Value in the Time of COVID-19...GET THE MOST (THINGS) for my money MINIMIZE THE TRADE-OFFS between convenience, quality and price Be personally responsible for my HOUSEHOLD Utilize

Value in the Time of COVID-19Presented by Tamara Barnett, Vice President, Strategic Insights

Value refers to the perception of what a product or service is worth

in relation to alternatives

What Is Value?

2VALUE IN THE TIME OF COVID-19 | © THE HARTMAN GROUP, INC. 2020

What Is the Consumer

Definition of Value?


TOTAL DEATHS

147,672TOTAL CASES

4,280,135UNEMPLOYED PEOPLE

17.8 million

The COVID-19 period has had a profound effect on consumers’ attitudes, perceptions of value and purchasing patterns for the foreseeable future


NEW CORONAVIRUS CASES IN THE U.S.1, 2

1. U.S. Centers for Disease Control and Prevention, total cases and deaths reported on July 28,, 2020; trendline from The New York Times, July 29, 2020.2. U.S. Bureau of Labor Statistics, civilian unemployment rate, seasonally adjusted for June 2020; accessed July 2, 2020.

Pandemic-driven Shift Toward ‘New’ Values


Reassessment of connectivity

Focus on personal empowerment

New emphasis on resilience

Surge in calls for systemic change

Continuing Evolution of the New Value Paradigm

Old Value Paradigm

Post-Great Depression

MAXIMIZE AND ACCRUE goods and assets

GET THE MOST (THINGS) for my money

MINIMIZE THE TRADE-OFFS between convenience, quality and price

Be personally responsible for my HOUSEHOLD

Utilize THRIFTY STRATEGIES in response to economic hardship

valu

e a

spira

tions


New Value Paradigm

Great Recession

CORRECT EXCESSES of unchecked capitalism and consumption

Live and purchase more PURPOSEFULLY

GET THE ‘RIGHT’ DEAL and most MEANINGFUL EXPERIENCE for my needs

Be personally responsible for my HOUSEHOLD

Engage in performance of austerity and financial CONSCIENTIOUSNESS

COVID-19

REASSESS ACT OF CONSUMPTION and shopping

Live and purchase more MINDFULLY

Consume in ALIGNMENT WITH MY NEEDS AND VALUES

Be collectively accountable for self and COMMUNITY

Engage in performative act of CARING FOR OTHERS

COVID-19 Inflection in Value Dimensions

Quality rise of H&W-related quality dimensions

Relevancedeepened focus on utility and consciousness of waste

Experienceengagement of the soul and imperative of social justice

Pricepremium’s continued rise and questioning how price impacts which consumers can participate

COVID-19 will result in an expansion of the considerations that consumers bring to their assessment of goods and services,

impacting not only their willingness to pull the ‘purchase lever’ but how they form relationships with products and brands

CONVENIENCE

PRICE

QUANTITY

EXPERIENCE

QUALITY

RELEVANCE

NEW VALUE PARADIGM


Quality: Rise of Health & Wellness-related Quality Dimensions


How does this item make me more resilient?

Does it support my health near-and long term?

Have steps been taken to ensure superior and consistent safety and efficacy?

Post-COVID-19 Value Considerations

“So during this COVID-19 debacle that's going on in this world, you know, if anything, I feel like it brought together our family more to be more

aligned with pursuing healthier eating.”1

-Male, Millennial

1. Hartman Group Functional Food & Beverage and Supplements 2020

31%of consumers report taking more

supplements as a result of the COVID-19 situation.1

29%of consumers report consuming

more functional foods/beveragesas a result of the COVID-19

situation.1

Relevance: Deepened Focus on Utility and Consciousness of Waste

1. Hartman Group Functional Food & Beverage and Supplements 2020

Will I get the full usefulness of this item?

How can I minimize, if not bypass, waste?


51%of consumers expect they’ll

be better in the future (versus before the pandemic) about not letting food they have at

home go to waste.1


Experience: From Enjoyment to Engagement

1. Hartman Group Functional Food & Beverage and Supplements 2020 10VALUE IN THE TIME OF COVID-19 | © THE HARTMAN GROUP, INC. 2020

Does this provide a unique, personalized experience?

Is this inspiring, engaging to use?

Post-COVID-19 Value Considerations 46%of consumers report looking for

more recipes to try as a result of the COVID-19 situation.1

29%of consumers report learning new cooking techniques as a result of

the COVID-19 situation.1

Experience:Engagement of the Soul and Imperative of Social Justice

To what extent does this product or service reflect who I want to be in the world?

Does this item or company demonstrate mindfulness of my community’s well-being?



1. Hartman Group Functional Food & Beverage and Supplements 20202. USDA ERS, Food Price Outlook, 2020, April CPI and May forecasts.

28%of consumers report choosing less expensive brands more

often as a result of the COVID-19 situation.1

32%of consumers report looking for items on sale / using coupons more often as a result of the

COVID-19 situation.1

Consumer Price Index for Food April 2020 vs. April

20192

+2.8% Food from restaurants

+4.1% Food from grocery/supermarket

+6.2% Meats, poultry, and fish

+17.3% Eggs

Price: Consumers’ Fluctuating Relationship With Price

Scenario A: (Temporary) Return to Austerity


Price: Consumers’ Fluctuating Relationship With Price

of consumers anticipate being willing to pay more for H&W products after the threat of

coronavirus has passed.1

12%

1. Hartman Group Functional Food & Beverage and Supplements 20202. United States Department of Agriculture Economic Research Service, Hartman Analysis.

Retail vs. Restaurant as a Proportion of Total $ Food Spending2

(1992 to 2020)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

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Sept. 2009Jan. 1994 May 2020

retail

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Scenario B: Increased Purchase of Premium-priced Products


Let’s Continue Talking

Which dimensions of the New Value Paradigm tend to be elevated in importance for your specific category/channel, and how

does this relative prioritization shift by occasion?

What macro shifts and emerging trends are reshaping expectations and cues within

these dimensions long term — particularly for Quality, Experience and Convenience?

14

How do the recent value considerations accelerated by the coronavirus pandemic

point to new opportunities for your brand to innovate, distinguish from competitors and

sustain or seize growth?

VALUE IN THE TIME OF COVID-19 | © THE HARTMAN GROUP, INC. 2020

ABOUT THE HARTMAN GROUP

The Hartman Group is the premier food and beverage consultancy in the world. Companies and brands across all segments of the food and beverage industry benefit from our unparalleled depth of knowledge on consumers, culture, trends, and demand-side market strategy. We listen closely to understand our clients’ business challenges and tailor solutions that deliver transformative results. Through a unique suite of integrated custom, primary research capabilities, market analytics, and business strategy services, we uncover opportunity spaces and avenues for growth. We deliver more compelling insights that fuel inspiration and ideas for innovation.

3150 Richards Road, Ste. 200 Bellevue, WA 98005Tel (425) 452 0818 Fax (425) 452 9092www.hartman-group.com

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Value in the Time of COVID-19...GET THE MOST (THINGS) for my money MINIMIZE THE TRADE-OFFS between convenience, quality and price Be personally responsible for my HOUSEHOLD Utilize