150512 dave mahr fcpc national sales symposium

© 2015 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG CONFIDENTIAL.

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Food Industry Trends that are changing the way we do business

David Mahrhttp://ca.linkedin.com/in/davidmahrEmail: [email protected]: 1-416-777-3824May 12, 2015

mailto:[email protected]


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Where do we start?

Dismantling the Sales Machine Harvard Business Review, November 2013


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Nutraceuticals represent an exciting new opportunity for food and pharmaceutical companies to diversify

CHALLENGESPHARMA Declining return on R&D investmentCOMPANIES ‘Patent cliff’

Pressures on health budgets Regulatory oversight

RELEVANCE OF NUTRACEUTICALSNew sector with lower R&D costs New revenue sourceMost purchases are by consumers Less onerous regulatory requirementsSlow-growing

Retailer-owned brands Retailer power Internet marketing

Fast growingSource of differentiation & higher margins Innovative products increase bargaining power Accepted channel for new products

FOODCOMPANI

ES

Global and Local - Nutraceuticals: The Future of Intelligent Food

© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International.

Major Grocery Trends In Canada


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10 Major Structural Trends Shaping the Canadian Food industry

1. Increased Snacking & Food Mobility

2. Consolidation of shopping trips

3. Local / sustainability push from consumers

4. Changing Demographics Driving Product Assortment

5. Inclusion of non-traditional foods in meals

6. Dinner as a later meal occasion

7. Demand for higher protein content & super foods

8. Increasingly Health Conscious Consumers & Demand for Product Transparency

9. Pricing/Affordability/Value are the KSFs for Consumers

10. Will Western Provinces drive Canadian growth?


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1 Increased Snacking & Food Mobility

Consumers are moving away from traditional meals & eating more ‘snack sized’ portions, in addition to increased eating on-the-go

Overview of Trend

• 67% of eating occasions happen outside of the 3 traditional meals, with the average Canadian having 6 snacks/day

• Non-traditional snacks make up 35% of total food consumed (e.g., Cereal, Sandwiches, Chicken)• 16% of individuals eat 5-6 smaller meals/day• 22% of breakfast meals are not consumed at home Lunch meals are now more of a ‘filler’ snack

than a meal, consumers are opting for more ‘snacking’

Opportunities

• Ensuring that product assortment balances large packaging with items that can be easily transported and used to snack on (i.e., single serving packages)

• Creating offers around the idea of snacking rather than traditional snack foods

Risks / Considerations

• Continuing to promote traditional meals throughout the day may result in a missed opportunity to capture the snacking market

• Need to balance the needs of the non-working population who eat more traditional meals, with the younger working population who has a higher demand for snacking / portable meals


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2 Consolidation of Shopping Trips

As retailers converge, and consumers’ time becomes more strained they are looking for destinations that can provide all their needs

Overview of Trend

• Retail market is seeing consolidation between supplemental offers, as well as other competitors expanding their offering to compete across a wider range of categories

• In 2014, shopping trips were down 5%, but basket sizes were up 3% indicating fewer trips but more spend per trip

Opportunities

• Capturing full shop customers will enable Retailers to steal share from competitors as a larger proportion of shops will be captured

• Optimizing the categories from a value perspective that drive customers to chose a given retailer will enable Retailers to win more full shops


• In regions where Retaliers have a ‘partial shop’ destination, there is a risk of losing those customers as they look to consolidate trips to a fewer number of retailers


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3 Local / Sustainability Push from Consumers

Consumers are becoming more socially conscious and increasing their demand for locally sourced and sustainable products

Overview of Trend

• Almost 20% of consumers stated that locally sourced and sustainable products are very important to them, however only 10-15% of consumers are willing to pay extra for these features

• Expanding definition of sustainable – includes fewer or simpler ingredients that are easy to understand for the consumer (rather than ingredients such as additives / preservatives)

Opportunities

• Products that are from the local area can be used as a point of differentiation relative to competitors

• Products that do not have lots of additives and complex ingredients will draw these more health conscious consumers


• Local and sustainable is becoming more table stakes rather than a premium offering

• Rolling out a national local product offering may create logistical challenges from a procurement point of view


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4 Changing Demographics Driving Product Assortment

As large segments of the population age, and ethnic diversity continues to change, product assortment requirements will evolve

Overview of Trend

• Millennials & Boomers represent 50%+ of the population and as they age the demand for certain products will vary

• By 2021 there will be a 30% growth in the 65+ year old bracket• Currently 1 in 5 Canadians are visible minorities, with those numbers expecting to grow over the

coming years, primarily of Asian origin• Many minority groups have different shopping preferences, e.g., preferring ‘market-style’ stores

Opportunities

• Boomers are getting older and will start to change their basket composition, potentially less food or simpler foods

• Millennials are starting to age into parenthood driving higher demand for products such as diapers, baby food, etc.

• Innovate with nutritional content, flavor profiles serving size and packaging


• Not integrating shifting demographics and the aging population may result in missed opportunities to capture changing assortment demand

• In markets with high densities of visible minorities, not catering store setup to these groups may prevent them from coming in to shop


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5 Inclusion of Non-Traditional Foods in Meals

Foods which were historically eaten only at certain meals are now starting to be included in other eating occasions during the day

Overview of Trend

• Driven primarily by Millennials, there is noticeable shift in the foods eaten at each meal occasion• E.g foods such as chicken, traditionally a lunch/dinner food, is starting to be consumed at breakfast• Other meal trends such as more traditional snack food (e.g., yogurt, berries, granola) becoming

meal replacements, as well as trends such as ‘breakfast for dinner’ will continue to change consumers baskets

• Meal choices are being driven more by a desire to be full, rather than by hunger or taste

Opportunities

• Capturing the trends of ‘blurring the lines’ between which foods are typically consumed at a given meal presents an opportunity to improve assortment to align with changing eating preferences

• Creating (through private label) or carrying products which address the changing trends will help to drive basket size and growth (e.g., more snack-style/turnkey products)


• Pushing products to align with certain meal occasions may continue to work with older generations, but will not drive growth with the younger consumers


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6 Dinner as a Later Meal Occasion

The typical time of day for dinner to be consumed is becoming later in the day, creating an opportunity for Home Meal Replacement (HMR)

Overview of Trend

• Almost half of meals by young adults are consumed after 7pm, where the likelihood to cook is significantly higher than prior to 7pm

• Weekday dinners are eaten much later than the weekly average as well• Most common meal to eat with a family / group

Opportunities

• The percentage of people eating an HMR does not change despite more people eating out after 7pm, implying a loss in share relative to restaurants or QSR

• Creating easily accessible, health dinner options after 7pm could create lift for the HMR department

• Creating a social setting in the HMR department may draw people away from restaurants or QSR


• Younger adults tend to live in more urban areas meaning that HMR locations need to be also located in these areas

• Consumers still like to have some element of preparation to their meals, but needs to be prepped and cooked in under 45 min


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7 Demand for Higher Protein Content & Super Foods

Consumers are increasingly more aware and educated about what they eat, this is driving demand for higher protein content

Overview of Trend

• 25% of all meal occasions (formal or snacking) include protein driven by the need to be healthy and full after eating

• Increasing pantry loading of super foods – e.g., quinoa, kale, swiss chard, spelt, etc.• Incorporation of super foods into diets is driven by their superior health benefits relative to other

foods traditionally consumed

Opportunities

• Inclusion of these foods in promotions such as recipes, prepared foods and HMRs may lead to discovery, basket building and greater consumption

• Increasing assortment to include higher-protein items (e.g., Icelandic yogurt)


• Super foods and protein sources tend to be fast moving trends, especially among younger generations


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8 Increasingly Health Conscious Consumers & Demand for Product Transparency

As consumers become more health conscious, they are also demanding more transparency about products/ingredients

Overview of Trend

• Health is the number one consumer concern behind the economy• Approximately 50% of Canadians are actively trying to lose weight and be healthier• Diet changes is the primary channel consumers are using to be healthier• Transparency into the ingredients within a product is a huge priority for consumers who are better

educated, and no longer will to just be told that a product is health

Opportunities

• Supporting consumers desire to eat healthy and lose weight could be a point of differentiation in the market

• Supporting and offering transparent ingredient lists, manufacturing and sourcing details will align well with consumer desires


• Consumers do not want to necessarily be told what to eat, but rather be presented with the right information that will help them to determine what is the right eating choice based on their needs


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9 Pricing/Affordability/Value are the KSFs for Consumers

Higher educated consumers, who are less brand loyal are using product pricing, perception of affordability and value for money as their driving decision factors

Overview of Trend

• Value is often the main motivation for choosing their food and beverage products, ahead of pricing• Affordable pricing is often table stakes for almost all products, as seen by a large divergence

between what people say they will pay more for feature wise and what they actually do

Opportunities

• Ensuring a solid understanding of how each of the key segments define value is imperative to ensuring the assortment offering meets that criteria

• The ability to deliver affordable food that is of a high perceived value, especially in smaller scales will be a huge differentiator


• Pricing and affordable are not necessarily correlated, affordability often includes an element of value/quality in combination with price point


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10 Western Provinces will drive Canadian Growth

The Western provinces are forecasted to be the highest growth, but will this become a reality?

Overview of Trend

• Prairie province consumers spend 7% more than the average consumer and buy more at full price

• 1 in 4 households earns over $100K per year, and are primarily younger than the rest of Canada

• 3 of Canada’s fastest growing cities are in the West

Opportunities

• Assuming the high growth environment stays strong and/or rallies from the lower oil prices create an opportunity to capture higher than market growth rates

• Generally younger consumers mean that product assortment and offering must be closely aligned


• Closely monitoring consumer spending and population growth patterns given the weaker oil prices and by extension job market will be crucial winning in this market

Social media


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Social Selling Facts

Source IDC’s Social Buying Study, February 2014

Nearly, 50% of the purchasing process for technology solutions is

complete before a salesperson becomes

involved

75% of B2B buyers have already used social media for purchasing support and of the remaining 25% - only

5.2% are unwilling to try

B2B buyers on social media represent a more and

influential segment than those who do not use social

media

Buyers with larger budgets are more likely to use Social

Media

When buyers are on the brink of committing to a

vendor and solution, B2B buyers find online networks

to be the most valuable information resource

81.7% of social buyers are under the age of 45


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5.4 75of B2B buyers now usesocial media to be more informed on vendors

% 90of decision makers say they never respond to cold outreach

%people are now involved in the average B2B buying decision

Changing Role of Social Media for Business

Source: Linked In 2015


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Today: your personal

network

All that social media has to offer

YOU

Tap into the power of social media, expand your access and tailor your experience

Boss

Peer

Direct report Business

leader

Cross-functional partner

Competitor #1

Competitor #2

Competitor #3

Source: Linked In 2015

Another Client

High School Friend


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LinkedIn, a good start

Source LinkedIn, 2015


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Implications for Sales Professionals:

You need to be online

Importance of professional networks is expected to grow

Be a selective giver, collaborative and help with strategy development

Everyone’s skills are increasing

Latent network is powerful

You need to create demand (not respond)

Today the biggest competitive challenges is the customer’s ability to learn and that requires superior teaching skills, a talent for revealing novel and important information about the business that the client has overlooked (Nov. 2013, Harvard Business Review)

…reps are most likely to succeed in their interactions with empowered customers when they feel supported rather then directed, and when they are held accountable for outcomes rather then performing certain activities. (Nov. 2013, Harvard Business Review)


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Thoughts to close

Don’t believe in overnight success.

Don’t believe that someone else has the answers for you.

Don’t settle – always improve.

Don’t believe the fault is someone else's...

Despite the challenges of the journey – have fun.


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David MahrEmail: [email protected]: 1-416-777-3824http://ca.linkedin.com/in/davidmahr/

mailto:[email protected]