1. NORTH AMERICAN TRENDS

2. Market Conditions in North America
Rick Winslow,
Nielsen Canada

3. Market Trends – Canada & U.S.
The Boston Tea Party
Market Trends – Canada & U.S.
Rick Winslow, The Nielsen Company
August 31, 2011
Thank you
Today we are covering:
Consumer confidence
Retail trade performance
Total beverage and hot tea performance
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4. For Today The Consumer What’s happening in the store? Tea Trends
Nervous and looking for value
What’s happening in the store?
Store sales and trends
Tea Trends
U.S. / Canada
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5. The Consumer Start with consumer confidence
A key indicator of market performance and market expectation
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6. Global consumer confidence climbed slightly as the year started
Regional Summary:
Emerging Driving Growth
Consumer Confidence Index
Q Results
LA 90
AP 107
MEAP 106
NA 85
EU 73
Emerging
Developed
Source: The Nielsen Company, Global Online Survey, Q1 2011
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7. Optimism varies greatly over personal finances and job prospects
Intersection: Global
Legend
CA Canada
US United States
GB Great Britain
IT Italy
FR France
DE Germany
ES Spain
AU Australia
CN China
HK Hong Kong
RU Russia
BR Brazil
AR Argentina
% Optimistic over Personal Finances
% Optimistic over Job Prospects
Source: The Nielsen Company, Global Online Survey, Q1 2011
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8. US and Canadian consumers differ greatly with their levels of confidence in the economy.
Source: Nielsen Consumer Confidence Survey
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9. While Canadian economic perceptions are getting more bullish, U. S
While Canadian economic perceptions are getting more bullish, U.S. Households continue to be mired in recession.
% of HH that believe their country is in an economic recession at the moment?
% of HH that believe their country will be out of a recession in the next 12 months?
Despite optimism, still high numbers of consumer feel we are in a recession
Canadians becoming less optimistic that a recession will end any time soon
Will impact spending behaviours
Source: Nielsen Consumer Confidence Survey
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10. Canadians are more optimistic than U.S. consumers
Source: Nielsen Global Online Consumer Confidence and Opinion Survey March 2011
Change vs. Q4 11 (Dec)
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11. Canadians and Americans have a mutual focus on paying off debt & saving while many report having no spare cash
How Do North Americans Utilize Their Spare Cash After Covering Essential Living Expenses?
Canada
United States
Source: The Nielsen Company, Global Online Survey, Q1 2011
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12. Top Canadian Concerns Top U.S. Concerns
Canadians & Americans have similar concerns, but in different sequence
What are the top ten things consumers are most concerned with over the next six months?
Top Canadian Concerns Top U.S. Concerns
Increasing Prices and Healthcare are the main Canadian concerns while the state of the Economy / Debt and Fuel prices are on top of mind for Americans.
Source: The Nielsen Company, Global Online Survey, Q4 2010
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13. Summary – Consumer Confidence
Similarities
Both U.S. and Canadian consumers are concerned by rising fuel and food prices
Both are hunting for value at retail – they want good everyday prices and deep features
Everyone wants the uncertainty to slide into the background
Differences
Canadians are much more bullish on the economic turnaround
Canadians feel more secure in their jobs and with their personal finances
American consumers are much more concerned with the economy; personal housing
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14. In Store
Trends…
So, how has the Total Beverage and Hot Tea market fared?
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15. Total Receipts are flat!
$ Vol % Chg 2 3 1 -8
Market Share
$ per Trip
Increased gas price continues to impact trips across the board. Most Canadian retailers (except Wal Mart) are experiencing decline in trips.
48.30
53.65
61.17
44.88
127.76
41.02
51.67
33.75
50.37
44.71
0.89
1.32
-0.64
0.41
-0.03
1.43
0.07
1.05
0.94
0.03
190.1
35.4
16.4
25.4
12.0
28.1
24.6
12.9
6.2
7.1
-6.3
-1.2
0.3
-0.6
-0.1
-0.7
-0.5
100.0
89.4
86.4
71.6
46.9
54.3
25.2
70.4
79.0
70.1
0.0
0.7
1.0
-0.8
-1.6
-1.0
-1.7
Pt Chg
Trips Per Shopper
Pt Chg
Penetration
Pt Chg
Source: Nielsen, Homescan, Channel Watch, National. Tl Receipts. 52 Weeks Ending January 1, 2011
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16. Units started to rebound while dollar growth slows
Quarterly Periods
Source: Nielsen MarketTrack, National All Channels – 12 wks Ending Mach 12, 2011
Total Tracked Sales excluding Fresh Random Weight
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17. CPG prices rising & promotions increasing too
9 periods of price gains; 1% & 1.2% increases in last two periods
All Departments
Increased promotion as retailers increase efforts too
During 2009 and Consumer packaged good (CPG) unit prices had been dropping sharply, and units on promotion (in the form of feature ads and/or displays) had been on the increase. Retailers had been cutting prices to gain competitive advantage or to react to other retailer price cuts. These patterns dissipated in 2010 as prices have been on a slight increase during the second half of 2010 and into For nine consecutive periods unit prices across the store are growing, with the largest increase of 1.2% in the most recent period. And brands have been promoting more to stimulate sales and win against private label efforts, while retailer store brand promotion support has been off. Retailers in the recent period have stepped up support.
4 Weeks Ending
Source: Nielsen Scantrack, (U.S. FDM w/ Walmart), 4 week increments (vs. prior year); UPC-coded
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18. 4 Weeks Ending vs Year Ago
Weak total store performance – good prices & heightened promotions didn’t work
All Departments
Avg U Price Chg, 13 w/e 03/19/11:
Positive: Neutral: Negative: 37
(major categories)
But price cuts and heightened promotions didn’t work in 2010 as both dollar sales and unit sales were off in most periods. Or would the situation have been worse without these value efforts?
In 117 categories examined, average unit prices in the latest quarter were positive or up in 79 categories, neutral for 0 and off in 38 – clearly a sign that inflation is coming back to our industry.
We should expect to see some improvement in dollar sales with rising prices, but unit declines at the end of 2010 and into 2011 are deeper?
4 Weeks Ending vs Year Ago
Source: Nielsen Scantrack, (U.S. FDM w/ Walmart), 4 week increments (vs. prior year); UPC-coded
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19. Tea Market So, how has the Total Beverage and Hot Tea market fared?
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20. The Tea Tale of 2 Countries……
Canadians loves theirs hot; Americans prefer it cold
The U.S. hot tea consumer has more choices “at the shelf” – a huge irony!
Coffee is growing on both sides of the border – driven by innovation and pricing
Tea is growing too – however at a much more modest rate
S0….how do we get our current users to drink more….and convert hot beverage consumers to add tea to their daily choices?
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21. Hot Beverages is leading growth in both Canada and the US Canada is more developed with Hot Beverages
$ Vol (000,000s)
TL Bevs 4,589 4,690 45,729 46,272
+6%
$ Vol % Chg
+12% 0%
Total Beverages stable with a shift to Hot Beverages in both Canada and U.S.
Canadian market about 1/10th that of the U.S.
-1%
$ Vol % Chg
$ Vol Shr
Source: Nielsen MarketTrack, National CAN All Channels, 52 Weeks Ending July 2, 2011
Nielsen Scantrack, National US All Outlet, 52 wks ending July 09, 2011
Shared to Close group of TL Bev based on Canadian categories for TL Beverages
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22. $ Share of Total Beverage
Beverage categories have different development in Canada versus the U.S. with a skew to Coffee and Tea in Canada and FSDs, Water and RTD Iced Tea in the U.S.
Hot Beverage
$ Share of Total Beverage
Cold Beverage
FSD biggest in both countries but much less developed in Canada
Canada continues to have more preference for Hot Beverages
Again this year, Canada has a stronger Coffee and Tea market
Source: Nielsen MarketTrack, National CAN All Channels, 52 Weeks Ending July 2, 2011
Nielsen Scantrack, National US All Outlet, 52 wks ending July 09, 2011 Shared to Close group of TL Bev based on Canadian categories for TL Beverages
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23. Top 10 Canadian Beverage Categories
Cold Beverages accounts for over 75% of sales but growth is from Hot Beverages
Top 10 Canadian Beverage Categories
$ $ % Unit
$ Sales (000’s) Share Chg % Chg
Total Beverages (Hot & Cold) 4,690,
Cold Beverages 3,563,
Hot Beverages 1,126,
Rank Top 10 Sales Categories
1 Flavoured Soft Drinks
2 Juices & Drinks - Shelf Stable
3 Coffee - Roast & Ground
4 Flat Water
5 Tea
6 Coffee - Instant
7 Vegetable Juices
8 Carbonated Water
9 Extreme Energy Drinks
10 RTD Iced Tea Cans
Tea is a large and important category
Its dollar growth is behind coffee but is growing at a steady pace
Source: Nielsen MarketTrack, National All Channels, 52 Weeks Ending July 2, 2011
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24. Top 10 US Beverage Categories
Cold Beverages accounts for nearly 85% of total beverages but is softer in its performance than Hot Beverages.
Top 10 US Beverage Categories
$ $ % Unit
$ Sales (000’s) Share Chg % Chg
Total Beverages $46,271,
Cold Beverages $39,292,
Hot Beverages $6,978,
Rank Top 10 Sales Categories
1 Flavoured Soft Drinks
2 Juices & Drinks – Shelf Stable
3 Flat Water
4 Coffee – Roast & Ground
5 RTD Iced Tea
6 Flavoured Drink Mixes
7 Tea
8 Extreme Energy Drinks
9 Carbonated Water
10 Coffee - Instant
Although Hot Tea is not as important of a beverage category in the US, it remains in the top 10 categories.
Hot Tea is soft in the US as Americans prefer their RTD Iced tea which is posting a strong growth this year
Source: Nielsen Scantrack, National US All Outlet, 52 wks ending July 9, 2011, Shared to Close group of TL Bev
based on Canadian categories for TL Beverages
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25. While Canadians like it hot, Americans prefer it cold
Total Beverages:
CDA
: $320.2 Million (+1%)
USA
: $3,342.5 Million (+2%)
Share of Tea categories
$ % Chg 3% 50% -1% -11%
Tea performing well in both countries given economic conditions
$ % Chg 1% 2% 6% -10%
Source: Nielsen MarketTrack, National CAN All Channels, 52 Weeks Ending July 2, 2011
Nielsen Scantrack, National US All Outlet, 52 wks ending July 09, 2011 Shared to Close group of TL Bev based on Canadian categories for TL Beverages
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26. Per Caps Hot Tea Consumption – Canada Rules!
Population
34,551, ,995,946
Tea Sales (pounds)
16,977,956 94,150,180
0.49 lbs 0.30 lbs
Hot Tea consumption per capita
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27. Specialty / Upscale Tea continues to gain in popularity and now holds nearly 60% of the $ market Share
USA
CANADA
$ Share
$ Vol % Chg +7% +5%
$ Vol % Chg -2% -4%
TL Tea % Chg +3% +1%
Specialty Tea continues to be the growth engine of Hot Tea for both countries
Still room for Specialty to grow in Canada given share size in U.S.
Source: Nielsen MarketTrack, National GB+DR+MM+GM+WC, Latest 52 Wks ending July 2, 2011.
Nielsen Scantrack, National US All Outlets, 52 Wks ending July 9, 2011
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28. In terms of Pounds, Regular Tea dominates but Specialty Tea has continued to gain share of the category.
CANADA
USA
Pounds Share
Tonn % Chg +8% +4%
Tonn % Chg -1% -3%
TL Tea % Chg +1% -1%
However, tonnage volume is not keeping pace with dollars and is slowing. More premium offerings driving growth?
Source: Nielsen MarketTrack, National TL GR+DR+MM+GM+WC, Latest 52 Wks ending July 2, 2011.
Nielsen Scantrack, National US All Outlets, 52 Wks ending July 9, 2011
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29. While overall tea reach is down in both countries, Specialty in the US is gaining some new consumers
% Households that purchased…
Pt Chg
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30. Specialty Black and Herbal Tea segments are key growth contributors
Specialty Black and Herbal Tea segments are key growth contributors. Increased health concerned consumers and many new launches are fuelling the growth.
$ Share of TL Tea
(Vol% Chg)
2% 27% 3% 11% -9% -25%
TL Upscale/ Specialty
57.2 $ Shr (+7%)
9% 4% 3% 6% -1% -16%
Black Core: Earl Grey, English Breakfast
Black Flavoured: Earl Grey Vanilla, Chai, Black currant, chocolate mint, orange, lemon twist, etc. Any black tea with flavours…
Herbal: Chamomile, lemon grass, peppermint, etc. Any tea with no caffeine (excl. Rooibos)
Herbal Red: Any Rooibos tea
White: Any white tea
TL Upscale/ Specialty
59.4 $ Shr (+5%)
Source: Nielsen MarketTrack, National GR+DR+MM+GM+WC, Latest 52 Wks ending July 2, 2011.
Nielsen Scantrack, National US All Outlets, 52 Wks ending July 9, 2011
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31. “Functional” Tea? Is there a co-relation between OTC and Tea?
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32. Summary
While Canadian consumers are becoming more confident in the economy, US consumers have experienced a setback this past quarter
Both consumers have similar concerns and intend to continue their new “frugal” shopping behaviour
The retail market continues to fuel consumers desire for less expensive products, although there are signs that this is starting to slow
The growth is fairly static however Beverages are a key segment for retailers in size
Hot Tea for Canadians and Cold Tea for Americans
Specialty Tea is the driver of Total Hot Tea growth but volume is flat
Specialty black and Herbal are the engines of growth for the segment
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33. Thank You! rick.winslow@nielsen.com
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34. GREATER ASSORTMENT
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