fresh foods & produce discussion...f&b ex fresh: +1.7% fresh foods: +1.4% non-edibles: +1.4%...

Sally Lyons Wyatt, IRIJonna Parker, IRIRick Stein, FMI

June 25, 2020

FRESH FOODS & PRODUCE DISCUSSION

Key Learnings in the Era of COVID-19

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2

In This Issue of IRI’s COVID-19 Report

Visit IRI’s COVID-19 Insights Portal andCOVID-19 Dashboard for more reports and updates.

To create this report, IRI leveraged data and analytics from various proprietary retail, market, consumer and shopper assets, including:• IRI Point of Sale Data, including Fresh random-weight • IRI Shopper Loyalty Data, utilizing millions of frequent shopper card transactions• Shopper Basket Analysis from National Consumer Panel including random-weight• IRI Proprietary Survey on weekly shopper sentiment during the COVID-19 crisis

IRI conducts weekly consumer surveys among primary grocery shoppers aged 18+, representative of the U.S. population.

CONSUMER SENTIMENT

FOOD & FRESH

PRODUCE THE ROAD

AHEAD


Today’s Discussion

3

How Fresh is Faring

4 Key Considerations for the Future

1 Shifting Realities in Retail Today

2

Deep-Dive Into Produce


COVID-19 Pandemic Has Impacted the World, Including Changes to How We Eat & Drink

Mandated Restrictions of “Shelter-in-Place” Resulted in the Majority of Eating & Drinking Occasions to Be at Home

Led to Unprecedented CPG Sales Including Two Weeks of Cocoon-Stocking Total Store

Accelerated Adoption of Online F&B Sales

Spring Holiday Celebrations Adopted More At-Home Activities, But Less “Traditional” Activities

The Rest of 2020 is Poised to Have More At-Home Occasions Than Ever Before


c

58% 49%I am extremely concerned about COVID-19

Week ending 3/22 Week ending 5/31


The COVID-19 Pandemic Affected Consumer F&B Mindset with Long-Lasting Impact

Source: IRI COVID19 Weekly survey of primary shoppers, as of Wave 12, week ending 5/29-5/31

What Shoppers Are Telling Us…

51% Prepare 91-100% of meals at home 45% Spent 20 minutes or less in the

grocery store on my regular trip -less time than before COVID-19 49% Biggest challenge is either new

meal ideas or lack of inspiration to cook


Wave Two Wave Eight

I am treating myself and my family more than I had in the past

Treating Their Family Has Been on a Steep Rise Since Early Weeks of COVID-19!

18%

31%

Source: IRI Weekly Surveys among IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers – Wave 2 = 3/20-3/22; Wave 8 = 5/1-5/3


c

Consumers’ Uncertainty Given the PandemicWill Impact Summer Holiday Demand

Source: IRI Survey 5/29-5/31 among National Consumer Panel representing Total US Primary Grocery Shoppers

Spent Memorial Day Differently

Plan to Spend Fourth of July Differently

Holiday plans are affected due to COVID-19

46% 40%Don’t Know How They’ll

Spend Fourth of July

19%


LEGEND

Consumers Have Shifted From Stocking Up Across Total Store to Focused Purchases of F&B; Fill-ins Include Fresh and Frozen to Offset Pantry Items

$ % Change vs. YAG - MULO

50%+

20% to 50%

10% to 20%

0% to 5%

-20% to 0%

5% to 10%

<-20%

NO

NED

IBLE

F&B

Source: IRI POS data Week Ending June 14, 2020 vs year ago


Beyond Grocers and Supercenters, Innovative New Areas Fulfill DemandWith the Foodservice Sector Suddenly Cut, Creativity Abounded in Ways to get Fresh Foods

Order groceries online for delivery or

curbside pickup

Buy food from local farmer at

their farm

14% Have & Plan to Do

Again

41% Haven’t But Interested in the Future

36% Have & Plan to Do

Again

34% Haven’t But Interested in the Future


E-Commerce Trends Higher Than Brick & Mortar Across All the Time Periods, and Sales Continued to Realize Strong Growth into JuneFood & Bev Dollar % Change

9.1%

65.8%

64.3%

16.3%19.5% 19.2%

6.4%

22.5% 19.2% 19.1% 15.9% 14.8% 13.3% 11.8%

43.1%

104.4%

73.2%67.3%

90.2%78.8%

98.8%88.8% 85.2% 80.7% 82.2%

63.2%

50.7% 53.1%

0%

20%

40%

60%

80%

100%

120%

In Store Online

Source: $ % Change - IRI TSV & eMarket Insights COS

Top Way to Shop Online? 59% Type Words into Search


Consumers in the Era of COVID-19• What have been the key takeaways of the last 13 weeks

of consumer shopping?

• What have retailers been taking away from this first phase as we enter into the summer?

• What have been the consumer changes so far with COVID-19?

• What are your perspectives regarding the future of online food & beverage shopping overall and the opportunities for brick & mortar?

(Fresh) Food for Thought


Sales Growth is Still Strong Week over Week for Fresh Compared to Year AgoTotal U.S. All Outlets Fresh Foods Consumer Purchasing Dynamics

Dollar Sales % Chg. vs. YA

Trips per Buyer% chg. vs. YA

Avg Basket Size% chg. vs. YA

$19.6

$21.3

$29.7

$28.4

$20.8

$22.0

$21.9

$21.3

Actuals ($B)

-16% -4%

0%

-3% -5% -5% -4%-4%

2.5 2.5 2.6 2.7 2.6 2.8 2.7 2.7

$71.3 $69.1 $69.8 $66.9 $65.6 $64.9 $65.9 $64.5

Actuals

Actuals

4%

25%23% 20%

15%12%

11%11%

$4.8 $4.8 $5.2 $5.2 $4.8 $5.1 $4.8 $4.8

35% 33% 31% 25% 27% 24% 26% 23%

04-19-20 04-26-20 05-03-20 05-10-20 05-17-20 05-24-20 05-31-20 06-07-20

Source: IRI Panel 8 weeks ending Jun 07, 2020. All Outlets.

But consumers are making fewer trips…

… and spending more in the store they chose

Grocery has gained +2.7 sharefrom pre-pandemic rates


Sales Have Declined Across Categories in Latest Week Compared to Prior WeeksDollar % Chg. vs. YA // Total U.S. MULO // Total Store Including Both Fixed and Random-Weight

52 weeks ending Feb 2020 benchmarksF&B ex Fresh: +1.7%Fresh Foods: +1.4%Non-Edibles: +1.4%

Source: IRI TSV+ Perimeter Model Note: Data reflected does not include Costco or Total eComm

3.1%9.1%

78.8% 80.7%

25.1%30.0% 30.4%

10.7%

31.6%25.6% 24.4% 21.5% 20.4% 17.5% 13.7%

0.4%

4.8%

47.1% 46.4%

13.3% 17.6% 19.7%

1.9%

24.1%23.3% 17.8%

11.6% 12.8% 11.2% 11.2%4.0%

20.5%

62.8%

44.5%

3.9% 2.0% -0.3%0.5%

10.0% 6.7% 8.7% 5.3% 4.9%2.7% 0.6%

03-01-20 03-08-20 03-15-20 03-22-20 03-29-20 04-05-20 04-12-20 04-19-20 04-26-20 05-03-20 05-10-20 05-17-20 05-24-20 05-31-20 06-07-20

F&B ex Fresh Fresh Foods Non Edibles


13.7%17.5%20.4%21.5%24.4%25.6%

10.7%30.4%30.0%

25.1%80.7%78.8%

9.1%3.1%

6/7/20205/31/20205/24/20205/17/20205/10/2020

5/3/20204/19/20204/12/2020

4/5/20203/29/20203/22/20203/15/2020

3/8/20203/1/2020

Fresh Growth in Total Has Been Mixed - Strong for Cooking and Meal-Making Departments But Struggling in Service Areas

19.2%18.6%20.6%

26.3%41.5%

52.5%18.0%

45.5%43.0%37.7%

92.2%80.4%

8.1%-0.8%

6/7/20205/31/20205/24/20205/17/20205/10/2020

5/3/20204/19/20204/12/2020

4/5/20203/29/20203/22/20203/15/2020

3/8/20203/1/2020

13.2%13.2%14.3%16.0%17.7%18.0%

4.0%17.7%

15.5%9.5%

31.0%35.8%

4.6%1.1%

6/7/20205/31/20205/24/20205/17/20205/10/2020

5/3/20204/19/20204/12/2020

4/5/20203/29/20203/22/20203/15/2020

3/8/20203/1/2020

Meat Department

Produce Department

Source: IRI, Total US, MULO, 1 week % growth versus year ago

11.2%11.2%12.8%11.6%

17.8%23.3%

1.9%19.7%

17.6%13.3%

46.4%47.1%

4.8%0.4%

6/7/20205/31/20205/24/20205/17/20205/10/2020

5/3/20204/19/20204/12/2020

4/5/20203/29/20203/22/20203/15/2020

3/8/20203/1/2020

Fresh Perimeter

Total Bakery

4.5%4.0%4.6%5.0%6.8%7.9%

-3.7%10.7%10.1%

7.7%38.2%37.3%

2.9%-0.9%

6/7/20205/31/20205/24/20205/17/20205/10/2020

5/3/20204/19/20204/12/2020

4/5/20203/29/20203/22/20203/15/2020

3/8/20203/1/2020

15.6%18.9%21.0%23.0%

26.6%28.9%

16.7%31.9%31.1%

22.2%56.6%56.0%

6.5%1.9%

6/7/20205/31/20205/24/20205/17/20205/10/2020

5/3/20204/19/20204/12/2020

4/5/20203/29/20203/22/20203/15/2020

3/8/20203/1/2020

Dairy Department

-12.0%-13.5%-13.8%

-16.4%-16.2%-16.9%

-24.6%-24.9%

-20.2%-17.8%

3.9%18.1%

2.6%0.4%

6/7/20205/31/20205/24/20205/17/20205/10/2020

5/3/20204/19/20204/12/2020

4/5/20203/29/20203/22/20203/15/2020

3/8/20203/1/2020

Deli Department

Total Edibles Excl. FreshTotal Store with Fresh

9.8%11.5%13.7%14.3%18.3%19.1%

5.6%17.8%18.0%

15.1%59.1%

64.1%11.8%

2.8%

6/7/20205/31/20205/24/20205/17/20205/10/2020

5/3/20204/19/20204/12/2020

4/5/20203/29/20203/22/20203/15/2020

3/8/20203/1/2020


While Price Has Gone Up, Variety Has Gone Down

Fresh Items Per Average Per Store During

COVID-19

While Growth Has Been Driven By Unprecedented Demand,Price Is Also Going Up

Average Price Changes vs. Year Ago Week ending 6/7/20

+6.2% Total Store including Fresh

+6.0% Fresh Foods

+15.4% Fresh and Packaged Meat

*Based on IRI benchmarks, reaching new buyers through advertising within 4 weeks of their initial purchase results in an average of 12.6% of those trial buyers becoming repeaters Source: IRI Loyalty database, IRI Consumer Panel. 12 weeks ending April 12, 2020

96 less

+11.2% Fresh and Packaged Bakery

-1.5% Fresh and Packaged Convenient Meals

1.0% Fresh and Packaged Produce


Shoppers Noticed Prices Climbed Across the Stores Increasingly with Each New Week

Q. Consumers who agree with statement: I have seen prices increase because of the coronavirus.

Source: IRI Survey 2020, among IRI Consumer Network™ Panel representing Total U.S. Primary Grocery Shoppers. March 13-15 to May 22-24

41%

51%

61%67% 66% 69% 70% 73% 74%

82%86%

Wave 1 Wave 2 Wave 3 Wave 4 Wave 5 Wave 6 Wave 7 Wave 8 Wave 9 Wave 10 Wave 11


Price Is Even More a Consideration for Many than Pre-COVID-19

6%

65%

29%More likely to decide what to buy based on price andwhat's on sale/special than before COVID-19

About the same

Less likely to decide what to buy based on price andwhat's on sale/special than before COVID-19

Rate is even HIGHER among Hispanics, Millennials and those who have experienced a layoff/furlough

Source: IRI Survey Collected 5/29-5/31 among National Consumer Panel representing Total US Primary Grocery ShoppersM4. Which of the following, if any, describe your current shopping for groceries, personal care items, and home care? M5. Have you changed how much you focus on prices while shopping for groceries personal care items, and home care?

PRICE FOCUS


Fresh Foods in the Era of COVID-19

• What trends in Fresh have been in demand with consumers during the pandemic?

• What key learnings can fresh take away from the increased demand and new roles being played by center store?

• How has price and promotion played a role? What does the future look like for using price as a lever?



Fresh Produce is More Complex Than Ever…


Initially Trending Behind Frozen and Canned in Growth, Fresh Produce is Now Posting Similar Sales Increase Year-over-Year Compared to other Fruits and Vegetables

Source: Total Store View + Perimeter Market Advantage, MULO week ending 6-14-20, Perimeter includes both FW/RW definition, Sales change vs. Prior year by period

1.1% 4.6%

35.8% 31.1%

9.5%15.6% 17.8%

3.8%

23.8%18.1% 18.1% 16.6% 14.8% 13.7% 13.6% 9.8%

During Pandemic (March - June) Weekly Dollar Sales % Chg. YA

Produce Department Frozen Fruits & Vegetables Shelf Stable Fruit & Veg


The Pandemic Has Increased the Role of Produce in Store Sales

Source: Total Store View + Perimeter Market Advantage, MULO week ending 6-14-20, Perimeter includes both FW/RW definition, Sales change vs. Prior year by period

2019 Share Benchmark 7.57.3

6.9

6.3 6.3

7.4 7.5 7.7 7.67.8

7.6 7.67.8 8.2

8.3 8.28.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Weekly Produce Share of Total Store


Price Growth Within Fresh Produce Has Been Relatively Moderate While Dollars Consistently Gained in the Double Digits Except for the Easter Overlap

0%

9%

16%

2%5%

39% 40%

15%

21%24%

5%

27%22% 22%

17%14%

11% 11%8%

11%

1.4%

-2.3%-0.8%

-0.8%-0.7%

-2.3%

-6.4%-4.9%

-4.2%-4.9%

-1.0%

-2.3%-3.1% -2.8%

-0.4%0.6%

2.9% 2.4% 2.1% 2.0%

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%

Weekly dollar and volume growth Total Produce (fixed and random weight)versus the comparable week in 2019

Volume Growth Price per Vol growth

Source: Total Store View + Perimeter Market Advantage, MULO week ending 6-14-20, Perimeter includes both FW/RW definition, Sales & price change vs. Prior year by period


The Highest Selling Fresh Vegetables Are Anchored in Meal Solutions

13.0%

23.3%

24.4%

25.7%

14.4%

28.8%

21.2%

9.1%

8.6%

15.7%

11.4%

23.7%

41.2%

25.9%

25.0%

30.0%

19.6%

15.6%

14.1%

18.2%

Lettuce

Tomatoes

Potato

Peppers

Onions

Mushrooms

Cucumber

Corn

Carrots

Broccoli

Dollar % Chg -Top 10 Vegetables of Produce

Latest 4 Weeks Ending 06-14-20Latest 12 Weeks Ending 06-14-20

Source: Total Store View + Perimeter Market Advantage, MULO 4 & 12 week ending 6-14-20, Perimeter includes both FW/RW definition, Sales change vs. Prior year by period

Top 10 Sorted Based on dollar sales latest 4 weeks ending 06-14-20


The Highest Selling Fresh Fruits have had Mixed Results during COVID-19

13.5%

-0.3%

2.2%

3.2%

54.8%

-6.1%

12.1%

69.0%

0.1%

11.8%

14.7%

0.5%

2.5%

6.6%

52.7%

-4.1%

14.4%

66.0%

5.4%

0.8%

Berries

Melons

Apples

Bananas

Cherries

Grapes

Avocados

Oranges

Tangerines

Pineapple

Dollar % Chg – Top 10 Fruits of Produce

Latest 4 Weeks Ending 06-14-20Latest 12 Weeks Ending 06-14-20

Source: Total Store View + Perimeter Market Advantage, MULO 4 & 12 week ending 6-14-20, Perimeter includes both FW/RW definition, Sales change vs. Prior year by period

Top 10 Sorted Based on dollar sales latest 4 weeks ending 06-14-20


47.0% Fixed Weight Packaged Produce

Pre-Pandemic Share Benchmark 2019

49.4% Fixed Weight Packaged Produce

During Pandemic

Source: Dollar Sales Change, IRI Total Store View + Perimeter Market Advantage, weekly ending 6-14-20

Fixed-WeightPre-packaged UPC-coded itemsSold in sealed packages or bags

Not loose or open to the consumer

FW sales growth was faster than RW in every top-selling produce category except onionsOranges, Lemons, Limes and Peppers saw the highest growth in Fixed Weight sales share vs. 2019


Fixed Weight has Grown Faster than Random since 2019; However, the Gap Has Widened During COVID-19

Source: Dollar Sales Change, IRI Total Store View + Perimeter Market Advantage, weekly ending 6-14-20 vs. Year Ago

3.4% 2.9%

8.0%

41.4%

37.1%

14.0%

21.1%23.5%

8.2%

30.2%

23.8% 22.9%20.7% 19.7% 18.8%

16.8% 15.3%

-0.2% -0.7%1.2%

30.4%

25.2%

5.2%

10.3%12.3%

-0.4%

17.6%

12.8% 13.7% 12.9%10.9% 9.6% 10.9%

5.4%

Total Year2019

WeekEnding 03-

01-20

WeekEnding 03-

08-20

WeekEnding 03-

15-20

WeekEnding 03-

22-20

WeekEnding 03-

29-20

WeekEnding 04-

05-20

WeekEnding 04-

12-20

WeekEnding 04-

19-20

WeekEnding 04-

26-20

WeekEnding 05-

03-20

WeekEnding 05-

10-20

WeekEnding 05-

17-20

WeekEnding 05-

24-20

WeekEnding 05-

31-20

WeekEnding 06-

07-20

WeekEnding 06-

14-20

Fixed Weight Random-Weight

Dollars % Change vs. Year Ago


After Gaining Last Year, Produce Organic Sales Share Has Dipped Back to Near 2016 Levels, and Conventional and Organic Have Similar Growth Rates

Source: Dollar Share Change and Dollar Sales Change , IRI Total Store View + Perimeter Market Advantage, Calendar Years 2015-2019 and 4 weeks ending 6-14-20 vs. Year Ago

2016 2019 YTD 2020 4 Weeks ending6/14/20

Dollar Sales Share

CONVENTIONAL ORGANIC

91.9 90.9 90.8 91.3

9.1 9.2 8.78.1

3.0%

1.4%

10.5%

13.0%

12.2%

2.7%

11.3%

12.2%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%

2016

2019

YTD 2020

4 Weeks ending 6/14/20

Sales Growth Rates

Presenter

Presentation Notes

Overall produce growth was 1.1% in the L52 weeks, with organic showing slightly stronger growth at 2.3%


Produce in the Era of COVID-19

• What role can produce play in the short and long term for stores during COVID-19?

• How will states’ re-opening and food service demand impact retail for produce?

• What key trends will impact produce as the pandemic continues?

• What key considerations should retailers keep in mind this summer and the fall? How about suppliers?



Jonna [email protected]

Sally Lyons [email protected]

Rick [email protected]


Insights and Strategic Guidance for Better DecisionsIRI’s Online Resources Include Real-Time Updates and Weekly Reports Which Track the Impact of the Virus on CPG and Retail

The IRI COVID-19 Info PortalIncludes COVID-19 impact analyses, dashboards and the latest thought leadership on supply chain, consumer behavior, channel shifts for the U.S. AND international markets

The COVID-19 Dashboard andThe IRI CPG Demand Index™

Accessible through the insights portal and tracks the daily impact of COVID-19. This includes the new IRI CPG Demand Index™, top selling and out of stock categories across countries, and consumer sentiment on social media.

https://www.iriworldwide.com/en-US/Insights/Publications/coronavirus-impact-to-CPG-and-retail

https://advantage.iriworldwide.com/Engineering/covid19/

https://advantage.iriworldwide.com/Engineering/covid19/index.html

fresh foods & produce discussion...f&b ex fresh: +1.7% fresh foods: +1.4% non-edibles: +1.4%...

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