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Potato trends in a Modern MarketCliona Lynch - Kantar Worldpanel

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Agenda

1. Close up on a Modern Consumer

2. Potatoes still central to Irish meals

3. How are Potatoes performing?

4. Where can we address challenges?

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3

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Sentiment at its highest since January 2006

Source: ESRI Consumer Sentiment Index

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3.8%

2.0%

-0.6%

2.4%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

90

2

90

4

90

6

90

8

91

0

91

2

10

01

10

03

10

05

10

07

10

09

10

11

10

13

11

02

11

04

11

06

11

08

11

10

11

12

12

01

12

03

12

05

12

07

12

09

12

11

12

13

13

02

13

04

13

06

13

08

13

10

13

12

14

01

14

03

14

05

14

07

14

09

14

11

14

13

15

02

15

04

15

06

15

08

15

10

15

12

Inflation HH Spend change

Source: Kantar Worldpanel Ireland (ROI )

Grocery inflation across 38,000 items

2009 2010 2011 2012 2013

ROI market growth vs. inflation

2014 2015

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–+0.8 trip

–+2.2%

–+2%

–-2.3%

–NC

–-0.2 trip

–+3.6%

–+1%

–+5.5%

–+2.6%

Shoppers relaxed the purse strings this Christmas

–More Trips?

–Average spend

–Volume Bought

–Trip Spend

Price Paid

Source: Kantar Worldpanel, data to 3rd Jan 2016

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7

Battle between treat and health categories…

KWP Total Grocery Data 4 weeks to 4th Jan 2015 – growth +5% within Top Markets

Source: Kantar Worldpanel, 4 w/e 3rd Jan 2016

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-2

1

5 6

9

0.1

4

6

3

12

4 4

9

6

13

LidlAldiDunnesSuperValuTesco

4 w/e Growth

12 w/e Growth

52 w/e Growth

Ab

so

lute

Valu

e

Sale

s €

m

Strong momentum across the retail sector

Source: Kantar Worldpanel Data To 3rd Jan 2016

© Kantar Worldpanel

25.0

25.6

23.7

7.2

7.7

25.2

25.0

24.0

7.7

7.7

SuperValu claimed top spot at Christmas with a slight

edge over Tesco

4.7

1.3

5.1

12

3.4

Retailer Value Share % Sales Change

Source: Kantar Worldpanel 8 w/e 3rd Jan 2016

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Agenda

1. Close up on a Modern Consumer

2. Potatoes still central to Irish meals

3. How are Potatoes performing?

4. Where can we address challenges?

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143 million* packs of potatoes sold in 2015

Potatoes are bought once every 2 seconds in Irish Retailers

1.65 million households purchasing annually

11

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11%

23%

Occasions Spend

€19.80€46.70

11% of all shopping trips feature potatoes. These trips contribute 23% of all sales. When potatoes are included in the basket, these grocery trips are worth more than average highlighting the importance of the potato category to retailers

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% of households buying (penetration)…

From a shopper perspective Potatoes

are the 8th most important category in

store

Source: Kantar Worldpanel, Jan 2016

100%

99%

99%

97%

98%

97%

97%

#1

#2

#3

#4

#5

#6

#7

#8

99%

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Potatoes and Frozen Potato Products together account for 84% of main meal carbs

72%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Main Meal Carbohydrates

Cous Cous

Noodles

Sweet Potatoes

Rice

Pizza

Pasta

Frozen Potato Products

Potatoes

14

52 w/e | % Volume Share (kgs)

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Agenda

1. Close up on a Modern Consumer

2. Potatoes still central to Irish meals

3. How are Potatoes performing?

4. Where can we address challenges?

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03-Jan-16 vs. Previous Year

Potatoes | Total Outlets | 52 w/e | Previous Year

Potato sales are up from last year as a result of price increases and shoppers making more trips to buy.

16

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After a drop in 2014 Potato sales have recovered again in 2015 but are still below 2007/8 levels

207,801 197,388

175,964 160,752

144,580

169,111

187,412

143,288

163,419

2007 2008 2009 2010 2011 2012 2013 2014 2015

17

€ 000 Value Sales

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In volume terms however, Potatoes are back to 2008 levels with a strong recovery in the last two years

192,526

186,379

182,349 181,969

172,197

164,704

183,397

195,405

2008 2009 2010 2011 2012 2013 2014 2015

Potato Volume kg 000 Sales

18

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For the first time in 7 years, Potatoes saw growth in both Value and Volume terms in 2015

-1.5

-5.1-7.8

-10.5

14.1

10.8

-23.5

14.0

-1.5

-5.1-2.2 -1.9 -1.4

-6.1

11.3

6.5

-30

-25

-20

-15

-10

-5

0

5

10

15

20

2008 2009 2010 2011 2012 2013 2014 2015

Value Change Volume Change

© Kantar Worldpanel

Frequency of purchase has recovered since lows of 2011 and last year’s dip with shoppers now buying Potatoes more than 34 times a year – in line with 2008/9 levels

34.7 34.6

32.5

31.5

34 33.9

32.7

34.4

2008 2009 2010 2011 2012 2013 2014 2015

20

© Kantar Worldpanel

140134

120113 112 110

103113

119

0

20

40

60

80

100

120

140

160

2007 2008 2009 2010 2011 2012 2013 2014 2015

Volume per household (kgs)

Since 2013 we have also seen recovery in the volumes that households buy – as they are willing to purchase more potatoes on each trip but this remains much lower than 2007/8 levels

© Kantar Worldpanel

26 3035

5954 55 53 50 49

1214

14

13

10 10 108 12

66

5

1022 21 28

29

35

3736

35

1415 14

914

4

19 15 113

2007 2008 2009 2010 2011 2012 2013 2014 2015

0-2.5kg 5kg 7.5kg 10kg >10kg

The trend towards less than 2.5kg packs has reversed with 7.5kg packs now at 35% share and growing steadily

% volume share

© Kantar Worldpanel

23

In volume terms Roosters have a clear lead and over 50% of the category sales. Queens & Kerr Pinks are also growing share

52

35

4 4 3 2 1

53

32

5 5 3 2 00.0

20.0

40.0

60.0

04-Jan-15 03-Jan-16

Product % of Category Volume | Actual | Total Outlets | 52 w/e

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24

Roosters and Queens are winning more trips, this along with price increases for these types is driving market growth03-Jan-16 vs. Previous Year

Total Outlets | 52 w/e | Previous Year

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Agenda

1. Close up on a Modern Consumer

2. Potatoes still central to Irish meals

3. How are Potatoes performing?

4. Where can we address challenges?

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Where are the retailer opportunities?

26

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03-Jan-16 vs. Previous Year

Potatoes | 52 w/e | Previous Year

27

Discounters are making strong gains in the market. Tesco, Dunnes and SuperValu are all losing Potato shoppers. Dunnes and SuperValu are also losing volumes per trip

+14%

+7%

+19%

+11%

+35%

+19%

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28

What are the opportunities for Potatoes?

Recruit back lost shoppers & improve volumes per trip

Under-trading vs Fruit & Veg overall – win back shoppers & increase volume per trip

Under-trading vs Total Grocery – win back shoppers & look at increasing prices

Under-trading vs Fruit & Veg – focus on shopper conversion

Under-trading vs Fruit & Veg – focus on shopper conversion

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Which shoppers should we focus on?

29

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0

50

100

150

200

250

300

Pre-Family Young Family Middle Family 45+ Family OlderDependants

EmptyNesters

2008 2009 2010 2011 2012 2013 2014 2015

Average volume benchmark

30

Pre-Family households have increased their volumes since 2012 but are still below the market benchmark. Young Families remain flat while Empty Nesters are decreasing

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Are other carbs stealing share from Potatoes?

31

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In % terms Sweet Potatoes and Cous Cous see strong growth but if we look at actual volumes Potatoes are contributing the most growth both in fresh & frozen processed

16,754

3,251 2,067 429 266 160 37

-1,036 Potatoes Frozen

PotatoProducts

Pasta Rice Noodles Cous Cous SweetPotatoes

Pizza

5 year actual volume change

32

80.5

12.1 9.2 7.8 6.5 5 2.3

-8.3

SweetPotatoes

Cous Cous Potatoes Noodles FrozenPotato

Products

Rice Pasta Pizza

5 year % volume change

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Volume switches show shoppers moving less spend directly to other carbs

34

Pack switch 52we 3rd Jan 2016

90k49k

7k

74k

14k

3k

9k

© Kantar Worldpanel

35

© Kantar Worldpanel

-862

3,051

-41

0

-1500 -1000 -500 0 500 1000 1500 2000 2500 3000 3500

Total Switching

Shoppers Held

Shoppers Lost

Category Arrivals

Source of Potatoes Packs (000s) Change - year ending 03 Jan 2016

Category

Level

Changes

Although Potato sees some switching losses spend with existing shoppers has increased as more packs are purchased YoY

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An eye on trends

36

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Health remains high on shoppers’ agenda

37

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Staying in touch with your consumer

38

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McCain leads the pack on NPD

39

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An eye on the competition

40

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Where to from here?

41

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Key take aways

Vital Category

Drive Footfall

Key to high € trips

Back in Value & Volume growth – prices up and

shoppers returning more often

Sweet Potato in strong % growth but Potato growing

more in actual volume

Potatoes now also growing ahead of Rice, Noodles &

Pasta

Gaining switched volumes back from Pizza

Shopper frequency now driving growth – next step =

grow volume on each trip

Growing younger shopper interest – increase focus on

young families

Ensure we continue to engage older generation

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