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Today’s Consumers and Generation Next Myths and Realities

Today’s Consumers and Generation Next Myths and Realities. Nick Lake The Nielsen Company NABI Board Meeting July 29, 2010. The Economy Is a Bit Like This – Can’t Make Up its Mind. Unemployment. -7.8 m. 9.7%. Jobs lost since recession began. Underutilized. 16.6%. Retail Sales (May).

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Today’s Consumers and Generation Next Myths and Realities

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  1. Today’s Consumers and Generation Next Myths and Realities Nick Lake The Nielsen Company NABI Board Meeting July 29, 2010

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

  3. 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

  4. 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

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

  6. 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

  7. 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

  8. Overall Dining Is Close to Flat Now, But Well Down vs. Two Years Ago Source: Company Reports – Nation’s Restaurant News

  9. It Could Take at Least 4–5+ Years Before Restaurant Sales Return to 2007 Levels Source: Nielsen projections

  10. 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.”

  11. Bev Al Mid Year Report Card – What’s Hot and Not

  12. ‘Value vs. Volume’ Gaps Have ShrunkFrom 2007 Levels Source: Nielsen Tl U.S. Food/Drug/Conv/Liquor Plus - through 06/26/2010 Lat 24 and Lat 12 for Beer/FMB’s only

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

  14. 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 14 Source: Nielsen, Total US Food, 13 weeks rolling ending 5/29/10

  15. 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)

  16. 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 06-26-2010

  17. 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 06-26-2010

  18. 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 06-26-2010

  19. 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/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  20. 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/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  21. 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/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  22. 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/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  23. Table Wine – Top 10 VarietalsPinot Noir and Riesling lead the way, followed closely by Sauv Blanc, Zinfandel and Cab Sauv. Syrah/Shiraz continues to struggle. Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  24. Spirits - Sub-categoryVodka continues to grow, along with improved Tequila, Cognac and Prep Cktl growth. Average price for some rising (Cognac, Prep Cltl), and others falling (Vodka, Tequila) Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  25. Spirits – Import vs. DomesticWhile domestic trends overall are flat, Imported trends have picked up in the last 13 weeks, with help from Imported Vodka growth *NOTE: Ttl Selected Spirits = Vodka, Whiskey, Cordials, Gin, Brandy and Schnapps segments Source: Nielsen Total U.S. Food/Drug/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  26. 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/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  27. 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/Liquor Plus; thru 06-26-2010; Pricing based upon 750 ml Equivalent

  28. 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 • Imports in general are mixed and those performing well have adjusted pricing to be more competitive within the category

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