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Upcoming Webinars

Fall 2010 Retail Landscape, circa 2015 New Product Development The New Demand Chain. Upcoming Webinars. Today’s Presenters. Danny Brager is Vice President, Group Client Director, The Nielsen Company

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Upcoming Webinars

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  1. Fall 2010 Retail Landscape, circa 2015 New Product Development The New Demand Chain Upcoming Webinars

  2. Today’s Presenters Danny Brager is Vice President, Group Client Director, The Nielsen Company Jim Greco is Senior Vice President, North America Professional Services, The Nielsen Company

  3. Today’s Consumers and Generation Next Myths and Realities June 25, 2010

  4. Impact of economy on Beverage Alcohol Bev Al Report Card – what’s hot and not Bev Al Consumer Myths and Realities What consumers are “thinking and doing” Uncovering Generational Opportunities Here Come the Millennials (aka Generation Y, Generation Next, Net Generation or Echo Boomers) Today’s Agenda

  5. The Economy Is a Bit Like This –Can’t Make Up its Mind

  6. Unemployment -7.8 m 9.7% Jobs lost since recession began Underutilized 16.6% Retail Sales (May) -1.2% vs Apr +6.9% vs YAG The News Is Inconsistent – Not All Good and Not All Bad DOWRollercoaster >11K (Apr); <10K (May), >10K (Jun) Foreclosures (May) New: -3% vs Apr Total: +11% vs 6 mos ago Building Permits +10% vs YAG

  7. The Labor Picture Is Improving,But Recovery Will Take Years 411,000 temporary workers for Census 2010 Monthly Job Gains/Losses Source: Seasonally Adjusted U.S. Total Non-Farm Employment, U.S. Government

  8. Momentous Events – Unpredictable or Uncontrollable – Are Impacting the Consumer

  9. Confidence Is Better, But Still Weak by Historical Levels 2001 2002 2003 2004 2005 2006 2007 2008 2010 2009 Source: The Conference Board - Nine census regions, 5,000 US households; 1985 = 100

  10. Consumers Still Saving, But Moving Toward Some Discretionary Spending Once you have covered your essential living expenses, what do you do with your spare cash? I spend it on… Source: Nielsen Global Online Consumer Confidence and Opinion Survey, 1Q10

  11. Consumers Are Rephrasing Value “I want what I want, but at the best price.” “I’ll trade down even if it means sacrificing what I really want.”

  12. Pre-Recession, Premiumization Was the Reigning Dynamic Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus/Dollars

  13. Through the Recession, Trading Down Dominated with the Exception of Crafts Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus/Dollars

  14. Now We See a “Trading Up” Comeback – Or Do We? Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus/Dollars

  15. Pricing Is a Factor in the Current Wine and Spirits Trading Up Wines >$20 $ Volume % Chg vs YA Avg Eq 750ml Price Chg vs YA Page 15 Source: Nielsen, Total US Food, 13 weeks rolling ending 5/29/10

  16. ‘Value vs. Volume’ Gaps Have ShrunkFrom 2007 Levels Source: Nielsen Tl U.S. Food/Drug/Conv/Liquor Plus - through 5/29/2010 Lat 24 and Lat 12 for Beer/FMB’s only

  17. Taking Price in Wine and Spirits Is Difficult; Beer Is in a Better Place, for some Segments Source: Nielsen Total U.S. Food, Drug, Liquor (+ Conv for Beer)

  18. Summary • Economic uncertainty still prevails; recovery likely modest • Impact depends upon your products’ geographic development and consumer demographics • Consumers have re-phrased “value” • Frantic trading down replaced by “I want what I want, on my terms” • Trading up activity in Wine and Spirits at least partially tied to decrease in pricing

  19. Bev Al Report Card – What’s Hot and Not

  20. Beer – Price Tiers/OriginCrafts continue to lead the way, while mainstream Premiums decline. Imports are now back to “flat”, and the only segment down on price. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010

  21. Beer – Country of OriginThe Import comeback is led by Mexican beer, and reduced Hollandlosses albeit with reduced prices, coupled with Canada/Belgium gains. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010

  22. Beer – Package Size4 packs, as well as large 30 packs lead growth, with Kegs now bouncing back. Prices are uniformly higher than year ago. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010

  23. Table Wine – Price TiersTrading down was a 2008/09 event. Now, price points $9-$15 and >$20 are in the best growth position, but have been accompanied by price decreases. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010; Pricing based upon 750 ml Equivalent

  24. Table Wine – PackageGrowth is led by 750 ml (but with average price attrition), alternative packaging such as 3 l Box and Tetra, and the 187 ml size. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010 Price Trend based upon Tl U.S. Food

  25. Table Wine – Country of OriginDomestic growth is running well ahead of Imports, with all major wine-growing states contributing. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010

  26. Table Wine – ImportsSoftness still from AU and FR, while clear growth leaders remain AR and NZ, now ranked #5 and #6, but with opposite pricing trends. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010

  27. Table Wine – Top 10 VarietalsPinot Noir and Riesling lead the way, followed closely by Cab Sauv and Sauv Blanc. Syrah/Shiraz continues to struggle. Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010

  28. Several Lesser Known Varietals are on Fire – a Reflection of the Adventurous Wine Consumer Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010

  29. Spirits - Sub-categoryVodka continues to grow, along with improved Whiskey, Tequila, Cognac growth. Average price for some rising (Cognac, Whiskey), and others falling (Vodka, Tequila) Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010

  30. Vodka Flavors Gone Wild! Today’s Rising Flavor Star could be Tomorrow’s Fading Glory Sales % Change Lat 52 weeks$ ShareDollarsVolume Flavored: 84.8% +10.2% +12.3% Unflavored: 15.2% +1.5% +3.1% * Top 10 ranked flavor Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010 Rising Starts/Fading Glory based upon data to 02-06-2010 Source: Nielsen Total U.S. Food/Drug//Liquor Plus; 52 weeks thru 03-06-2010 - Dollars

  31. Spirits - Price TiersTrading down NOT the descriptive word any longer; premium and especially ultra-premium leading the way but with reduced pricing. Spirit Price Tiers Legend (equiv 750 ml) Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010; Pricing based upon 750 ml Equivalent

  32. Ultra Premiums Generally Leading the Way, with the Exception of Vodkas and Tequilas Top box growth Bottom box growth Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 05-29-2010; Pricing based upon 750 ml Equivalent

  33. Objectives Examined a variety of dynamics to gain insight into today’s beverage alcohol consumer/shopper Consumer perceptions/attitudes across multiple dimensions Trading down/trading up activity; current/planned On- and Off-Premise channel preferences; current/planned Mechanics April 20 – May 10, 2010 Total U.S. # Bev Al responses: 7,500 Beer : 5,600 Wine : 5,200 Spirits: 4,200 Reporting levels: Age group Income level Gender Ethnicity Major states: CA, NY, FL, TX, IL Beverage Alcohol Consumer Survey

  34. #1. Myth or Reality?Bev Al consumers are saying that they are better off financially than they were a year ago.

  35. #1. Myth or Reality?Bev Al consumers are saying that they are better off financially than they were a year ago. Myth

  36. In the Consumer Mind, it’s Still Not Pretty, But it’s Better Than it Was Compared to a year ago, would you say that overall your household is? 2010 Net: Better minus worse = -18 Source: Nielsen Beverage Alcohol Consumer Survey (May 2010)

  37. #2. Myth or Reality?The majority of Bev Al consumers traded down as a result of the economic downturn.

  38. #2. Myth or Reality?The majority of Bev Al consumers traded down as a result of the economic downturn. Myth

  39. Majority Claim They Stayed the Course How have your purchases changed in regards to price compared to before the start of the economic downturn? Trade Down Segment Stand Pat Segment Source: Nielsen Beverage Alcohol Consumer Survey (May 2010)

  40. Many “Stand-Pat” Consumers Experimented But Returned; Some Adjusted Their Purchases How have your purchases changed in regards to price compared to before the start of the economic downturn? • Tried less Expensive but Returned • 20%* • Buy Less Frequently • 25%* • Buy on Deal • 13%* Stand Pat Segment * Average across 3 categories Source: Nielsen Beverage Alcohol Consumer Survey (May 2010)

  41. #3. Myth or Reality?In trading down, Bev Al consumers say they ended up with lower quality in exchange for a lower price. Myth

  42. Trade Down Consumers Are Generally Satisfied With Quality Which best describes your experiences with less expensive products? Source: Nielsen Beverage Alcohol Consumer Survey (May 2010)

  43. Beer and Wine Consumers Find Good Quality at Lower Prices; Not so Much for Spirit Consumers Statement: “Category” that costs more is typically of better quality. (Chart represents “completely or somewhat agree” minus “somewhat or completely disagree”) Source: Nielsen Beverage Alcohol Consumer Survey (May 2010)

  44. #4. Myth or Reality?As the economy improves, the Bev Al “trade down” segment will continue to buy less expensive products.

  45. #4. Myth or Reality?As the economy improves, the Bev Al “trade down” segment will continue to buy less expensive products. Reality

  46. “Trade Downers” Are Most Likely to Continue That Behavior As the economy improves, what best describes what you will do? Source: Nielsen Beverage Alcohol Consumer Survey (May 2010)

  47. #5. Myth or Reality?Purchases are now more planned than before. Reality

  48. It’s Even More Important to Reach the Spirits Consumer Before They Enter the Store Statement: Compared to before the start of the economic downturn, my purchases are more planned, less on impulse. (Chart represents “completely or somewhat agree” minus “somewhat or completely disagree”) Source: Nielsen Beverage Alcohol Consumer Survey (May 2010)

  49. #6. Myth or Reality?Big, well-known brands are favored by Bev Al consumers. Depends

  50. The Beer and Spirits “Brand” Story Is Powerful; Wine Consumers Prefer the Adventure Source: Nielsen Beverage Alcohol Consumer Survey (May 2010)

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