Shopper Insight Focus Report, Flour Rachael Arding, Project Executive HGCA and VCR² Kent Business School Report

Contents Providing Shopper Insights Objectives Data Sharing Restrictions Executive Summary Analysis Appendix

Health Warning! The dunnhumby data offers unparalleled breadth and depth but it does not tell us why shoppers behave the way they do Further research is warranted in order to understand the purchasing drivers (e.g. attitudes, perceptions, motivations) before changes are made to the marketing mix (product, price, place, promotion) or resources are deployed for the development of new products

Providing Shopper Insights

Providing Shopper Insights Collaboration between HGCA and the Centre for Value Chain Research at Kent Business School since 2005 Sponsorship of PhD students Access to panel of 1.4 million supermarket shoppers Provide generic and tailor made insight reports for the industry free of charge

Centre for Value Chain Research

Objectives

Objectives Provide an overview of shopper behaviour and shopper segmentation for Flour category Identify opportunities for market/product development Highlight potential areas for further research Demonstrate the breadth and depth of shopper insight that is available to farmers and small food producers 8

Data Sharing Restrictions

Data Sharing Restrictions This information is supplied by Kent Business School on the strict understanding that recipients use it exclusively as part of their own marketing and product development activities. Under no circumstances should the information provided be shared with third parties, without our prior consent. Failure to comply with these requirements will result in the organisations involved being denied further (subsidized) access to the dunnhumby data and may jeopardise this service provision for farmers and small food producers in the future.

Executive Summary

Executive Summary (1) Shopper Behaviour Regional Hotspots Specialty flour including bread mixes is the largest category share, by value, at 41% of the category. Impressive sales growth for the ‘Free from’ range which may be the result of the increasing interest of shoppers for health issues. However, due to a still low figure for penetration, there may be opportunities to launch new products and or adapt the offer to shoppers. Customer penetration figures are all lower than 50%, indicating that such a basic cooking ingredient as flour is not widely used. Repeat rates are fairly strong suggesting there are some loyal customers who buy these products. However there are still room for increasing these figures for example in the Organic subgroup. Regional Hotspots The best performing store has a penetration figure of just above 33% which denotes how the category struggles to attract more shoppers.

Executive Summary (2) Shopper Segmentation Life-stage Lifestyle Region Pensioners and Older shoppers enjoy cooking activities are the segments of shoppers more likely to buy flour products Specialty products and Free from range are appealing to younger shoppers Lifestyle Less Affluent shoppers are mostly appealed by Plain and Self raising alternatives With a value added and a corresponding premium the specialised ranges attract the more affluent shoppers. Region East England county dominates the Plain and Self raising categories. Northern Ireland and Scotland perform best for the specialised range 13

Executive Summary (3) Basket Analysis Other ready meals and convenience foods are closely associated with purchases of Flour products. Yeast and other baking products are mostly bought alongside flour products which indicates a clear purpose for a shopping mission. The difference in products bought along with organic flour products only, is not that widely marked. 14

Composition of Flour Category Analysis Composition of Flour Category

Composition of Flour Category Free From Range Flour (4 products) Organic Flour (10 products) Plain Flour (15 products) Self Raising Flour (14 products) Specialty Flour (50 products)

Analysis Key Measures

Key Measures Category Share Sales Growth Penetration The share of sales for each product sub-group as a % of total category sales (Highlights the relative importance of different product sub-groups) Sales Growth Year on year growth of sales, by volume and value (Illustrates performance of different sub-groups over time) Penetration % of shoppers who have made at least one purchase in the last 52wks (Indicates scope for attracting new buyers). Frequency of Purchase The average number of times a purchase as been made in the last 52wks (Indicates scope for increasing product usage) Repeat Purchase Rate % of shoppers who have made at least two visits to the category in the last 52wks (Gives an indication of product performance and shopper loyalty)

Key Measures: Flour (52 wks to 28-Dec-08) Specialty flour including bread mixes is the largest category share by value at 41% of the category. Impressive sales growth for the Free from range which may be the result of the increasing interest of shoppers for health issues. However, the penetration of the subgroup is still very low therefore the impact on the overall category growth remains limited. Flour being a basic commodity we would expect a higher figure for Customer Penetration for these products. This may denote the disappearance of the traditional shopper type cooking from scratch. Repeat rates are fairly strong suggesting there are some loyal customers who buy these products. However there are still room for increasing these figures for example in the Organic subgroup

Weekly Sales Trends: Flour categories (104 wks to 28-Dec-08) Source: © dunnhumby 2009

Analysis Shopper Segmentation

Shopper Segmentation Shopper profiles are presented in index form, with 100 representing the average for all supermarket shoppers Over-indexing segments purchase a disproportionately high share – they find them appealing Under-indexing segments purchase a disproportionately low share – they find them less appealing. In looking for potential target segments (those which are under or over performing) attention is drawn to those which over-index or under-index by at least 10% Further segmentation, by geo-demographics and detailed lifestyle can be provided upon request

Lifestage Segmentation: Total flour (12 weeks to 15.02.2009) Young adults are less buying into the flour category Source: © dunnhumby 2009 Young families are more likely to buy flour than other shoppers 23

Lifestyle Segmentation: Total flour (12 weeks to 15.02.2009) Mid market shoppers are slightly less appealed by Flour than other lifestyles Source: © dunnhumby 2009 24

Regional Segmentation: Total flour (12 weeks to 15.02.2009) Source: © dunnhumby 2009 Thighs are the only chicken part to appeal to Pensioners 25

Lifestage Segmentation: Plain and Self raising flour (12 weeks to 15 Self raising flour appeal strongly to Pensioners Source: © dunnhumby 2009 Young families are more likely to buy Plain flour than other shoppers

Lifestyle Segmentation: Plain and Self raising flour (12 weeks to 15 Plain flour appeals to Up market shoppers whilst Self raising products tend to be preferred by Less Affluent shoppers Source: © dunnhumby 2009

Thighs are the only chicken part to appeal to Pensioners Regional Segmentation: Plain and Self raising flour (12 weeks to 15.02.2009) Both types of flour are most likely to be bought in East England and South West. Source: © dunnhumby 2009 Thighs are the only chicken part to appeal to Pensioners

Lifestage Segmentation: Free from range, organic and specialty flour (12 weeks to 15.02.2009) These types of flour are most likely to be bought by Young families and appeal less to Pensioners Source: © dunnhumby 2009

Lifestyle Segmentation: Free from range, organic and specialty flour (12 weeks to 15.02.2009) These types of flour are more likely to be bought by Up market shoppers very weak appeal to less-affluent shoppers Source: © dunnhumby 2009

Northern Ireland shoppers are not buying into the Organic range flour, Regional Segmentation: Free from range, organic and specialty flour (12 weeks to 15.02.2009) Northern Scotland and South West are the counties where these subgroups are the most likely to be bought Source: © dunnhumby 2009 Northern Ireland shoppers are not buying into the Organic range flour,

Areas for potential further research Analysis Areas for potential further research

Areas for Potential Further Research This report reveals several areas which might warrant further research: Would marketing campaigns of ‘Free from’ range products be likely to increase the customer penetration? Northern Ireland shoppers are not buying into the Organic range flour, it might be interesting to look further this issue as to identify reasons and adapt marketing strategies. How can the category appeal to other than Pensioners shoppers and encourage cooking from scratch activities. Central Scotland county under performs for every subgroup, would a focussed awareness campaign appeal to new shoppers?

Appendix

the dunnhumby data 2yrs of weekly supermarket purchases 1.4 million shoppers Representative of 40% of UK households Over 30,000 food products Segmented by; Lifestage (young adults, young families, older families, older adults, pensioners) Lifestyle (Up-market, Mid-Market and Less Affluent shoppers) Region (13 TV advertising regions)

The dunnhumby data: Lifestage Segmentation % shoppers Lifestage segment Age & family Adults aged 20-39 with no children Young Adults 16% Adults aged 40-59 with no children Older Adults 14% Adults with all children under 10 Young families 15% Adults with one or more child over 10 Older families 16% Adults over 60 with no children Pensioners 9% Multigenerational households Mixed 28%

The dunnhumby data: Lifestyle Segmentation % shoppers Lifestyle segment Key Characteristics time conscious, enjoy luxury products and are willing to experiment Finer Foods 17% interested in organic, environmental benefits, low fat/sugar and calorie conscious Healthy 9% regard food as fuel, are busy and rely heavily on the microwave Convenience 22% look primarily for value and rely on staple foods Price Sensitive 16% have broad tastes, favour established brands and are influenced by the needs of children Mainstream 26% enjoy the art of cooking but rely on a fixed shopping list so less likely to buy on impulse Traditional 10%

The dunnhumby data: Regional Segmentation ISBA (TV advertising) regions North Scotland – STV North (Aberdeen, Dundee) Central Scotland – STV Central (Glasgow, Edinburgh) Borders – Border Television North East – Tyne Tees Television North West/ Lancashire – Granada Television Northern Ireland - UTV Yorkshire – Yorkshire Television Midlands – Carlton Central East England – Anglia Television London – LWT Wales and the West – HTV Wales & HTV West South and South East – Meridian Broadcasting South West – Carlton West Country

The dunnhumby data: Regional Segmentation % shoppers % shoppers Region Region London 20% Scotland 9% Midlands 15% Yorkshire 8% Southern England 11% South West 4% Lancashire (NW) 10% North East 3% East of England 9% Northern Ireland 3% Wales & the West 9%

Contact Details: HGCA Rachael Arding For further Information about how your business can obtain more information like this please contact: Rachael Arding HGCA Market Development Project Executive Email: Rachael.Arding@hgca.com Telephone: 020 7520 3930

Contact Details: VCR² and Kent Business School For further information about the Centre for Value Chain Research at Kent Business School, please contact: Melanie Felgate Centre for Value Chain Research, Kent Business School, University of Kent, Canterbury, CT27PE Email: m.felgate@kent.ac.uk Tel: 01227824766 Website: www.kent.ac.uk/kbs/cvcr

Contact Details: VCR² and Kent Business School For further information about the Centre for Value Chain Research at Kent Business School, please contact: Professor Andrew Fearne Centre for Food Chain Research, Kent Business School, University of Kent, Canterbury, CT27PE Email: a.fearne@kent.ac.uk Tel: 01227824840 Website: www.kent.ac.uk/kbs/cvcr

Thank you