

sustainable, healthy? What about wild

caught?


Sustainable Seafood Key Influencers

Top conversation influencers go beyond

niche advocacy organizations

1.6MM+ downloads


Fair Wage / Food Animal Welfare

Retailer/grower partnerships

Linked with broader social issues

Formal governance

structure/broader advocacy

Major progress and change

Emotional topic/engaged consumer

3rd party certifications

becoming more important


Why This Trend Will Continue

Fears They

Won’t Like

Natural/Organic

Products

Proud of Buying

Natural/Organic

Products

True Believers

Enlightened Environmentalists

Strapped Seekers Indifferent Traditionalists

Healthy Realists

Resistant Non-Believers

Struggling Switchers

10% 10% 26% 15%

16% 13% 10%

Full Spectrum of Natural/Organic Buyers

Source: IRI/Spins NaturalLink segmentation; IRI Consumer panel IRI FreshLook POS data; MULO, 52 weeks ending 11/29/2015, IRI analysis


True Believers

$70K

College /

Post Grad

West

42 avg. age

75% Caucasian

My Top 3 Priorities for…

Willing to Pay More For…

What Holds Me Back

My Sources of Info.

Food & Beverage Personal Care Home Care

Made w/all natural

ingredients

Free of chemicals Most effective

Made w/organic

ingredients

Made w/all natural

ingredients

Eco-Friendly

Best taste Most effective

ingredients

Made w/all natural

ingredients


Organic

Non-GMO

All Natural

Eco-Friendly

Fair Trade

Organic

All Natural

Eco-Friendly

Eco-Friendly

All Natural

Organic

• Expense of natural/organic products

• Availability of natural/organic options at

local store

• No all-natural/organic options available

for products I like



Enlightened Environmentalists

$59K

Post Grad

NE/West

61 avg. age

77% Caucasian Skew African American



What Holds Me Back

My Sources of Info.


Made w/all natural

ingredients Free of chemicals Most effective

Best Taste Most effective

ingredients Eco-Friendly

Made w/organic

ingredients

Made w/all natural

ingredients Multi-purpose


Organic

All Natural

Non-GMO

Eco-Friendly

Fair Trade

Organic

All Natural

Eco-Friendly

Eco-Friendly

All Natural

Organic

• Expense of natural/organic products


local store

Celebrity Chefs

Product Labels



Healthy Realists

$70K Skews $100K+

College+

Throughout

U.S.

39 avg. age

75% Caucasian



What Holds Me Back

My Sources of Info.


Best taste Most effective

ingredients Most effective

Made w/all natural

ingredients Is on sale/coupon Is on sale/coupon

Is on sale/coupon Not tested on

animals Multi-purpose


All Natural


local store



There’s still room to grow across major markets in the U.S.

Low

Adoption

High

Adoption


NAE Meat and Organic Produce


Seattle

NAE Meat

5.9% 11.6%

Organic Produce

US Average Share

Seattle Share

7.5% 15.5%

US Average Share

Seattle Share

96

163

132

Seattle: 2X share compared to US average



5.9% 4.9%

Organic Produce

US Average Share

Norfolk Share

7.5% 7.0%

US Average Share

Norfolk Share

95

112

202

Norfolk

NAE Meat

Similar consumer profile to Seattle: room to grow



Source: IRI FreshLook POS data; MULO, 52 weeks ending 11/29/2015, IRI analysis

Norfolk Seattle

+22% units/store

+20.5% sales

+8.4% units/store

+6.4% sales

TOTAL US MULO

+13.4% units/store

+13.0% sales

Norfolk growth outpacing Seattle…

Organic Produce


Health and Wellness interest among consumers is high and organic attributes play a role

58% expected Millennial spending growth by 2020

25% of Millennials eat organic

45% of older Millennials are looking for

Organic snack options

33% of younger Millennials are looking for

Organic snack options

Source: IRI Consumer research; Millennial and NaturalLink surveys


$1.55

$5.50

$1.54

$1.42

$3.54

$1.31

Decreasing price gaps between products with and without key attributes which will spur additional growth

2015 2011

NAE

Meat

Organic Deli

Cheese

Produce



Baby Carrots: Decreasing price gaps between products with and without key attributes which will spur additional growth

$1.30

$1.26

$1.38

$1.45 2011

2015

Price Per LB

18%

30%

Organic Conventional

Organic % Share

70%

79%

US Dist.



Small Tomatoes: Decreasing price gaps between products with and without key attributes which will spur additional growth

$2.28

$2.20

$3.41

$4.03 2011

2015

Price Per LB

3.1%

5.1%

Organic Conventional

Organic % Share

52%

62%

US Dist.



Increasing Distribution

37 items/store Organic

Fruit

54 items/store

46 items/store Organic

Vegetables

67 items/store

From

To



Organic Berries Increasing Distribution

9 items/store

2011

14 items/store

2015

6% of berry

sales in 2011

9% of berry

sales in 2015



Transparency: Consumer Expectations for Traceability

Product Origin

(Farm)

Growing

Practices

Animal Welfare

Opportunity for

Feedback

Source: Company Website and App


2hr radius

State

Region

Consumer desire for local/authenticity

Source: IRI Research; Company website


Local: Farmers’ Markets Growing and Evolving

1,755

2,410

2,746

1,863

3,137

3,706

4,385

4,685

5,274

6,132

7,175

7,864 8,144

8,268

1994 1996 1998 2000 2002 2004 2006 2008 2009 2010 2011 2012 2013 2014

Farmers market growth

Source: USDA-AMS Marketing Services Division

Organizing

for scale


Top

20% Retailers

Food Transparency Can Drive Faster Growth

NAE Meat Grow Total Meat 44% faster than total US

Organic Produce Grow Total Produce 40% faster than total US

Halo Effect

Source: IRI FreshLook POS data, MULO, 52 weeks ending 11/29/2015 based on Retailer Market Area-level analysis


3-5 Outlook: NAE Chicken could become standard in the market

Producers Retailers & Restaurants

To

day

20

17

- 2

01

9

*Eliminate antibiotics also used by humans

*

*

12% NAE

2015

40%+ NAE

2022


Animal Welfare: Gestation crate-free pork could be almost 50% of the pork market by 2022

Producers Retailers &

Restaurants

To

day

20

17

*Committed to sourcing 25% of all meat (including pork) from GAP or equivalent animal welfare certified sources

Today Estimated Pork

Production

Capacity

85% Conventional

14% Cage Free

1% NAE

Today Estimated Pork

Production

Capacity

53% Conventional

37% Cage Free

10% NAE

20

22

Retail Packaged Brands

*

* *

*

*

Source: NRDC Going Mainstream: Meat and Poultry Raised Without Routine Antibiotics Use

Company Owned Farms

Company Owned Farms

Company Owned

Farms Contract Farms

Contract Farms


3-5 Year Outlook:

• Continued fast growth in Organic

Produce (at least 50% growth over the

next 5 years)

• Accelerating growth in Meat claims (NAE

chicken, gestation crate-free pork)

• Continued focus on health and wellness

from consumers

• Increased consumer engagement and

demand for traceability

• Evolving sophistication and growth in

local-based supply programs


Retailer Impact

Winners will: • Drive major programs using

strategically selected claims and attributes

• Use store-level insight to target offerings and refine programs

• Create strong local programs that integrate local farmers to on-shelf marketing

• Expand dialogue with consumers

to educate and inform


2016 Individual Trend Launches + Education Plan

Jan 28 Feb 25 Mar 31 Apr 28 May 26 June

Food

Transparency

Next:

Prepared

Foods &

Specialty

New Supply

Chains

Convenience

Connected

Consumer

Chris DuBois Steve Ramsey Chris DuBois

FMI Connect

Refresh/Update

Content Plan

Communication

Plan

Sally Lyons Wyatt

Webinar

Webinar

Webinar Webinar Webinar

Larry Levin

Thank You! Chris DuBois, Principal

(312) 342–8916

[email protected]

Documents

FMI is the trade association that retail. We assist food ... Transparency... · FMI is committed to the growth and success of fresh companies and their partners. FMI provides resources