Our nation out of home Taste Wales

March 23rd 2017

What do Kantar Worldpanel collect?

7,500 individuals (aged 13 to 79) record purchasing in a purpose built

app at the point of consumption

The Out of Home panel records all meals, snacks, hot drinks and soft

drinks purchased to be consumed outside of the home (excluding

alcohol) + Takeaways consumed at home

1.1m

Purchase

Records

How does the app work?

Our nation out of home

Out of home in GB & Wales

6

97% buy Out of Home

in GB

98% in Wales

£968 per person in OOH GB

£846 in Wales

4.8 times a

week in GB,

4.6 in Wales

£3.86 Our average GB

spend per trip

£3.53 In Wales

240 In Wales

250 GB Trips per

person

Source: Kantar Worldpanel OOH | 52 w/e 01 Jan 2017 | YoY

Growth comes

through price (in line

with GB) and also

items per trip

Out of home fundamentals

Source: Kantar Worldpanel OOH | 52 w/e 01 Jan 2017 | YoY

Spend +4.5% Vs Last

year

Items Bought +1.1% Vs Last year

Driven by Price Inflation;

+3.4% per item Vs

Last year

However, penetration is

-0.9% Vs Last year

Shoppers are buying

+1.8% more

Frequently Vs Last year

But in smaller trips

(-0.3% Vs Last year)

…And it is growing!

Source: Kantar Worldpanel OOH | 52 and 32 w/e 01 Jan 2017

This broad market offers growth across a range of categories

Decline more than -3%

Decline between -3 and 0%

Growth between 0 and 2%

Growth between 2 and 5%

Growth more than 5%

Formal Meals

£18.5bn

Drinks

£13.5bn

Snack Items

£5.3bn

Quick Meal Markets

£9.9bn

Out of Home Markets

Source: Kantar Worldpanel OOH | 52 and 32 w/e 01 Jan 2017

Sandwiches dominate the quick meals market, we also know that Salads and Sushi offer an

opportunity in Wales

Out of Home Markets

Decline more than -3%

Decline between -3 and 0%

Growth between 0 and 2%

Growth between 2 and 5%

Growth more than 5%

Formal Meals

£18.5bn

Drinks

£13.5bn

Snack Items

£5.3bn

Sandwiches Total

Savoury Pastry &

Other Savoury

Other Quick

Meals Salads

Sushi

£1.8bn £1.6bn £0.8bn

£0.1bn

£5.6bn

Source: Kantar Worldpanel OOH | 52 and 32 w/e 01 Jan 2017

Confectionery and CSN struggle in snacks….However Confectionery in slight growth in

Wales

Out of Home Markets

Decline more than -3%

Decline between -3 and 0%

Growth between 0 and 2%

Growth between 2 and 5%

Growth more than 5%

Formal Meals

£18.5bn

Drinks

£13.5bn

Sandwiches Total

Savoury Pastry &

Other Savoury

Other Quick

Meals Salads

Sushi

£1.8bn £1.6bn £0.8bn

£0.1bn

£5.6bn

Cakes Pastries &

Biscuits

Confectionery

Fruit

Ice

Cream

CSN & Popcorn

£2bn

£1.7bn

£0.5bn

£0.4bn

£0.6bn

Source: Kantar Worldpanel OOH | 52 and 32 w/e 01 Jan 2017

And coffee dominates hot drinks growth – In Wales Coffee also a ‘Hero’ category

Out of Home Markets

Formal Meals

£18.5bn

Sandwiches Total

Savoury Pastry &

Other Savoury

Other Quick

Meals Salads

Sushi

£1.8bn £1.6bn £0.8bn

£0.1bn

£5.6bn

Cakes Pastries &

Biscuits

Confectionery

Fruit

Ice

Cream

CSN & Popcorn

£2bn

£1.7bn

£0.5bn

£0.4bn

£0.6bn

Cold Drinks Coffee

Tea

Other Hot

Drinks

£6.2bn

£1.5bn

£0.9bn

£4.9bn

Decline more than -3%

Decline between -3 and 0%

Growth between 0 and 2%

Growth between 2 and 5%

Growth more than 5%

Source: Kantar Worldpanel OOH | 52 and 32 w/e 01 Jan 2017

With the exception of vending machines; each out of home channel takes at least £1bn over

the course of a year, Wales has similar proportions

Out of Home Channels

Decline more than -3%

Decline between -3 and 0%

Growth between 0 and 2%

Growth between 2 and 5%

Growth more than 5%

Quick Service Restaurant

Bakery &

Sandwich

Symbols &

Indies

Forecourts &

Travel

Vending

High

Street Hotels

Workplace & Education Leisure

Full Service Restaurant Mults (inc cafe/forecourt)

Pubs & Bars

Coffee Shop

£10.3bn

£4.7bn

£1.3bn

£1bn

£0.6bn

£6bn

£1bn £1bn

£2.4bn £1.6bn

£5.9bn

£5.1bn £6.3bn

The pubs & bars channel is more important in Wales, driven by meals out (out of home data

excludes alcohol)

Source: Kantar Worldpanel OOH | Total OOH – Time of Day Switching | 32 w/e 01

Jan 2016

21.8 18.7

13.3 12.4

12.6 12.4

12.6 17.2

10.7 11.4

10 8

19 19.9

Total GB Wales

Others

Bakery & Sandwich

Mults (inccafe/forecourt)

Pubs & Bars

Coffee Shop

Full ServiceRestaurant

Quick ServiceRestaurant

39.2 40

21 20.2

18.2 18.7

11.1 11.1

10.5 10.1

Total GB Wales

Cold Drinks

Snack Items

Hot Drinks

Quick MealMarkets

Formal Meals

Millennials are the lightest out of home spenders (and more so in Wales), driven by a greater

spend on lower value categories

Source: Kantar Worldpanel OOH, 52 w/e 01 Jan 2017

MILLENNIALS (Under 35)

Spend £783 per annum in GB

Spend £505 per annum in Wales

GENERATION (35-54)

Spend £948 per annum in GB

Spend £827 per annum in Wales

BABY BOOMERS (55+)

Spend £1186 per annum in GB

Spend £1112 per annum in Wales

20.5 20.1 20.1

31.9 39.1

43.2

15.1 9.9

10.5

15.6 13.2 6.4

16.9 17.8 19.9

Under 35 35-54 Age 55+

Hot Drinks

Cold Drinks

Snack Items

Formal Meals

Quick MealMarkets

Spend %,

Wales

Source: Kantar Worldpanel OOH | 52 w/e 01 Jan 2017

So whilst channels do have clear and traditional leanings towards market sectors…

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Vending

Forecourts/Travel

Coffee Shop

Symbols &

Independents

High Street

Mults

Leisure

Workplace & Edu.

Bakery & Sandwich

Pubs & Bars

Hotels

QSR

FSR

Hot Drinks

Cold Drinks

Other Sweet Snack Items

Ice Cream

Fruit

Confectionery

Cakes Pastries & Biscuits

Other Savoury Snack Items

CSN & Popcorn

Quick Meal Markets

Formal Meals

% Spend

Source: Kantar Worldpanel OOH | 52 w/e 01 Jan 2017

…We can expect channels to increasingly compete outside of their traditional sectors; with

hot drinks often used to bridge the gap

20% QSR trips

include a hot

drink…22% in

Wales

17% Coffee Shop

trips include a Quick

Meal…13% in Wales

32% Bakery and

Sandwich Shop

trips include a hot

drink…26% in

Wales

To win in out of home, retailers are pulling a number of different levers

Source/base information here 19

1. New stores 2. New

occasions 3. Loyalty 4. Trip spend

658 in 2010

1500 in 2015

Weekend v

Weekday

Time of Day

Occasion Type

CRM and

loyalty

schemes

Price Rise

Premiumisation

Category Mix

Coffee is being used to drive both new occasions and trip spend

20

In GB 72% out of home hot beverage spend is on coffee (only 17% on tea), Wales shows a

similar dynamic – Welsh consumers opting for slightly cheaper OOH Coffee

21

The out of home coffee

market is worth £6.2bn

That means we drink

3.7bn coffees a year

The average out of

home coffee costs

£1.68

69.9% Population buy Coffee

out of home over a year

On average we have 82 coffee trips per person

And is growing

+8.9% YoY

We spend £176 on

Coffee out of home on

average

Source: Kantar Worldpanel OOH | 52 w/e 01 Jan 2017

As coffee grows, its channel mix is changing…

40.2

11.8 9.8

7.7 7.4 6.3 5.3

3.7 2.9 1.8 1.1 1.1 0.7

0

5

10

15

20

25

30

35

40

45

Hig

h S

treet

Sym

bols

and

Independents

Hote

ls

FS

R

Vendin

g

Pubs a

nd B

ars

Leis

ure

Fo

recourts

& T

ravel

QS

R

Work

pla

ce &

Educatio

n

Mults

(inc

Café

/Fo

recourts

)

Bakery

/Sandw

ich

Coffe

e S

hop

Jan16

Jan15

Sh

are

of C

offe

e S

pen

d

Source: Kantar Worldpanel OOH | 52 w/e 01 Jan 2017

… competition in coffee will continue to evolve

Easy Coffee: easyJet’s latest venture Starbucks: St. Michael’s Lane Store

is also selling Craft Beer and Wine

Greggs: Preston upgraded facilities McDonald’s: Table service and store refits

Nearly 40% coffee occasions include non-coffee purchases; sandwiches and cakes/sweet

pastries/biscuits are most often bought

Source: Kantar Worldpanel OOH | 52 we 01 Jan 2017 – 1 year continuous panel

Coffee Occasions

38% also include non-coffee purchases

11% include Sandwich

purchases

11% include

Cakes/Pastry/Biscuit

4% include Soft Drinks

Less than 1% currently

include Confectionary

The coffee market is also reliant on some very heavy shoppers; more than 1 in 20 of us buy the

category more than 300 times a year

Source: Kantar Worldpanel OOH | 52 we 01 Jan 2017 – 1 year continuous panel

0.0

5.0

10.0

15.0

20.0

25.0

% Coffee

Shoppers

% Coffee

shoppers

Number of Trips per annum

40% OOH Coffee

shoppers bought less

than 25 times in a year…

…however, 30%

bought more than

100 times 15% Coffee

shoppers (11%

Population) bought

more that 200 times

in a year; and these

shoppers account

for more than 50%

OOH Coffee spend

10% Coffee

shoppers bought

more that 300

times in a year;

That is more

than 1 in 20 GB

adults

Although they spend £850 on coffee, the heaviest shoppers are not necessarily connoisseurs

24% Population

>25 Trips

£1.86 per unit

£11 Annual Spend

23% population

25 - 100 Trips

£1.91 per unit

£114 Annual Spend

10% Population

101 - 200 Trips

£1.88 per unit

£307 Annual Spend

4% Population

201 - 300 Trips

£1.71 per unit

£446 Annual Spend

8% Population

300+ Trips

£1.54 per unit

£850 Annual Spend

Source: Kantar Worldpanel OOH | 52 we 01 Jan 2017 – 1 year continuous panel

Their profile is firmly that of the older male and they are unlikely to be buying in the main

coffee shops

Source: Kantar Worldpanel OOH | 52 we 01 Jan 2017 – 1 year continuous panel

Under 25

25 to 99 times

100 - 199 times

200 to 299

300+

40

42

44

46

48

50

52

54

56

58

60

30 35 40 45 50 55 60 65 70 75 80

% S

pen

d f

rom

Ma

les

% Spend from 45+

Younger,

Male

Older,

Male

Younger,

Female

Older,

Female

The less frequent shoppers

are far more likely to be

buying at the weekend than

the most frequent, for whom

77% volume is bought on

weekdays

Far less likely to be visiting

coffee shops like costa, but

overindex in QSR,

Forecourts and Workplace

29

Coffee is a fast growing and dynamic part of the out of

home market…

…as more channels recognise the strategic

opportunities that coffee provides; is your business

placed to capitalise?

…wouldn’t it be great to understand how shoppers are

changing their behaviour….?

Although a really important period for out of home sales, the lunchtime trade is

underperforming

Source: Kantar Worldpanel OOH | Total OOH | 32 w/e 01 Jan 2016

Breakfast Lunch Evening Afternoon

Annual Occasions

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

Shifts throughout the day

have come, in part, as

retailers note the blurring

of meal-times

Morning

+3% +9% -3% +1% -1%

31

This could in part be driven by increasing willingness of adults to prepare and carry out their

lunches from home – even without specific products targeting the occasion

Source: Kantar Worldpanel OOH | Total OOH – Time of Day Switching | 32 w/e 01

Jan 2016

300

350

400

450

500

550

600

1400

1450

1500

1550

1600

1650

1700

N D J F M M A M J J A S O N D J F M M A M J J A S O N D J J F M A M J J A S O

Kids

Adults

2016 2015 2014

Few

“lunchbox”

products

targeting

adults

September 2014

Free school meals for

kids 5-7 in England

33

As consumers are able to offset out of home spend at other meal occasions through whilst

also fulfilling health and enjoyment needs

Source: Kantar Worldpanel OOH | Total OOH – Time of Day Switching | 32 w/e 01

Jan 2016

Carried Out Lunch occasions:

+75m additional occs (growth across all Adults except 55-64s)

These are active decisions:

“Prepared another Day” is growing whilst

“Needed using up” declines

They are considered:

“I fancied a change”, “A Treat/Reward”

and “adds extra flavour” grow

As well as indulgence, Health Needs such as

Calorie Control are growing within Carried Out lunches

34

37

Shoppers are being a bit more

considered at lunch, and indulging

more in the mornings.

Are they also doing so in the

Evenings?

38

£13bn market (+5.5% YoY)

Growth is driven by meals, as snack foods decline in

the evening YoY

Dominated by Quick Service Restaurants (29%

spend), Full Service Restaurants (16% Spend)

We see Quick Service Restaurants growing fastest

Growing through Premiumisation As both Price Per Item and Items per Trip increase

YoY

Source: Kantar Worldpanel OOH | Total OOH – Time of Day Switching | 32 w/e 01

Jan 2016

39

As shoppers begin to change their lunchtime

behaviours…

…is your portfolio well placed to capitalise on the

growth in carried out lunch occasions and premium,

indulgent occasions in the morning?

Food-service will continue to grow and some trends will continue into 2017

42

Takeaways will grow,

as long as confidence

maintains

Millennials will grow

up, but will they

become wealthier?

Various meal types

are growing through

differing occasions

Food-tech is changing

the way we engage with

takeaways

OOH has changed

rapidly, but there may

be a long term shift

Venues will either

broaden variety or

specialise

Thank you

Chris Hayward

Tel.: +44 (0)7943 811656

chris.hayward@kantarworldpanel.com

For further information please contact:

43