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Bakery Category Presentation
A closer look at the key trends impacting BakeryMatthew Verity
Thursday 18th October 2018
The largest shopper panel in Great Britain
Geographically and demographically representative of the
population of GB
30,000Households in GB
Kantar Worldpanel Service & Methodology
Future prospects Price competition Slow
behaviour
change
Is all as it seems…
Food & Drink Growth
Consumer Confidence
May
2016Sep
2018
0%
-1%
+3.8%
-9%
Yet confidence seemingly has no direct bearing on FMCG market growth
Source: Kantar Worldpanel/ Trading Economics.com (GfK)
9.4 9.3 9.1 8.9 8.8 8.7 8.6 8.5 8.9 9.2 9.1 9.1 9.3 9.3 8.5 8.5 10.7 10.5
5.6 5.7 5.8 5.8 5.8 5.7 5.6 5.5 5.6 5.7 5.6 5.8 5.9 6.0 6.8 5.4 4.4 4.5
10.6 10.6 10.8 10.7 10.6 10.4 10.2 10.1 10.0 9.5 9.6 9.8 9.9 9.99.0 8.4
8.5 9.0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201720162015201420132012201120102009200820072006200520042003200220012000
Food + Non-alcoholic Beverages
Alcohol + Tobacco
Clothing + Footwear
Housing + Utilities
Furnishing + Equipment + Maintenance
Health
Transport
Communication
Recreation + Culture
Education
Restaurants + Hotels
Miscellaneous Goods + Services
Food and drink increasing in importance for UK households
Source: ONS
-4%
-2%
0%
2%
4%
6%
8%
10%
O D J MM J S N D F A J A O N J MM J A O D F AM J S N J MM J A O D F AM J S N J MA J A O D F MM J S N J MA J A O D J MM J S N J F A J A O D J MM J S
Grocery Inflation
Grocery Growth
201820172016201520142013201220112010200920082007
The GB market relies on inflation for growth with inflation now standing at +2.0%
% change
Source: Kantar Worldpanel – Total Grocery (RST) Growth vs. Inflation – 12 we
7
-4
-2
0
2
4
6
8
07
-De
c-1
4
04
-Jan
-15
01
-Fe
b-1
5
01
-Mar
-15
29
-Mar
-15
26
-Ap
r-1
5
24
-May
-15
21
-Ju
n-1
5
19
-Ju
l-1
5
16
-Au
g-1
5
13
-Se
p-1
5
11
-Oct
-15
08
-No
v-1
5
06
-De
c-1
5
03
-Jan
-16
31
-Jan
-16
28
-Fe
b-1
6
27
-Mar
-16
24
-Ap
r-1
6
22
-May
-16
19
-Ju
n-1
6
17
-Ju
l-1
6
14
-Au
g-1
6
11
-Se
p-1
6
09
-Oct
-16
06
-No
v-1
6
04
-De
c-1
6
01
-Jan
-17
29
-Jan
-17
26
-Fe
b-1
7
26
-Mar
-17
23
-Ap
r-1
7
21
-May
-17
18
-Ju
n-1
7
16
-Ju
l-1
7
13
-Au
g-1
7
10
-Se
p-1
7
08
-Oct
-17
05
-No
v-1
7
03
-De
c-1
7
31
-De
c-1
7
28
-Jan
-18
25
-Fe
b-1
8
25
-Mar
-18
22
-Ap
r-1
8
20
-May
-18
17
-Ju
n-1
8
15
-Ju
l-1
8
12
-Au
g-1
8
09
-Se
p-1
8
Co
ntr
ibu
tio
n t
o G
row
th (
%)
Frequency Basket Size Shoppers LFL Inflation Rate Price Mix Growth
Inflation key to growth though recent warm weather boosts an increase in trips
Source: Kantar Worldpanel – Total Grocery (RST) Contribution to Value Change – 12 we
Butter
+15%
Milk
+5%
Bread
+4.7%
Fresh Poultry
-2%
Ambient Cooking Sauces
-3%
Washing Detergent
-1%
Not consistently positive across the market, some areas in negative territory
Source: Kantar Worldpanel
Latest 12 weeks to 7th October 2018
28.0%
15.8%
15.5%
10.3%
6.8%
6.2%
5.2%
5.3%
2.1%
1.1%
27.4%
15.4%
15.3%
10.3%
7.6%
6.4%
5.6%
5.2%
2.1%
1.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Total Grocers
Tesco
Sainsbury's
Asda
Morrisons
Aldi
Co-op
Lidl
Waitrose
Iceland
Ocado
Share of Till Roll Grocers £%
12 Weeks to 08/10/17 12 Weeks to 07/10/18
3.2%
0.9%
0.6%
2.4%
2.4%
15.1%
7.0%
10.0%
0.1%
4.8%
7.5%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
Total Grocers
Tesco
Sainsbury's
Asda
Morrisons
Aldi
Co-op
Lidl
Waitrose
Iceland
Ocado
YoY % Growth
Till Roll. Kantar Worldpanel
9
All key retailers showing growth with the Big 4 share continuing to shrink whilst Aldi post their fastest growth of the year
2007
4.3%2018
13.1%12 Weeks
65% of population
2006-2008 numbers realigned consistent with
improved post 2009 promotional read. Best fit calendar years. 52w/e 31 Dec 201711
0
5
10
15
20
25
30
35
40
45
34.5
2017
37.4
2016
39.4
2015
39.6
2014
38.7
2013
39.8
2012
38.3
2011
37.3
2010
33.2
2009
30.9
2008
30.2
2007
30.1
2006
On promotion
% spend on deal
Rapid de-escalation of promotions has continued with promotions at a new low with 68% of sales going through at full price in the past 12 weeks
32%of spend is on deal in
past 12 weeks
Online Grocery growth slowing to under 0.5%pts per annum
12RST (Grocery). KWP 2017 13. 52w/e 31 Dec17
0
1
2
3
4
5
6
7
8
7.3
2016
6.8
2015
6.1
2014
5.1
2013
4.4
2012
Online
% FMCG spend
7.5
2017
7.5%Online Share of
Grocery
Own Label Fresh Out of HomePremiumTop up
shopping
Many retailers all looking for growth in the same place….though signs this is starting to change
In August brands grew faster than own label for the first time in 3 years
15
-4
-2
0
2
4
6
8
10
MM J S N D F A J A ON J MM J S ND F AM J S N J MM J A OD F AM J S N J MA J A OD FMM J S N J MA J A OD J MM J S N J F A J A OD J MM J S
Own label
Brands
% spend growth
20142013201220112010200920082007 2015 2016 2017
RT43 (Grocery). 2018 09. 12 w/e 9 Aug 18
2018
Source: Kantar Worldpanel – Total Grocery (RST) – 12 we
Own label
is for
everyone
Store
differentiation
Guides
store choice
Cheaper
options
within a
store
Own Label - shopper choices save money, but also potentially trading up
16
Value
Own
Label
Standard
Own
LabelBrands
Premium
Own
Label
-1% +4% +6%+4%
RT43 (Grocery). 2018 08. 12 w/e 12 Aug 18
Fresh sales contribute a third of £ growth to retailersAlcohol, ambient, frozen, healthcare, household and toiletries collectively grew +£2.4bn
+£0.6bn +£1.2bn +£0.3bn +£0.1bn +£0.1bn +£0.0bn
+£1.3bn
RT43 (Grocery). KWP 2018 08. 52w/e 12 Aug 18
All grew faster than +3% fresh & chilled
RT43 (Grocery). Full years to KWP 2017 13. 52w/e 31 Dec 17 18
41 40 40 39 38 38 38 37
8 8 8 8 8 8 8 9
36 36 37 37 37 38 37 37
15 16 15 16 16 17 17 17
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2016201520142013201220112010
Main Shop
For Tonight
Replenishment
Specific Journey
% spend
2017*
Changing shopper missions – Top Up has become more important over past decade
Source: Kantar Worldpanel – Total Grocery (RST) – 52 we 31 Dec 17
Take Home
+3%Out of Home
+6%
1. Naturalness
21Source: Kantar Worldpanel Usage – 52 w/e June 2018
Total In Home/Carried Out food. Includes dishes/ingredients
Health
29
29.5
30
30.5
31
31.5
32
32.5
33
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 N D J J F M A M J J A S O N D D J F M A M J J
20182017201620152014
Servings of food
chosen for health have
grown 5% vs. last year
and are now worth
£20bn p.a.
% food servings chosen for Health
Almost 1 in every 3 food items chosen for health reasons
6.9
2.6
15.0
8.7
Hlth benefits(fibre/vitamins)
To get portion of fruit or veg
More natural/less processed
Lower in fat/salt/sugar
Growth across all key health drivers. More natural grows the strongest with concern increasingly about ‘what is in rather than just what is not in my food’
Source: Kantar Worldpanel
How many ‘health’ benefits can you spot?
23
2. Fragmentation
25
44.7
34.2
10.2
6.84.1
1 person 2 people 3 people 4 people 5+ people
Household occasions | Number of
people present
1980
33%
KWP USAGE HOUSEHOLD OCCASIONS
52 w/e December 2017
We are increasingly seeing a fragmentation of the meal occasion
Cutting a course :
312 million fewer
dessert courses in
the past 2 years
(-3%)
‘Over half of us don’t decide what we’re
having for dinner until lunchtime, 1 in 10 of us
will decide just before we eat.’
Waitrose Food & Drink Report
Classic grocery options – seven outlets within a mile
3.‘Low effort’ to ‘Treat’
The average evening meal
takes 34 minutes to prepare.
Down from an hour
30 years ago
Flat in recent years
Source: Kantar Worldpanel Usage – 52 w/e December 2017
Total In Home/Carried Out consumption
7.6
7.8
8
8.2
8.4
8.6
8.8
9
9.2
D M J S D M J S D M J S D M J S D
Total Consumption – Practicality Needs
201620152014
Quick to prepare
Easy to prepare
Servings Vert %
2017
Ease of preparation has become more important than speed
Level of emotional engagement
Va
lue
pe
r o
cca
sio
n (
pe
r ca
pita
)
£1.26
SOCIAL
£3.24
CELEBRATION
£0.81
IN FRONT OF PC
£1.33
TREAT
£1.88
ROMANTIC
£1.64
TOGETHER TIME
£1.00
FUEL
£2.42
SPECIAL
£1.31
IN FRONT OF THE TV
£0.72
GRABBED
£0.68
ON THE GO
£0.80
A QUICK BITE
£1.21
CUPBOARD STOCK
KWP USAGE ROLLING 52 W/E OCTOBER 2017
Some moments are worth more than others
£3.9bn +2.5%90 Trips
£146
76.1 76.7 77.0 78.3 79.2
22.9 23.3 23.0 21.7 20.8
2014 2015 2016 2017 2018
In StoreBakery
Wrapped
Bakery has returned to slight growth in the latest year with Wrapped outperforming ISB. However over 5 years the category has grown just 1.4% compared to the 6.6% growth Grocery has experienced
£3.94bn £3.99bn
Source: Kantar Worldpanel – Total Ambient Bakery – Value Share – 52 we Sep 2018
-250,000
-200,000
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
200,000
Contr
ibution
Frequency Trip Packs Price per Pack Penetration (%) GB HH Population
Growth of Bakery has been almost entirely driven by prices after a period of deflation
Source: Kantar Worldpanel – Total Ambient Bakery – Contribution to Value Change – 52 we
-40,000 -30,000 -20,000 -10,000 0 10,000 20,000 30,000 40,000 50,000 60,000
Tesco
Sainsbury's
Asda
Morrisons
The Co-Operative
Aldi
Lidl
M&S
Iceland
Ocado
Waitrose
Penetration % Purchase Frequency Trip Packs Price per Pack GB HH Population
1.9
-1.9
2.0
0.9
2.5
12.2
11.9
3.1
-3.7
10.3
4.2
Higher prices offer some growth for Big 4 despite less frequent trips whilst Aldi and Lidl post very strong growth akin to their performance in Total Grocery
Source: Kantar Worldpanel – Total Ambient Bakery – Retailer Contribution to Value Change & Growth – 52 we Sep ‘18
40.2 37.6 36.1 36.5 36.7
17.4 18.6 19.9 20.6 20.8
22.9 23.3 23.1 21.7 20.8
8.1 9.3 9.1 9.1 9.1
6.8 6.5 6.8 7.1 7.7
4.7 4.7 5.0 5.0 5.0
2014 2015 2016 2017 2018
Wrapped Meal Accomps
Wrapped Rolls
Wrapped Sandwich Alternatives
In Store Bakery
Wrapped Bakery Snacks
Wrapped Bread
-£120m
+£149m
-£72m
+£45m
+£40m+£13m
Long term trend is a move away from Traditional Loaves to Snacks and Sandwich Alternatives
Source: Kantar Worldpanel – Total Ambient Bakery – Sector Value Share – 52 we
-60,000 -40,000 -20,000 0 20,000 40,000 60,000 80,000
Wrapped Bread
Wrapped Bakery Snacks
Wrapped Rolls
Wrapped Sandwich Alternatives
Wrapped Meal Accomps
In Store Bakery
Penetration % Purchase Frequency Trip Packs Price per Pack GB HH Population
+3.1%
+3.5%
+10.2%
+2.9%
+2.8%
-1.9%
Though Wrapped Bread has recovered slightly in the past year with higher prices the driver
Source: Kantar Worldpanel – Total Ambient Bakery – Sector Contribution to Value Change – 52 we Sep ‘18
5500
5600
5700
5800
5900
6000
6100
6200
6300
6400
6500
52
w/e
30
Mar
14
52
w/e
27
Ap
r 1
4
52
w/e
25
May
14
52
w/e
22
Ju
n 1
4
52
w/e
20
Ju
l 14
52
w/e
17
Au
g 1
4
52
w/e
14
Se
p 1
4
52
w/e
12
Oct
14
52
w/e
09
No
v 1
4
52
w/e
07
De
c 14
52
w/e
04
Jan
15
52
w/e
01
Fe
b 1
5
52
w/e
01
Mar
15
52
w/e
29
Mar
15
52
w/e
26
Ap
r 1
5
52
w/e
24
May
15
52
w/e
21
Ju
n 1
5
52
w/e
19
Ju
l 15
52
w/e
16
Au
g 1
5
52
w/e
13
Se
p 1
5
52
w/e
11
Oct
15
52
w/e
08
No
v 1
5
52
w/e
06
De
c 15
52
w/e
03
Jan
16
52
w/e
31
Jan
16
52
w/e
28
Fe
b 1
6
52
w/e
27
Mar
16
52
w/e
24
Ap
r 1
6
52
w/e
22
May
16
52
w/e
19
Ju
n 1
6
52
w/e
17
Ju
l 16
52
w/e
14
Au
g 1
6
52
w/e
11
Se
p 1
6
52
w/e
09
Oct
16
52
w/e
06
No
v 1
6
52
w/e
04
De
c 16
52
w/e
01
Jan
17
52
w/e
29
Jan
17
52
w/e
26
Fe
b 1
75
2 w
/e 2
6 M
ar 1
7
52
w/e
23
Ap
r 1
7
52
w/e
21
May
17
52
w/e
18
Ju
n 1
7
52
w/e
16
Ju
l 17
52
w/e
13
Au
g 1
7
52
w/e
10
Se
p 1
7
52
w/e
08
Oct
17
52
w/e
05
No
v 1
7
52
w/e
03
De
c 17
52
w/e
31
De
c 17
52
w/e
28
Jan
18
52
w/e
25
Fe
b 1
8
52
w/e
25
Mar
18
Millions of sandwich occasions
Kantar Worldpanel Usage // Total in home and carried out consumption // 52 w/e 25th March 2018
5867m
6396m
-0.3%
YOY
This coincides with a slowdown in the decline of the Sandwich occasion
6000
6100
6200
6300
6400
6500
6600
6700
52
w/e
30
Mar
14
52
w/e
27
Ap
r 1
4
52
w/e
25
May
14
52
w/e
22
Ju
n 1
4
52
w/e
20
Ju
l 14
52
w/e
17
Au
g 1
4
52
w/e
14
Se
p 1
4
52
w/e
12
Oct
14
52
w/e
09
No
v 1
4
52
w/e
07
De
c 14
52
w/e
04
Jan
15
52
w/e
01
Fe
b 1
5
52
w/e
01
Mar
15
52
w/e
29
Mar
15
52
w/e
26
Ap
r 1
5
52
w/e
24
May
15
52
w/e
21
Ju
n 1
5
52
w/e
19
Ju
l 15
52
w/e
16
Au
g 1
5
52
w/e
13
Se
p 1
5
52
w/e
11
Oct
15
52
w/e
08
No
v 1
5
52
w/e
06
De
c 15
52
w/e
03
Jan
16
52
w/e
31
Jan
16
52
w/e
28
Fe
b 1
6
52
w/e
27
Mar
16
52
w/e
24
Ap
r 1
6
52
w/e
22
May
16
52
w/e
19
Ju
n 1
6
52
w/e
17
Ju
l 16
52
w/e
14
Au
g 1
6
52
w/e
11
Se
p 1
6
52
w/e
09
Oct
16
52
w/e
06
No
v 1
6
52
w/e
04
De
c 16
52
w/e
01
Jan
17
52
w/e
29
Jan
17
52
w/e
26
Fe
b 1
75
2 w
/e 2
6 M
ar 1
7
52
w/e
23
Ap
r 1
7
52
w/e
21
May
17
52
w/e
18
Ju
n 1
7
52
w/e
16
Ju
l 17
52
w/e
13
Au
g 1
7
52
w/e
10
Se
p 1
7
52
w/e
08
Oct
17
52
w/e
05
No
v 1
7
52
w/e
03
De
c 17
52
w/e
31
De
c 17
52
w/e
28
Jan
18
52
w/e
25
Fe
b 1
8
52
w/e
25
Mar
18
Kantar Worldpanel Usage // Total in home and carried out consumption // 52 w/e 25th March 2018
Millions of toast occasions
(incl. toast meals)
-0.1%
YOY
6261m
6601m
Whilst after a long period of accelerated decline consumption of Toast has plateaued
+7.8m
-16.4m
+0.5m
2.1%
79.1%
18.7%
3.6%
76.8%
19.3%
Change in Volume
Packs 2018 vs.
2017
Share of Wrapped
Bread Volume
2014
Share of Wrapped
Bread Volume
2018
Whilst we are buying less packs of bread we are also purchasing smaller packs
SMALL
MEDIUM
LARGE
Source: Kantar Worldpanel – Total Wrapped Bread – 52 we Sep ‘18
41
Health now a key focus in Bakery with a lot of NPD tapping into this trend
-25000 -20000 -15000 -10000 -5000 0 5000 10000 15000 20000 25000 30000
Seeded
Half & Half
Brown & Wholemeal
White
Total Switching Shoppers Held Shoppers Won Category Arrivals
Switching based on Packs (000s) to year ending 22-Apr-18
Seeded continues to grow strongly stealing volume from all sectors
Source: Kantar Worldpanel – Total Wrapped Bread – Contribution to Value Change – 52 we Sep ‘18
Premium &
Artisan Flavoured Gluten Free
Health remains a key long trend. Communicating benefits, responding to concerns andembracing positive ‘natural’ health will be important for future growth
Be mindful of the fragmentation of the shopper. Convenience, ease of purchase, ease ofpreparation and ‘value for money’ will remain increasingly important
Understanding and engaging the consumer has never been more important. Help shoppers totreat themselves, snack and indulge their needs outside of traditional occasions
Keep the NPD pipeline full. Meeting new consumer needs and playing across different occasionsprovides growth opportunities
Be ready to support retailers with a clear online strategy, wider channel and out of home focusand a clear point of difference
Final Thoughts…
1
2
3
4
5
