HARVESTING THE FRUITS OF INNOVATION DONE RIGHT€¦ · HARVESTING THE FRUITS OF INNOVATION DONE RIGHT Larry Levin, Executive Vice President Susan Viamari, Vice President, Thought

HARVESTING THE FRUITS OF INNOVATION DONE RIGHT

Larry Levin, Executive Vice President

Susan Viamari, Vice President, Thought Leadership

April 19 - 20, 2016

Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 2


Harvest the Fruit

Increase Launch

Success and

Support Future

Brand Growth

4

New Product

Launch Success

Is Elusive

Sow the Seeds

1

Cultivate Carefully

Deliberate and

Well-Informed

Market Assessments

Breed 90-95%

Forecast Accuracy

2

Beware of Weeds

CPG Marketers

Must Abandon

Conventional

Category

Definitions

3 5

Questions


METHODOLOGY

IRI Market Advantage™ New Product Launch Module

IRI New Product Survey

GuestMetrics

IRI Social Advantage™



New or Extended

Brand, or Existing Brand in a New

Category

30% Distribution

Starts the Clock on Year-1

Top 100 Brand

Launches in Food and Beverage

and Non-Food

New Products that Completed their First Year in

Calendar Year 2015

DEFINING THE BEST OF THE BEST IRI’S NEW PRODUCT PACESETTERS GROWTH CRITERIA

5


90%

NEW PRODUCT INNOVATION SUCCESS RATE ARE PAINFULLY LOW 90% OF LAUNCHES FAIL TO MEET CRITICAL MILESTONES

Key Issues

• Achieving Forecasted Sales

• Optimizing Portfolio Assortment

• Driving Incremental Sales Volume



Share of NPP Dollar Sales by Company Size

INNOVATION IS COMING FROM CPGS BIG AND SMALL MID-SIZE COMPANIES ARE DEMONSTRATING MOMENTUM

34%

2012

14%

52%

26%

2013

12%

62%

27%

2014

13%

60%

41%

2015

10%

49%

Large

Medium

Small


LINE EXTENSIONS STILL DOMINATE NEW BRANDS VS. BRAND EXTENSIONS % PACESETTER BRANDS

12%

2010

14%

2015

88%

2010

86%

2015

Food & Beverage New Extension

8%

2010

14%

2015

92%

2010

86%

2015

Non-Food New Extension


12,000 new brands were launched in 2015

200 of these brands made IRI NPP

status

9 of these brands

achieved >$100M

THOUGH BLOCKBUSTER PRODUCTS ARE FEW AND FAR BETWEEN


37% 46%

38%

37%

14% 6%

6% 6% 3% 2% 4% 5%

1 2

$100> Million

$80-$99 Million

$60-$79 Million

$40-$59 Million

$20-$39 Million

<$20 Million

2014 2015

SUCCESSFUL NEW PRODUCT LAUNCHES BRING IN CONSIDERABLE SALES BUT NEARLY HALF OF EVEN THE MOST POWERFUL LAUNCHES FAIL TO HIT $20M

New Product Pacesetter Year-1 Sales

Note: Numbers do not add to 100% due to rounding.


TOP FOOD PRODUCTS RAKE IN HUGE MEDIAN YEAR-1 SALES: $19.6M ON AVERAGE, NEW PRODUCT PACESETTERS OUTPERFORM BY A WIDE MARGIN

Coffee

$172.7M

Luncheon Meats

$146.2M

Yogurt

$108.0M

Milk

$87.1M

Yogurt

$83.6M

Yoplait Greek

100 Whips! McCafé 1 Oscar Mayer

Deli Fresh BOLD

Dannon Oikos

Triple Zero

3 fairlife 4 5 2

Simply

Juice Drinks

Chili’s

at Home

6 Breyers

Gelato

Indulgences

8 Cobblestone

Bread Co.

9 10 7 Cheerios

Protein


AND ON THE NON-FOOD SIDE, YEAR-1 MEDIAN SALES REACHED $26.5M TOP LAUNCHES ARE HITTING IT OUT OF THE PARK

Gastrointestinal Tablets

$270.6M

Air Fresheners

$172.5M

Laundry Detergent

$167.5M

Adult Incontinence

$133.0M

Foot Care Products

$128.1M

Amopé

Pedi Perfect Nexium 24HR 1 Air Wick

Life Scents

Tide Simply

Clean and Fresh

3 Always

Discreet

4 5 2

Sally Hansen

Miracle

Gel

Purina

Beyond

6 Gillette

Fusion

ProGlide

8 Gillette

Venus

Swirl

9 10 7 Glad

OdorShield

with FlexBall Technology

with Febreze Freshness and Gain


C-STORE NPP PULL IN CONSIDERABLE REVENUE: $18.6M YEAR-1 MEDIAN SALES BY OFFERING AN ARRAY OF INDULGENT TREATS

Electronic Smoking Devices

$222.1M

Energy Drinks

$82.7M

Electronic Smoking Devices

$69.3M

Beer/Ale/ Alcoholic Cider

$43.3M

Salty Snacks

$26.5M

RUFFLES Deep Ridged VUSE 1 Monster Energy

Ultra Sunrise

MarkTen 3 REDD’S

Wicked Ales

4 5 2

Juicy Fruit

Starburst

Jack Link’s

Small

Batch

6 Monster

Energy

Unleaded

8 Wrigley’s

5 Ascent

9 10 7 Pillsbury Soft

Baked Mini

Cookies


POWERFUL BRANDS PLAY A CRITICAL ROLE IN INFLUENCING SOCIAL BUZZ…

Source: Voice of Consumer Analytics courtesy of IRI Social Advantage


…AND SPURRING PRODUCT USAGE IDEAS

#cbcbreakfast

Source: Voice of Consumer Analytics courtesy of IRI Social Advantage


SUCCESSFUL LAUNCHES ENHANCE CATEGORY SHARE GROWTH POTENTIAL

9 points dollar share gain

17% category growth

$141M revenue gain


11% category growth

$302M revenue gain

1 point dollar share gain

1% category growth

$142M revenue gain


5% category growth

$217M revenue gain


Non-Food Growth

Health Care

General Merchandise

Air Fresheners & Candles

3.4%

5.0%

3.7%

2.6%

Non-Food

Beverage Growth

Coffee/Tea

Beer/Wine/Spirits

6.5%

5.4%

2.5%

Beverages

HIGH INNOVATION SECTORS FREQUENTLY ENJOY OUTSIZED GROWTH CATEGORY DOLLAR SALES PERCENT CHANGE 2015 VS. 2014

Food Growth

Sweet Snacks

Salty Snacks

Meal Makers/ Lt Meals/Apps

2.7%

3.0%

3.0%

2.2%

Food


A REALISTIC LOOK AT THE COMPETITIVE LANDSCAPE

POWERFUL INNOVATION REQUIRES

AND A COMPREHENSIVE UNDERSTANDING OF MARKET OPPORTUNITIES AND CHALLENGES

Define the True Competitive Set

Understand Key Sources of Volume & Incrementality

Understand the True Market /

Consumer Trends, Needs & Wants










CONSUMERS WANT SOPHISTICATED FOOD AND BEVERAGE SOLUTIONS

enlightened elegant worldly


THIS IS FEEDING AN INFLUX OF CROSSOVERS FROM OTHER SECTORS


FOOD SOLUTIONS FOR ON-THE-GO CONSUMPTION ARE IN DEMAND CONSUMERS ARE LOOKING TO FUEL-UP WITHOUT SLOWING DOWN

of millennials

are looking for new foods that can be eaten on-the-go

of females


of consumers



PROTEIN IS MAKING A MARCH ACROSS AISLES 17% OF NPP TOUT PROTEIN



THE DINE-OUT SEGMENT IS A HUGE INFLUENCER OF FUTURE CPG TRENDS



NON-FOOD CONSUMERS WANT TO EXPRESS THEMSELVES AS UNIQUE INDIVIDUALS

stand out from the crowd personalized to

unique needs different and

delightful scents


S T A I N R E L E A S E S H I N E & P R O T E C T

POWER AND PERFORMANCE ARE STILL CRITICAL

B L O O M M I R A C L E B R I L L I A N C E


CO-BRANDING IS STRETCHING THE VALUE PROPOSITION ACROSS BROADER USAGE OCCASIONS






AS SEEN ON TV PRODUCTS ARE BREAKING NEW GROUND IN CPG AISLES NPP BRANDS


AS SEEN ON TV PRODUCTS ARE BREAKING NEW GROUND IN CPG AISLES RISING STAR BRANDS










INVEST TO CLEARLY AND ACCURATELY DEFINE THE COMPETITIVE SET THE BREAKFAST MARKET IS COMPRISED OF 3 DOMAINS

DOMAIN 2 $9.0B +0.6%

Category I

Category J

Category K

Category L

Category M

Segment C

Category N

Category O

Category P

Category Q

Segment D

DOMAIN 3 $10.7B +0.2%

Category R

Category S

Category T

Category U

Category V

Category W

Segment E

Category X

Category Y

Category Z

Segment F

DOMAIN 1 $11.1B +4.3%

Category A

Category B

Category C

Category D

Category E

Segment A

Category F

Category G

Category H

Segment B


AND REMEMBER, CROSS-CATEGORY COMPETITION IS REAL & INTENSIFYING DIGESTIVE HEALTH MARKET STRUCTURE REFLECTS MULTIPLE PAIN TYPES

Reactive (OTC) Proactive (Rx)

DOMAIN 1

Category A

Category B

Category C

DOMAIN 2 DOMAIN 3 DOMAIN 4 DOMAIN 5

Category D

Category E

Category F

D I G E S T I V E H E A LT H










DOMAIN 1 $11.1B +4.3%

Segment A

Category C

Brand 1 Brand 2 Brand 3 Brand 4

Category B Category C

Brand 5 Brand 6 Brand 7 Brand 8 Brand 9

Category C Category C

Brand 10 Brand 11 Brand 12 Brand 13

Category D Category C

Brand 14 Brand 15 Brand 16

Category E Category C Category A

REALIZE VOLUME MAY BE SOURCED FROM WITHIN THE SAME CATEGORY…

Note: Private label excluded. Source: Transactions from HH panel data 152 weeks ending 03/23/2014; POS data latest 52 weeks ending 4/30/2014 vs. YAGO


…OR ELSEWHERE IN THE STORE, EVEN FROM BEHIND THE PHARMACY COUNTER



A 360º VIEW OF MARKET POTENTIAL IS ESSENTIAL TO ACCURATE FORECASTING

“It’s hard to forecast the impact of marketing

and innovation if you don’t know where the sales will come from.”

THE HENDRY METHOD


A 360º VIEW OF MARKET POTENTIAL IS ESSENTIAL TO ACCURATE FORECASTING

65% ACV Assumption

$52M Y1 Forecast Revenue

$50M Actual Y1 $ Sales

+96% Accuracy

90% ACV Assumption

$267M Y1 Forecast Revenue

$271M Actual Y1 $ Sales

+98% Accuracy


AND IT WILL PLAY A VITAL ROLE IN DEVELOPING OPTIMAL BRAND DEVELOPMENT PROGRAMS ADVERTISING RESPONSE CURVE FOR CASE STUDY BRAND PROVIDES SPENDING LEVELS TO OPTIMIZE PROFIT VS. SHARE DURING LAUNCH

0

50

100

150

200

250

300

3500.0

4.8

9.6

14.4

19.2

24.0

28.8

33.6

38.4

43.2

48.0

52.8

57.6

62.4

67.2

72.0

76.8

81.6

86.4

91.2

96.0

100.8

105.6

110.4

115.2

120.0

Share Optimization

Marketing Spend ($M)

$ S

ale

s (

$M

)

Profit Optimization

Assumes current levels of spend for base case study brand and key competitors remain at steady state spending levels


Harvest the Fruit

Increase Launch

Success and

Support Future

Brand Growth

4

New Product

Launch Success

Is Elusive

Sow the Seeds

1

Cultivate Carefully

Breed 90-95%

Forecast Accuracy

and Prioritize Ideas

with Deliberate and

Well-Informed

Market Assessments

2

Beware of Weeds

Abandon

Conventional

Category

Definitions

3 5

Questions


QUESTIONS & ANSWERS



THANK YOU!

Documents

HARVESTING THE FRUITS OF INNOVATION DONE RIGHT€¦ · HARVESTING THE FRUITS OF INNOVATION DONE RIGHT Larry Levin, Executive Vice President Susan Viamari, Vice President, Thought