Functional Ingredients and the Consumers Who Buy Them (Food and Beverage)
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1 Functional Ingredients and the Consumers Who Buy Them (Food and Beverage) Mary Ellen Lynch SPINS FINAL Oldways Supermarket Die3cian Symposium March 2015
2 ABOUT SPINS At SPINS our mission is to maximize the value of information for growing the natural products industry. We carry out our mission by providing information, insight and a common language for the industry with which to understand and analyze consumer, retail and broad marketplace dynamics. ABOUT THE DATA SPINS Exclusive Natural and Specialty Retailer POS Data IRI Multi Outlet (Conventional) POS Data with SPINS Attribution Overlay National Consumer Panel with SPINS Attribution Overlay SPINS NaturaLink Total US Consumer Segmentation
3 Defining Natural If you can t define it, you can t measure it! (no$ce these Natural Standard brands to not even say natural on the label their commitment to natural is imbedded in the Brand and the brand has developed a high level of trust with Natural consumers)
4 Not all Natural products are created the same. The difference lies in product standards, manufacturer, perception & distribution Brand Posi,on Code SPINS in- house team of Natural and specialty product experts assess and code products Natural Standard Specialty Natural Naturally Perceived Conventional Natural Marketed and sold in Natural retailers Meets the strictest quality standards demanded by core natural consumers Marketed as artisan, premium quality, imported/regional or ethnic/cultural Quality standards similar to a Natural Standard brand Targets shoppers looking for an entry point to make better purchasing decisions Broader distribution across various retail channels Developed by traditional CPG brands but has added value such as organic content, fair trade, or allergy free
5 Functional Good Fo Lot s of Buzz better for you Real Food Health & Wellness Natural
6 Functional Food Any modified food or food ingredient that may provide a health benefit beyond that of the traditional nutrients it contains* * The Ins3tute of Medicine
7 Increasing Consumer Demand for Food & Beverages with Functional Health Benefits millions + 32% 3 year growth Seasonality: These high margin products take a back seat to holiday focused merchandising and promo Includes Natural Products: Energy Bars & Gels Medicinal Tea Refg. Functional Juice Fermented Bevs and Kombucha Yogurt & Kefir pre/probiotics Shelf Stable Functional Bev SPINS Natural Channel, SPINS Specialty Gourmet Channel and Conventional MULO powered by IRI Total US, 3 Years ending Feb 11, 2015
8 Who is Buying?
9 SPINS Segments to Understand the Consumer, Because Whether Intentional or Not, Virtually All US HH Purchase Natural Products and Most Buy Organic Inputs: Broad range of surveyed attitudes and behaviors (not limited to Natural products) Lifestyles Physical and emotional category needs SPINS NaturaLink Segmentation Lifestyle & General Shopping Habits Importance of Natural/ Organic Products Natural/ Organic/ Eco- Friendly Category Considera3on Retail Awareness & Shopping Shopping habits and preferences ATtudes Toward Product Choices Trend SeZer Informa3on Demographics Actual buying behavior from the same households as attitudes Natural product loyalty/share of requirements maximizes the predictability and discrimina$on of the ahtudinal based consumer segments by accoun$ng for underlying buying behavior of the respondents.
10 SPINS NaturaLink Segmentation %Total US HH 9% 14% 26% 14% True Believers Healthy Realists Indifferent Traditionalists Resistant Non-Believers Proud of Buying Natural/ Organic Products 9% 11% 16% Fears Family Won t Like Natural/ Organic Products IRI Shopper Network SPINS NaturaLink Enlightened Environmentalists Strapped Seekers Struggling Switchers
11 SPINS NaturaLink Segmentation True Believers These shoppers are passionate about staying fit and healthy. They are focused on trying new things, serving as strong role models for their children, and are strong believers in the benefits of natural/organic products. True Believers enjoy a median income of $65,000, have an average age of 40, attended college and, in some cases, embarked on post- graduate studies. Enlightened Environmentalists This segment is passionate about the environment and making good choices to support it. These shoppers are making a real effort to make healthier choices and will go out of their way to shop at stores that carry natural/organic products. Enlightened Environmentalists are older than True Believers, averaging 63 years old, attended graduate school and have a median income of $57,000. Strapped Seekers This group likes to try new things and live a healthy lifestyle, but knows they should make healthier choices than they do. With a median income of $45,000 and median age of 45, these shoppers represent all levels of education. Healthy Realists Being healthy and fit and making exercise a priority is important to these shoppers. They are often the first among their friends to try something new, but can have difficulty deciding whether to buy healthy or traditional products. Their average age is 39; they have attended college and earn a median income of $65,000. Indifferent Traditionalists Leading a simple life with few passions, they may try healthy products but do not consider themselves on the leading edge of change. With a median income of $46,000 that skews under $25,000, these shoppers are aged 65 on average and have a high school education. Struggling Switchers These shoppers are focused on staying within their budgets, have suffered during the last recession, but know they should be eating healthier and getting more exercise. With a median income of $56,000, they are aged 39 on average and attended all levels of school. Resistant Non- believers With very little desire to explore other options for things to buy, Resistant Non- believers stay loyal to the products they know. They have completed high school; have an average age of 52 and a median income of $48,000.
12 Func3onal Ingredient Trends (Food & Beverge)
13 HEART HEALTH CHIA is the Yes, it Examples of Different Types of Chia Products same! Many health benefits including high in omega-3 fatty acids promote a healthy digestive tract gluten-free and grain-free Have a greater propensity to buy: %$ $ Index HH with younger children Young Couples Acculturated Hispanics FH FH Fun Fact: Egg subs3tute= 1tbl chia + 3 tbl water SPINS Consumer powered by IRI Shopper Network Total US YE 2/28/15
14 CHIA Buyer Profile SPINS NaturaLink Segment % $ $ Index True Believers Eightened Environmentalists Healthy Realists Strapped Seekers 8 93 Indifferent Traditionalists Struggling Switchers 6 39 Resistent Non Believers 4 22 True Believers Healthy Realists Indifferent Traditionalists Struggling Switchers Strapped Seekers Resistant Non-Believers Enlightened Environmentalists SPINS Consumer powered by IRI Shopper Network Total US YE 2/28/15
15 PROTEIN The high protein trend stems from popular diets, so weight loss and weigh management is a big reason everyone wants more protein in their products. Consumers interested in weight loss tend to alter the ratio of macronutrients (carbohydrates, protein & fat) in their diet, often in favor of low carbs/high protein. One of the most google searched terms 2014 Hot Growth Product (Organic+Raw) Just save the bros!
16 PROTEIN PEA Have a greater propensity to buy: % $ $ Index HH with Kids Young Singles Young Couples Acculturated Hispanic FH FH * Hispanic Buyer Index 130 Examples of Different Types of Pea Protein Products Revised 3/24/14 SPINS Consumer powered by IRI Shopper Network Total US YE 2/28/15
17 ENERGY Basic choice Simple bezer for you choice Func3onal choice
18 ENERGY Examples of Different Types of Clean Energy Products organic Have a greater propensity to buy: % $ $ Index Young Couples FH No FH Acculturated Hispanic Yerba Mate water tea Revised 3/24/14 SPINS Consumer powered by IRI Shopper Network Total US YE 2/28/15
19 Clean Energy Buyer Profile SPINS NaturaLink Segment % $ $ Index True Believers Eightened Environmentalists Healthy Realists Strapped Seekers 5 55 Indifferent Traditionalists Struggling Switchers 8 58 Resistent Non Believers 4 23 Healthy Realists True Believers Indifferent Traditionalists Struggling Switchers SPINS NaturaLink Strapped Seekers Resistant Non-Believers Enlightened Environmentalists SPINS Consumer powered by IRI Shopper Network Total US YE 2/28/15
20 RELAXATION Relaxation beverages focus on anti-anxiety and mood support and are often formulated with herbal adaptogens, targeted amino acids and phospholipids. GABA Kava kava L- Theanine Passionflower Valerian Hops Lemon balm Melatonin Taurine and others Have a greater propensity to buy: Examples of Different Types of Clean Relaxa3on Products % $ $ Index HH with kids Young Couples Large HH FH FH Could it happen? Famed ice cream impresarios Ben Cohen and Jerry Greenfield declared on HuffPo Live that they d support making a cannabis-infused version of their sweet treats available where marijuana is legal. SPINS Consumer powered by IRI Shopper Network Total US YE 2/28/15
21 Natural Relaxation Buyer Profile True Believers Healthy Realists Enlightened Environmentalists Indifferent Traditionalists SPINS NaturaLink Struggling Switchers Strapped Seekers Resistant Non-Believers SPINS Consumer powered by IRI Shopper Network Total US YE 2/28/15
22 ANTI INFLAMATORTY TUMERIC It is now believed that chronic, low-level inflammation plays a major role in almost every chronic, Western disease. This includes heart disease, cancer, metabolic syndrome, Alzheimer s and various degenerative condition Buyers have a greater propensity to be*: Highly Educated Young Singles Major Metropolitan Area Male True Believer * Emerging profile (small sample) and may be driven by distribution SPINS Consumer powered by IRI Shopper Network Total US YE 2/28/15
23 Thank You!
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