INNOVATION BEFORE THE “NEW NORMAL” · Planet Oat HP Hood Milk Red Bull Peach Edition Red Bull North America Energy Drinks Smithfield Prime Fresh Delicatessen Smithfield Foods

Joan Driggs and Larry Levin

June 2020

INNOVATION BEFORE THE “NEW NORMAL”

2019 New Product Pacesetters

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

JOAN DRIGGS

Vice President

Thought Leadership

LARRY LEVIN

EVP, Market and

Shopper Intelligence

Today’s Presenters

New Product Pacesetters is developed with tremendous input from IRI colleagues:

Ryan Stredney, Senior PR Analyst, Marketing and Claudia Burgos, Client Insights


Today’s Discussion

1 – 25th Anniversary Pacesetters

2 – Big is Back

3 – From Specialty to Mass

4 – Telling the Story

5 – Who is Buying What, and Why

6 – Strategy Success

7 – Pacesetter Scorecard


25th Anniversary New

Product Pacesetters

• 25 years of IRI tracking new

product innovation

• Identifying the successes of today

(New Product Pacesetters) and

tomorrow (Rising Stars)

• Future insights based on historical data

to invent and reinvent categories

• Ultimate benchmark in successful

innovation


New Product Pacesetters Criteria

New or Extended BrandExisting Brand

in a New Category

30% Distribution

Starts the Clock on Year-1

30%+ Distribution

at Year-1 Completion

Top 100 Brand Launches

in F&B and Non-Food

New Products

that Completed Their

First Year in 2019


Big is Back:

Blockbuster

Rebound

in 2019

The Impact of

$100MM+ Launches is

Clearly Accentuated in

2019’s Dollar Share 23%

58%

22%

25%

14%

9%

8%

4%

33%

5%

$100+

$60-$100

$40-$60

$20-$40

<$20

33%

66%

24%

20%

15%

7%

17%

5%11%

2%

% of Pacesetter Dollars

% of Pacesetter Products

% of Pacesetter Dollars

% of Pacesetter Products

2018 2019

Note: Numbers may not add to 100% due to rounding. Source: IRI Market Advantage™


$100 Million+ Blockbusters Are a Small Percentage of

New Product Launches, But They Make a Huge Impact

c

Ten Products in Multi-Outlet Channels Achieved Sales of $100MM+; Eight Products

Achieved Blockbuster Status, Marking a Major Shift Among Pacesetters


Medium-Sized Companies are Caught in the Middle

Innovation From Big and Small Companies Puts Pressure On Medium Companies

to Get the Distribution Just Right – Everywhere Isn’t Always The Answer

31% 28% 26% 26%19% 20% 19%

24%

46%

35% 38%44%

35% 31%30% 23%

23%

38% 37%29%

34% 28% 37%30%

12% 15% 14%23%

% of Total Count

52%62% 60%

49%

36%43% 46%

52%

34%

26% 26%41%

49% 30% 27%22%

14% 12% 13% 10%11%

16% 19% 19%

4% 8% 8% 7%

% of Total Dollars

Source: 2019 New Product Pacesetters

Big Companies >$5.5B Medium Companies $1B - $5.5B Small Companies $100M- <$1B Extra Small Companies <$100M

2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019


The Road from Specialty to Mass:

Leverage Specialty Brands for Mass Appeal

Critical to Maintain Unique, Targeted Appeal; Focus on

Appropriate Distribution, Appropriate Merchandising


Three 2019 New Product Pacesetters Boast the “Shark Tank” Effect,

Gaining the Support Needed to Thrive in a Broad Marketplace

Shark Tank Effect: Solid Products

Bolstered by Endorsement,

Expanded Distribution

53% of 2019 Pacesetters→ small companies

Innovation + flexibility= strong likelihood

of success

Shark Tank mentality requires a niche product

to have broad recognition

Niche innovation can translate to large $$$


Telling the Story: Big Brands Tend

to Have Big Marketing Budgets

Traditional brand marketing is not always the right

approach. Social media platforms play a HUGE

role, garnering uncalculated exposure.

Media Spend Source: Kantar Media

Instagram Followers

1.2MMGatorade

#fans #influencers

~25%of sales dollars are

often spent on

advertising to

support significant

brand launches


Media Spend Source: Kantar Media

New Brand: No Budget. Bang Energy

Traditional

brand

marketing is

not always

the right

approach.

Social media

platforms

play a

HUGE role,

garnering

uncalculated

exposure.

Instagram

Followers

1.5MM

#1 F&B Pacesetter

with Only ~$2K on

Traditional Media


Who is Buying What, and Why

• IRI EconoLink segmentation buckets six groups of

consumers to explain:

– Mindset

– Behaviors

– Economic perspectives

• Invaluable tool to understand how economic outlook

impacts consumer behavior toward new products

Not a New Concept: Build the Right Product,

Give it the Right Attributes, Put it in the Right

Place, Get it to the Right Consumer


EconoLink® Segmentation Spectrum

EconoLink Identifies Which Shoppers Are Gravitating to Products,

Attributes, But Now There’s a New Lens: COVID-19

DowntroddenCautious &

WorriedStart-Ups Optimistics

Savvy

ShoppersCarefree

MINDSET = CAUTIOUS / NEGATIVE

Economically Fragile & Cautious & Negative

MINDSET = POSITIVE / OPTIMISTIC

Economically Stable & Positive

9% 23% 10% 30% 13% 15%

Source: 2019 IRI EconoLink Segments


\

EconoLink is Based on Personal Financial Situations, Attitudes

About Economic Conditions and Shopping, and Known Behavior

INFO SEARCH

PRODUCT USAGE

BRAND CHOICE

TRIP PREPARATION

STORE SELECTION

IN-STORE INFLUENCES

Views on

Economy

& Gas

prices

Demos

Financial

Situation &

Outlook

Attitudes

toward

Shopping &

Lifestyle

Purchase:

Channel,

Aisle &

Deals

SE

GM

EN

TA

TIO

N IN

PU

TS

Note: Distributions may shift slightly due to static, timing and type of analysis being run


Consumer Survey: Gauging Consumer

Enthusiasm for New Products

Combining New Product Pacesetter

consumer survey results with

EconoLink segmentation, we

gauge new product enthusiasm.

The connection between new product

adoption and economics is IMPORTANT

Results point to a powerful consumer

group: Avid Early Adopters

Source: IRI 2020 New Products Survey

Consumer New Product Survey

7%

17%

76%

8%

17%

75%

Avid Early Adopters New Product Enthusiasts Laggard

2019

2020


Who are Avid Early Adopters

and Why are They Important?

• Mid-40s

• Kids at home

• Moderate income levels

• Willing to take some risks

• Small, but mighty → only 8% of

population, but highly committed

to new products

• One in 12 U.S. consumers see

themselves as Avid Early

Adopters


Not all Early Adopters Share

Economic Outlook

Critical to know where and how to focus

as the commitment to new products is

shared among Early Adopters, but not

the economic confidence

Understanding the distinctive economic

mindsets and underlying financial

conditions that drive early adoption

behavior is critical for product

innovation decision-making

Source: 2019 New Product Pacesetters

9% 11% 8% 9%

22%12% 18%

24%

10%

14%14%

8%

27% 31%31% 25%

18% 13%13% 19%

15%19% 16% 14%

Total Respondents

2020

Avid Early Adopter

New Product Enthusiast

Laggard

Downtrodden Cautious and WorriedStart-Ups OptimisticsCarefree Savvy Shoppers


Strategy Success Stories

ENFAMIL NEUROPRO

#2 Food & Beverage Pacesetter

• $230M+ in MULO

• Imitates mother’s milk more closely than any product

• Huge market potential: parents

• Revolutionary nutrition advancement in R&D

SCHMIDT’S

Niche Brand, Big Reach

• 2018 acquired by Unilever

• Grabbed mass distribution; $26M+ in MULO

• Established brand and grew

• Lifestyle brand for consumers with strong commitment to natural


Consumers Have an Appetite for Healthy Attributes

3 of Top 10 and 25 of

Top 100 F&B Pacesetters

→ non-GMO benefits

2 of Top 10 and 25 of

Top 100 Non-Food Pacesetters

→ Natural / Simple Ingredients


2 3

9 10

BangVital Pharma

$299.4 M

ENERGY DRINKS

Arnold/Brownberry/Oroweat

Sandwich Thins

Grupo Bimbo

$103.2 M

FRESH BREAD & ROLLS

BublyPepsiCo

$116.3 M

SPARKLING WATER

G ZeroPepsiCo

$154.4 M

SPORTS DRINKS

Enfamil NeuroProReckitt Benckiser

$230.5 M

BABY FORMULA

Corona PremierConstellation

Brands

$101.8 M

BEER

Cheez-It Snap’d

Kellogg’s

$88.7 M

SALTY SNACKS

SlimFast KetoGlanbia

$76.2 M

SNACK BARS & WEIGHT CONTROL

Pop-Tarts BitesKellogg’s

$68.3 M

TOASTER PASTRIESFROZEN PROCESSED POULTRY

Perdue Simply Smart

OrganicsPerdue Farms

$70.7 M

Top 10 Pacesetters

4 5

6 7 8

1


4 521

6 7 8 9

3Colgate

Total SFColgate Palmolive

$243.1 M

TOOTHPASTE

Blue BuffaloGeneral Mills

$313.3 M

PET FOOD TOILET TISSUE

Scott ComfortPlus

Kimberly-Clark

$241.6 M

SHAVING & PERSONAL CARE

Harry’sHarry’s

$169.8 M

DIAPERS & BABY WIPES

Pampers Pure

CollectionProcter & Gamble

$72.4 M

6 7 8 9 10

TOOTHPASTE & MOUTHWASH COFFEE MAKER CAT LITTER EYE CARE EXTERNAL ANALGESIC RUBS

Crest Gum CollectionProcter & Gamble

$62.1 M

Keurig K-Select

JAB Holding

Company

$55.0 M

Fresh Step Clean Paws

The Clorox

Company

$48.8 M

LUMIFYBausch +

Lomb

$48.2 M

Theraworx Relief

Avadim Health

$47.1 M

Top 10 Pacesetters

10


Top 10 Pacesetters

6 7 8 9 10

CIGARETTES

MarlboroIceAltria

$189.0 M

5

ELECTRONIC SMOKING DEVICES

Vuse AltoBritish

American Tobacco

$225.6 M

4

HARD SELTZER

White Claw

Mark Anthony

Group

$344.8 M

3JUULJuul Labs

$2,354.6 M

ELECTRONIC SMOKING DEVICES

1Bang

Vital Pharma

$723.6 M

ENERGY DRINKS

2

6 7 8 9 10

ENERGY DRINKS ELECTRONIC SMOKING DEVICES SPORTS DRINKS ELECTRONIC SMOKING DEVICES CANNED JUICES

Red Bull Coconut

Red Bull

North America

$141.3 M

Vuse CiroBritish

American Tobacco

$136.7 M

G ZeroPepsiCo

$136.5 M

MybluImperial

Brands

$91.2 M

Mtn Dew Amp Game Fuel

PepsiCo

$86.3 M


Rising Stars

What will happen to them?

• Rising Stars on path to Pacesetters, but… COVID-19

• Major market disruption

• However, they reflect lasting trends:

– Treating pets like family

– Indulgence

– Energy to get through rigors of daily life



Food & Beverage Rising Stars

Energy Drinks Are Powering Their Way to Pacesetter Status

Monster Energy

Ultra Paradise

Monster BeverageEnergy Drinks

My/Mo

Mochi Ice Cream

CompanyFrozen Novelties

Planet Oat

HP HoodMilk

Red Bull Peach

Edition

Red Bull North

AmericaEnergy Drinks

Smithfield Prime

Fresh Delicatessen

Smithfield FoodsLuncheon Meats

Ruffles Double

Crunch

PepsiCoSalty Snacks

Spindrift

Spindrift

Beverage Co.Sparkling Water

Talenti Gelato

Layers

UnileverIce Cream

7 Wonderful No Shells

Flavored Pistachios

The Wonderful

CompanySnack Nuts

Reign

Monster BeverageEnergy Drinks

LISTED ALPHABETICALLY



Non-Food Rising Stars

Pet Products Are Well Poised for Pacesetter Status

Greenies L’Oréal Infallible

Fresh Wear

Mr. Clean

Clean Freak

Procter & GambleHousehold Cleaner

Native

Procter & GambleDeodorant & Personal

Care

Sensodyne Pronamel

Intensive Enamel

Repair

GlaxoSmithKlineToothpaste

Pampers Cruisers

360° Fit

Procter & GambleDiapers

Swiffer Pet

Procter & GambleCleaning Tools

Tidy Cats

Free & Clean

NestléCat Litter

7 Viva Multi-Surface

Cloth

Kimberly-ClarkPaper Towels

Mars

Pet Treats L’Oréal

Facial Cosmetics

Neuriva

Reckitt BenckiserVitamins

LISTED ALPHABETICALLY


COVID-19 Will Impact Future

New Product Pacesetters

What will hit the New Product Pacesetters

mark in 2020 and beyond?

• Historical Precedent from Past Recessions

• Current Momentum

– Sustainability

– Natural

– Health and Wellness

– Indulgence

• Guide Future Innovation

– Personal Health and Safety

– Economic Considerations


With a Recessionary Response Fueling “Value

for the Money” Creating Better-Life Experiences

Top New Product Pacesetters

delivered IN-HOME PROFESSIONAL

QUALITY at premium prices.

Source: IRI New Product Pacesetters Archived Reports.

An array of at-home DIY SERVICES

including nail care, dental care and skin

care products were an AFFORDABLE

TRADE-OFF to professional services.

Premiumization was a

Key Winner in 2008-2010,


Multi-serving products helped consumers see VALUE FOR THE MONEY, but often delivered

a MORE PREMIUM PRODUCT, including Bertolli’s Oven Bake Meals and Stouffer’s Easy

Express. Technology supported advancements in microwaveable fare. Plant-based

dairy alternatives and a new wave of enhanced beverages also emerged.

Multi-Serving Products Were Not Only Focused on Price Value; Many

Were Led by New Technology to Create a More Premium Experience



Dual-Focused Benefits Also Delivered Enhanced Value to U.S. Consumers

CO-BRANDED, MULTI-BENEFIT

PRODUCTS were embraced by

consumers looking to consolidate

purchases during the recession.

DUAL-FUNCTION PRODUCTS

were, and continue to be an

important innovation platform to

fuel consumers’ need for SPEED

AND EFFICIENCY.



What Innovation Can Look Like in 2020 and Beyond

Private Label

High quality private brands are an important innovation platform as retailers enhance their

commitment to shoppers.

Emerging categories include plant-based meats and dairy alternatives, as

well as CBD products.

Pack Size Innovation

Package innovation can be just as important in a recession as brand new products. Estimate the demand for multi-pack, multi-serving or larger

sizes as a way to answer consumer demand. Beer and cereal are just two

examples of recent large pack innovation shifts

that feed a need to “pantry stock.”

Brand Expandability

Leverage brand equity to expand into adjacent

categories and make the most of growth pockets.

Alcohol has been identified as a category

ripe for innovation. Traditional spirit brands can adapt to at-home cocktail machines a la Keurig Drinkworks, or

develop branded frozen slushy concoctions.

More is More

Multi-serve food products satisfied a financial need with high quality food and

indulgent products. Products trending now include multi-serving

premium chocolates and non-chocolate candy.

Multi-function laundry and home care with sanitizing properties and perceived convenience will become increasingly important in

the coming months.

Premiumization

The Great Recession saw a new product evolution that brought professional services home, including

restaurant-branded frozen entrées and

teeth whitening.

For the current recession, premiumization will take the form of restaurant-quality meals for home

consumption and personalized DIY kits for services including

hair treatments, nail care and color.


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Confidential and Proprietary. 35

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Documents

INNOVATION BEFORE THE “NEW NORMAL” · Planet Oat HP Hood Milk Red Bull Peach Edition Red Bull North America Energy Drinks Smithfield Prime Fresh Delicatessen Smithfield Foods