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Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Return of the Cautious Consumer
15th December, 2009Rob Prosser
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Today’s discussion
How has the global recession
impacted the industry?
How have consumers responded?
What’s the PL outlook for
2010?
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
• Consumers looking beyond the Global Economic Crisis and focussing on recovery
• Grocery channel still showing positive growth in Australia
• Grocery suppliers looking more optimistic but concern around external pressures and impact on profitability
How has the global
recession impacted the
industry?
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Government spending at unprecedented levels
Source: The Standard, 2 April 2009
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
75
80
85
90
95
100
105
110
115
120
Apr 2007 Oct 2007 May 2008 Oct 2008 Apr 2009 June 2009 Oct 2009
Aus NZ Asia-Pac Global
Consumer sentiment plummeted in the midst of the GFC but latest data shows clear signs of recovery
Source: Nielsen Global Consumer Confidence survey
Consumer Confidence
+11
+11
+6
+4
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Base (AUS): All Manufacturers: Nov 2005 (n=117) May 2006 (n=118), Nov 2006 (n = 131), May 2007 (n= 129). Nov 2007 (n=112), May 2008 (n=102) , Jan 2009 (n=93), May 2009 (n=105) Base (NZ): All manufacturers Feb 2006 (66), Nov 2006 (64), May 2007 (60), Nov 2007 (54), Jun 2008(67), Nov 2008 (55), Jun 2009 (66)Source: Aus – Homescan (Packaged grocery incl. Fresh); NZ – ScanTrack
Business conditions are improving but NZ suppliers still feeling the heat…
January 2009
+ 18%
- 49%Net:
- 31%
Q. Compared to the same time last year, do you think business conditions in your industry have improved or deteriorated?
May 2009
+ 38%
- 33%Net:
+ 5%
November 2008
+ 2%
- 85%Net:
- 83%
June 2009
+ 17%
- 61%Net:
- 44%
Packaged grocery growthMAT Oct 2009 vs YAValue: +5.6%, Units: +1.4%
Packaged grocery growthMAT Oct 2009 vs YAValue: -2.5%, Units: -9.1%
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
1. Global recession
2. Private Label growth
3. Increased cost of raw
materials
4. Increase in promotional
sales/ erosion in baseline
5. Pressure on trading
terms
1. Maintaining margins
2. Pressure on trading
terms
3. Ability to pass on price
increases
4. Australian recession
5. Private Label growth
Underlying supplier concerns centre on profitability driven by local economic conditions
Base: All Manufacturers: Aus (n=105); NZ (66) – Retail Barometer June 2009
Q Which of the following issues concern you in terms of the impact they may have on your business? Rank the top five issues that concern you.
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
• Global recession has changed consumer values, spending habits and lifestyle choices – restraint is the new mantra
• Thrifty consumers will refrain from unnecessary spending and are prepared to shop around for the best value
• Adoption of Private Label as an attractive value proposition
• The ‘Masterchef effect’ – consumers cooking and entertaining at home more often
How have consumers responded?
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Consumers coming to terms with the new economy but underlying caution remains
Tough but moderating conditions:
Free fall is over
Fundamental shift in
consumer spending:
Restraint is the new mantra
DenialDenial
UncertaintyUncertainty
FearFear
Acceptance Acceptance
$ Food$ Food
$ Fuel$ Fuel
UnemploymentUnemployment
Savings?
Discretionary Spending?
Savings?
Discretionary Spending?
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
The worst might be over but we know we’re not completely in the clear…
Major concerns:
1) Work/life balance
2) Economy
3) Increase in utility bills
Impacting the way we spend our spare cash…
1) Saving
2) Debt recovery
… & influencing where we cut back expenses:
•↓New clothes•↓Take-away meals• Save on utilities•↓OOH entertainment• Switch to cheaper grocery brands
Source: Nielsen Global Online Consumer Survey, October 2009 (Pacific results)
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Significant fragmentation – Increase in the amount of households now shopping across more than four banners
Source: Nielsen Consumer : Homescan
% households shopping across 4+ banners
Oct 2008: 58.7%Oct 2009: 60.8%
An increase of 219,694 additional households
Sept 2008: 63.9%Sept 2009: 64.5%
An increase of 6,600 additional households
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
PL $ share of grocery: 22.9%
Average household PL spend per QTR: $186
Average spend change vs YA: +4.6%
Private Label remaining an attractive proposition to the value conscious consumer
Source: Homescan, QTR to Sept09
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Source: AC Nielsen | Homescan (Australia)
ALDI continues growth in penetration, almost a third of all Australian Households now shopping at ALDI
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Source: AC Nielsen | Homescan (Australia)
WW’s claw back average spend to Dec 08 levels as shoppers move back to more premium PL.
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Source: AC Nielsen | Homescan (Australia)
Coles reverse declines in spend per buyer somewhat. PL share remains consistently above that of WW & IGA
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Source: AC Nielsen | Homescan (Australia) – Issue# 385957, 385995, 385994, 38591, 385990, 385989, 385988
IGA ‘Signature’ has done little to increase penetration or share. Average spend per buyer has also remained fairly stagnant
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Opportunity for PL in a concentrated market
What’s the PL outlook for 2010?
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Strong correlation between PL share and retailer concentration, except…
Is it scale that limits PL share in these markets?
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The ‘Masterchef effect’: 15/20 fastest growing categories linked to in-home entertainment, cook-from-scratch meals and more inspired/gourmet cooking
35.0
23.4
15.7
14.9
14.0
13.7
13.1
13.1
12.4
12.2
11.7
11.2
10.0
9.9
9.8
9.2
9.2
8.8
8.6
8.4
Packaged Smallgoods
Fresh Cream
Ice Cream
Chilled Seafood
Vitamins
Milk Additives
Canned Vegetables
Cooking Needs
Skin Care
Packaged Cheese
Personal Wash
Oils
Snack Foods
Frozen Pastry
Coffee
Chilled Spreads
Eggs
Confectionery
Biscuits
Deodorants
% value change vs YA
Top 20 fastest growing categoriesBased on Top 50 fastest growing categories ($ value) and ranked by % value change vs YAMAT 03/10/2009, Australia – all outlets
NZ fastest growing categories reflect same trend:
• Pasta + rice: +29%• Fats+oils:+22.1%• Coffee: +14.5%• Canned fish/seafood: +13.7%• Tea: +13.5%• Bottled/canned sauces: +11.9%
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
• PL Tiers and exclusive brands will remain a key part of retailer strategy
• Innovation – delivering on today’s most exciting food trends
• Convenient packaging, portion sizes and nutrition
• Mainstream advertising support
• Converting consumers looking for value into shopper loyalty
• Poised to grow as a lifestyle choice
Private Label trends and outlook in the Pacific
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
• Consumers are more optimistic but their shift in spending behaviour (restraint) may be here to stay
• In order to feed their growing demand for value – shoppers will channel switch, rely heavily on promotions and buy more Private Label
• The grocery trade is performing better than other food trade channels, but we’re not out of the woods yet…
Key takeouts
Confidential & Proprietary Copyright © 2009 The Nielsen Company PLMA Q3 2009
Thank you
www.au.nielsen.com