Project Dairy – chapter 1 of 3

1. Project Dairy – chapter 1 of 3 A consumer research programme to test and promote awareness of health and nutritional advantages and preferences of milk and other dairy products

2. Technical background (Chapter 1) Site map Post-debrief value-add (Chapter 3) Meet your sample (Chapter 1) Typologies (Chapter 3) Highlights (Chapter 1) Knowledge about dairy products (Chapter 3) Product awareness and usage (Chapter 1) Purchasing and consumption (Chapter 3) Product positioning and loyalty (Chapter 2)

3. Unpacking business vs. research objectives To promote viability of the dairy industry from a national point of view Business objective Marketing objective • Consumers should be informed of the health and nutritional • advantage of milk and other dairy products and misconceptions • regarding these issues should be eliminated • To identify the usage incidence, product awareness, drivers of • consumption and overall perceptions of specific dairy categories on a national level • To identify any confusions that exist regarding dairy products • By uncovering the answers to these questions provide insight for • future strategic planning Research objectives Dairy categories will consist of: Fresh milk, UHT milk, fermented milk, milk powder, baby milk powder, flavoured milk, yogurt, cheese, sweetened condensed milk, butter, cream, buttermilk.

4. Research solution: Quantitative methodology Approach Sampling method Information needs Usage incidence • Optima brand and category audit. • Cost effective way • Shorter questionnaire • Optima format lends itself to communication evaluation, testing public opinion and incidence investigation • Tailored questions to comply with information needs • Random household sample • 3500 adults- metro and rural • area • 16 years and older • Living in residential homes in • South Africa • All races and geographical • areas • Data is weighted to • population Product awareness Drivers of consumptions Overall perceptions Confusions or information needs of consumers Demographics: Including LSMs, income, household composition, education, gender, age, etc. A sample of 3 500 is the optimal sample for a national study: This sample is the minimum required to represent all community-size levels (i.e. metropolitan, cities, large towns, deep rural) in all provinces of SA at an allowable error of maximum 5% at a 95% level of confidence. A sample of 3 000 will provide accurate results at a national level, but accurate representation of non-metropolitan areas will be compromised, and analysis at these levels would not be possible.

5. Meet your sample

6. (Pop. (wt.) (‘000s) =31 540) % Meet your sample: Age Race Gender Home language 36% (mostly black, non-metro households) do not have a fridge/freezer in home

7. (Pop. (wt.) (‘000s) =31 540) % Meet your sample: Education Work status Gross monthly household income LSM Subsisting Surviving Aspiring Advantaged • Two thirds of those who don’t know their household income, or refused first-time round, have household incomes of less than R6 000 p.m. • One in five adults have more than 2 under-18-year-olds under personal supervision.

8. Highlights

9. Highlights General market and usage dynamics Affordability is the key reason for lapsing products – especially cheeses, cream and butter face this fate. Taste also plays a role in rejection, especially of UHT fat-free milk. Fresh or UHT fat-free or low-fat milk looks watery and thin. The dairy leaders are: Fresh full-cream milk, maas, normal yoghurt, gouda/cheddar and full-cream UHT milk. These products have a wide age range and, except for maas which is used predominantly by blacks and LSM 1 - 5, wide racial and LSM profile. Fresh full-cream milk (in hot drinks, with porridge) and maas (any time of day and meal replacement) are most likely candidates for future increased per capita consumption. Yoghurt (though seen as healthy) might lose out, as might butter (though it tastes nice). Gouda/cheddard is attractive, but really expensive. Interestingly, 2 in 5 buy fresh milk or maas once a month… Under 19 year olds account for large proportion of dairy consumption, except for UHT fat-free and buttermilk. Core usage of low-fat 2% fresh milk is a good indicator of a wide dairy repertoire: Yoghurt, a variety of cheeses, cream, butter, cheese spread, and low-fat UHT milk. Normal yoghurt and drinking yoghurt often interchange. Core maas users are also likely to use normal yoghurt. It’s not what you look at that matters, it’s what you see. Henry David Thoreau

10. Highlights General market and usage dynamics (continued) If fresh full-cream milk becomes unavailable, UHT full-cream milk will be a likely stand-in, and vice versa. The same interchangeability exists amongst cheese, normal/drinking yoghurt (respectively) and fresh/UHT low-fat milk. Margarine is an obvious stand-in for butter. Knowledge gaps More than 50 per cent consumers don’t know the fat content of full-cream milk. The average guess is 45% fat – and it’s not really seen as better than derived fats and oils or fastfood. People want to know more about the production process of milk, pasteurization and whether there are quality differences amongst brands. It’s not what you look at that matters, it’s what you see. Henry David Thoreau

11. Highlights Perceptual and experiential drivers of choice – 5 key products Fresh full-cream milk: Priced well, popular with everyone, always in home, grew up with, straight from the cow. Doesn’t look as thick and creamy as maas Maas: convenient meal replacement, well-priced, popular, straight from the cow, grew up with. Packs don’t have enough info UHT full-cream milk: Helps digestion, popular, always in home, straight from the cow. Does not contain right amount of salt Yoghurt: Product that children love, convenient meal replacement. Does not enhance the taste of food, not value for money. Gouda/cheddar: Not positively driven by any market factor, but is seen as high in cholesterol and for rich people. Packaging is of poor quality, and does not contain enough info (both key drivers). Too expensive (key driver). It’s not what you look at that matters, it’s what you see. Henry David Thoreau

12. Product awareness and usage

13. Product awareness and usage route map • Helicopter view • Brand profiles • By age • By race • By LSM • Reasons for rejecting products without trial (“never tried before, not interested in trying”) • Changes in dairy product consumption

14. (Pop. (wt.) (‘000s) =31 540) % A helicopter view of the market Full-cream milk accounts for the largest volume of dairy consumption. 2% milk, or fat-free or skim milk suffer from low awareness, but not out-right rejection. Maas and yoghurt are more likely to be used occasionally rather than most often. Lapsing or rejection of dairy is low, except for condensed milk and baby milk powder.

15. Key product portfolios: What do respective core users also use occasionally? Use occasionally Use most often Slide 1 of 2; mentions of 7% or higher (occasional usage) shown; products with raw bases of 50+ (most-often usage) shown Significantly higher than average Core user’s most likely alternative (and significantly higher than occasional usage average)

16. Key product portfolios: What do respective core users also use occasionally? Use occasionally Use most often Slide 1 of 2; mentions of 7% or higher (occasional usage) shown; products with raw bases of 50+ (most-often usage) shown Significantly higher than average Core user’s most likely alternative (and significantly higher than occasional usage average)

17. Profiles are based on most-often/occasional users of each respective product Top ten footprint leaders - age profiles (Pop. (wt.) (‘000s) =31 540) Younger Older Age profiles are evenly spread across the top 10 footprint leaders. With cream there is a slight leaning towards 35+ year olds, and with drinking yoghurt the age profile is younger.

18. Profiles are based on most-often/occasional users of each respective product Bottom twelve footprint leaders - age profiles (Pop. (wt.) (‘000s) =31 540) Younger Older Older Younger Younger Older Older Older Younger With more niche dairy products one sees clearer age segmentation: Young families are likely to use baby milk powder. Flavoured milk is marketed to young consumers, and very specialised, new products like “other cheese” and “organic milk” appeal mostly to younger consumers

19. Profiles are based on most-often/occasional users of each respective product Top ten footprint leaders - race profiles (Pop. (wt.) (‘000s) =31 540) Maas and UHT full cream have a stronger bias towards black consumers than average. Low fat 2% milk, cheese spread and cream have strong white and coloured biases. Gouda/cheddar and drinking yoghurt are additional favourites amongst coloureds.

20. Profiles are based on most-often/occasional users of each respective product (Pop. (wt.) (‘000s) =31 540) Bottom twelve footprint leaders - race profiles Feta and cottage cheese have strong white bias, whilst baby milk powder is largely used by black consumers.

21. Profiles are based on most-often/occasional users of each respective product (Pop. (wt.) (‘000s) =31 540) Top ten footprint leaders - LSM profiles Compared to age and race, LSM segments provide a clear way of segmenting dairy products: Maas and UHT full cream have a strong presence in LSM 1-3 (Subsisting) and LSM 4-5 (Surviving); In LSM 6-8 (Aspiring) and LSM 9-10 (Advantaged), cheese spread, cream, butter and 2% milk play significant roles.

22. Profiles are based on most-often/occasional users of each respective product (Pop. (wt.) (‘000s) =31 540) Bottom twelve footprint leaders - LSM profiles Baby milk powder has its significant market in LSM 1 – 5. The remaining low-footprint dairy products, with very niche products amongst them (e.g. feta cheese, nutritionally enhance milk, etc.), generally have a presence in LSM 6 or higher.

23. Reasons for rejecting products without trial (Slide 1 of 2; mentions of 5% or higher shown; products with raw bases of 50+ shown) Significantly higher than average Product associated most with comment

24. Reasons for rejecting products without trial (Slide 2 of 2; mentions of 5% or higher shown; products with raw bases of 50+ shown) Significantly higher than average Product associated most with comment

25. Key facts about product rejection and substitution • Key reasons for rejection are price, taste and lack of knowledge. • Baby milk powder: general disinterest; targeted at a very specific market (mothers with babies) • Fresh milk, 2% fat, or fat-free/skim: Dislike fat-free or low-fat products; looks watery • UHT – fat free or skim, 2% fat: Similar to above; people dislike the taste • Maas/Amasi/Inkomaas/sour milk: People dislike smell • Buttermilk: Little-known product • Organic milk: Unknown • Butter, nutritionally enhance milk, all cheeses: Too expensive (esp. butter) • Gouda and cheddar: People dislike the smell

26. (Pop. (wt.) (‘000s) =31 540) Changes in dairy product consumption – 6 leading products (slide 1 of 3) % Fresh full cream milk (particularly LSM 6-8) and maas (particularly LSM 4–5) are the leaders in stated future increased consumption. There is robust interest in Gouda and Cheddar (bar pricing issues), especially amongst LSM 9-10. Yoghurt had the highest count for “using less of”, and in net terms future interest seems flat (and only 2% use it most often). This product is confined to LSM 9-10.

27. (Pop. (wt.) (‘000s) =31 540) Changes in dairy product consumption (slide 2 of 3) %

28. (Pop. (wt.) (‘000s) =31 540) Changes in dairy product consumption (slide 3 of 3) %

29. Reasons for increasing consumption (Mentions of 5% or higher shown; products with raw bases of 50+ shown) Significantly higher than average Yoghurt's chief perceived benefit is that it’s good for children. Full cream fresh milk enhances the taste of hot drinks.

30. Reasons for decreasing consumption (Mentions of 2% or higher shown; products with raw bases of 50+ shown) Significantly higher than average The main reason for decreasing consumption is pricing, especially in the Gouda/Cheddar category and butter. Cream is a product people would use only on occasion.