Grow Sales the Healthy Way. October 13, :05 am 9:55 am
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1 Grow Sales the Healthy Way October 13, :05 am 9:55 am
2 Objectives Learn which product categories are incorporated into betterfor-you foods and which items are consumed more by the different consumer segments Discover the consumption profile of specific snack items (i.e., cookies, crackers, candy, salty snacks, granola, etc.) by consumer segment Realize the role of nutrition by meal occasion
3 Moderator Speakers Jeff Lenard Vice President of Strategic Industry Initiatives NACS Steve French Managing Partner Natural Marketing Institute Hank Cardello Senior Fellow Director, Obesity Solutions Initiatives Hudson Institute
4 Health & Wellness Trends Impacting Convenience Store Sector Steve French Managing Partner Natural Marketing Institute
5 The importance of living a healthy lifestyle is being embraced by more consumers. % U.S. general population indicating it is extremely/very important to lead a healthy, balanced lifestyle 76% 66% 69% 69% 66% 66% 69% 62% and 75% say that consuming healthy, nutritious foods is important in how they achieve this healthy lifestyle , Natural Marketing Institute (NMI). All Rights Reserved.
6 Healthy eating means many things FIBER Desire for whole grains to offer many health benefits SODIUM Concerns over health risks FAT Good fats vs bad fats SWEETENERS Consumers want less but want taste; many options exist CLEAN LABEL A macro trend for minimal and recognizable ingredients CARBS Low carb continues to resonate consumers want good carbs GLUTEN-FREE Increase in use both for health and general dietary reasons PROTEIN Consumers want protein for energy, satiety, weight management GMOs Consumers are wary; clear information is necessary 2015, Natural Marketing Institute (NMI). All Rights Reserved.
7 Which transfers into label checking: Is it all (still) about calories, sodium and fats? % U.S. general population indicating what specific items they check most often when they read the label of a food/beverage product Primary Concerns Sugar 47% Calories 45% Sodium 41% Total fat 38% Secondary Concerns High fructose corn syrup 31% Trans-fats 31% Saturated fat 30% Ingredient list 29% % of calories from fat 28% Cholesterol 27% Protein 27% Carbohydrates 27% Type of sweetener 26% Fiber 26% Tertiary Concerns Preservatives 22% Nutritional facts panel 22% Artificial colors/flavors 22% Vitamins 21% Whole grains 21% Natural ingredients 19% Hydrogenated oils 17% GMO content 16% Organic ingredients 13% Gluten content 10% And the low-carb movement continues with over 60% of Americans consuming low-carb packaged foods 2015, Natural Marketing Institute (NMI). All Rights Reserved.
8 Fast food restaurants have even added healthier options to attract a broader audience. Yesteryear Today
9 Desire for a more nutritious diet is also helping to drive the expansion of healthy convenience. From convenient delivery systems, to convenient packaged goods to the rise of mega convenience stores, consumers desire for quick stop, healthy convenience is in demand. Convenient formats Packaged convenience Convenient service
10 C-Store Trends
11 C-store shoppers are trending more affluent and have more children in the household Compared to 7 years ago, c-store shoppers Median income $52.6K $61.5K More affluent Children 40% 51% More with children in household Male 53% 56% Skewing more male Average Age Skewing younger College graduate+ 22% 27% Higher educated BMI Lower BMI 2015, Natural Marketing Institute (NMI). All Rights Reserved.
12 C-store shoppers are increasingly understanding the importance of consuming healthy, nutritious foods toward maintaining a healthy, balanced lifestyle. (Q.3 - % Convenience Store shoppers indicating the following are extremely/somewhat important in how they maintain a healthy, balanced lifestyle) 68% % convenience store shoppers indicating the following are extremely/somewhat important in how they maintain a healthy, balanced lifestyle.. 76% 62% 39% 47% 23% Consumption of healthy, nutritious foods Consumption of natural foods/bevs Consumption of organic foods/bevs 2015, Natural Marketing Institute (NMI). All Rights Reserved
13 Convenience Store Shoppers are adopting healthier attitudes and behaviors (Q.38 - % Convenience Store shoppers who completely/somewhat agree with the following statements) % convenience store shoppers Are eating healthier than they used to 66% 76% Increasingly feel eating healthy is a vital part of their life Are more likely to take whatever means necessary to control their own health 52% 71% 51% 73% 2015, Natural Marketing Institute (NMI). All Rights Reserved.
14 and are looking for convenience to be healthier, yet many are giving up convenience for health a notable c-store opportunity. (Q.38 - % Convenience Store shoppers who completely/somewhat agree with the following statements) % convenience store shoppers I am interested in healthy foods/beverages that can be eaten onthe-go 59% 66%* I often give up convenience for health benefits 37% 55%* * Denotes high index vs. GP ( 120) does this lead to a an anti-bfy c-store perception? 2015, Natural Marketing Institute (NMI). All Rights Reserved.
15 Healthier snacking is becoming the new norm. (% consumers who completely/somewhat agree with the statements [HWTD 2010, HWTD 2011]) % consumers who agree 74% 75% C-store Shoppers I would be interested in snacks which are nutritionally healthy C-store Shoppers Snacking can be part of a healthy diet 2015, Natural Marketing Institute (NMI). All Rights Reserved.
16 Convenience Store shoppers also report consuming more healthy food items such as vegetables, fruits, and healthy snacks compared to a year ago. (Q.92 - % convenience store shoppers indicating they are consuming more of the following compared to a year ago [NMI s 2015 Healthy Aging Database]) % convenience store shoppers indicating they are consuming more of the following compared to a year ago Vegetables 50% Fruits 49% Chicken/turkey 43% Healthy snacks 39% Whole grain foods 38% Nuts 34% Fish/seafood 34% Plant-based proteins 19% Percentages are similar to the general population 2015, Natural Marketing Institute (NMI). All Rights Reserved.
17 Convenience Store shoppers conversely report consuming less high fat foods, junk food and fast food. (Q.92 - % convenience store shoppers indicating they are consuming less of the following compared to a year ago [NMI s 2015 Healthy Aging Database]) % convenience store shoppers indicating they are consuming less of the following compared to a year ago High fat foods Food from fast food restaurants Junk food (any type) Regular soda (with sugar) Potato chips Food from casual food restaurants 44% 42% 40% 38% 38% 36% High carbohydrate foods Popcorn Red meat Diet soda 31% 30% 29% 26% 2015, Natural Marketing Institute (NMI). All Rights Reserved.
18 Breakfast also represents a primary health-related c-store opportunity. (Q.27 point allocation of Convenience Store shoppers based on the importance of each of the reasons for each meal occasion using a total of 20 points [NMI s 2011 Healthy Aging Database]) While taste is the most important reason across all eating occasions, it is most important for dinner, whereas nutrition is highest at breakfast. Convenience Store Shoppers allocating points based on reasons for each meal occasion. BREAKFAST LUNCH DINNER SNACKS Taste Nutrition Convenience Cost , Natural Marketing Institute (NMI). All Rights Reserved.
19 C-store opportunity: Making breakfast easy, fun and nutritious 63% believe it s unhealthy to skip breakfast, but only 26% actually eat breakfast every day Ethnic-inspired breakfast Breakfast wraps Meat snacks The breakfast sandwich: protein and portability Clean label: no artificial anything The incredible egg 2015, Natural Marketing Institute (NMI). All Rights Reserved.
20 Identifying the Opportunity: Consumer Targets
21 So how do we target the consumer group who is most opportunistic in c-stores??????
22 NMI s Health & Wellness consumer segmentation reveals the diversity of the population across the health and wellness landscape. WELL BEINGS : 20% Most health pro-active Market leaders & Influencers Highest organic usage Food purists FOOD ACTIVES : 16% Mainstream healthy Basics, balance and control Desire inherently healthy foods Most price driven MAGIC BULLETS : 21% Lack commitment to healthy lifestyle Skew Boomer/Senior, lower income Belief in pills, not nutrition Least likely to exercise FENCE SITTERS : 25% Wannabe healthy Most likely to have kids Convenience important Stressed out, want help and control EAT, DRINK & BE MERRYS : 18% Least health active Unconcerned about prevention Choose taste over health Younger Healthy eating a priority Self-directed health Looking for quick fix Health strivers Not very health motivated 2015, Natural Marketing Institute (NMI). All Rights Reserved.
23 Based on the health orientations of the five segments, three segments were identified for analysis to determine how to grow Better-for-You items in c-stores without impacting the core consumer base. WELL BEINGS : 20% FOOD ACTIVES : 16% MAGIC BULLETS : 21% FENCE SITTERS : 25% EAT, DRINK & BE MERRYS : 18% Healthy eating a priority Self-directed health Looking for quick fix Health strivers Not very health motivated 2015, Natural Marketing Institute (NMI). All Rights Reserved.
24 The highest concentration of c-store shoppers are in the FENCE SITTER segment. 18% 14% Eat, Drink & Be Merrys 25% 38% Fence FENCE Sitters SITTERS index high against the GP for shopping convenience stores 21% 16% 17% 12% Magic Bullets Food Actives 20% 19% Well Beings GP Convenience Store Shopper READ: FENCE SITTERS represent 38% of convenience store shoppers (not based on dollar volume) 2015, Natural Marketing Institute (NMI). All Rights Reserved.
25 EAT, DRINK & BE MERRYS are heaviest users of indulgent products. % U.S. Household Penetration Index Cookies, Candy, Ice Cream, Soda Well Beings Fence Sitters Eat, Drink & Be Merrys Total U.S. Volume Index (in pounds) Cookies, Candy, Ice Cream, Soda Well Beings Fence Sitters Eat, Drink & Be Merrys 2015, Natural Marketing Institute (NMI). All Rights Reserved. Source: Nielsen Homescan, 52 weeks ending 6/2/12
26 EAT, DRINK & BE MERRYS are making more c-store trips, but FENCE SITTERS are spending more and on a wider array of healthy categories. FENCE SITTERS BASKET EAT, DRINK & BE MERRYS BASKET 2015, Natural Marketing Institute (NMI). All Rights Reserved.
27 FENCE SITTERS are also increasing in size within the population, while EAT, DRINK & BE MERRYS are diminishing, highlighting the importance of capturing the FENCE SITTER customer. % total American adult population % 26% 16% 20% 18% 18% WELL BEINGS FENCE SITTERS EAT DRINK & BE MERRYS 2015, Natural Marketing Institute (NMI). All Rights Reserved.
28 FENCE SITTERS are considered the primary BFY target for c-stores as they are striving to be healthier and their lifestyle dictates a need for quick, convenient, on-the-go, tasty, kid-friendly, parent-friendly options. Compared to EAT, DRINK & BE MERRYS, FENCE SITTERS are more likely to: Already be shopping in convenience stores Desire convenient options Have a higher median income Be Millennials Have a child in the household further impacting the need for healthy convenience Feel eating healthy is a vital part of their life Have a higher annual basket ring in c-stores FENCE SITTERS EAT, DRINK & BE MERRYS Total Annual Basket Ring $ per Shopper $ Total Annual Basket Ring $ per Shopper $ Source: Nielsen Homescan, 52 weeks ending 12/28/ , Natural Marketing Institute (NMI). All Rights Reserved.
29 But, FENCE SITTERS and WELL BEINGS are not health purists % segments who shop convenience store indicating they currently smoke cigarettes 45% Cigarettes comprise 32% of instore sales 23% 27% Well Beings Fence Sitters Eat, Drink & Be Merrys 22% of the population smoke cigarettes Source: Nielsen Homescan, 52 weeks ending 6/2/ , Natural Marketing Institute (NMI). All Rights Reserved.
30 In addition, FENCE SITTERS are more likely to use of a wide array of healthy foods and beverage categories. (Q.17 - % indicating they have purchased the following products in the past 3 months items listed are the ones FENCE SITTERS index the highest) % indicating they have purchased the following products in the past 3 months- sorted by FENCE SITTER index % GP FENCE SITTERS INDEX Energy drinks 20% 153 Fresh prepared non-meat entrees 14% 152 Fresh prepared soups 14% 146 Energy/Nutrition bars 25% 139 Meal replacement drinks/shakes 14% 136 Smoothies 14% 130 Granola (ready-to-eat) 20% 129 Reduced Calorie Bevs (e.g., Trop 50, Pepsi Next) 12% 125 Sports drinks 31% 125 Fresh prepared side dishes 19% 122 Light beer 20% 121 Granola bars/cereal bars 41% 109 Yogurt cup/drinkable yogurt 44% 107 Greek/Greek style yogurt 36% 102 Pink shading denotes very high index vs. GP ( 150) Green shading denotes high index vs. GP ( 120) 2015, Natural Marketing Institute (NMI). All Rights Reserved.
31 Closing NMI Thoughts The health tide is rising across all segments of the American population and has reached mainstream consciousness C-stores are under-developed with respect to BFY offerings Significant opportunities exist to expand the consumer base, dollar ring, channel share, etc. Not all consumers are equal need a segmented, targeted strategy to acquire new shoppers, yet keep the current base unaffected Specific BFY categories/products align well with the c-store shopper behavior In the end, consumers want choice, options and alternatives, regardless of channel
32 Strategies for Convenience Stores Hank Cardello Senior Fellow & Director, Obesity Solutions Initiative Hudson Institute
33 Putting Segmentation to Work for C-Stores 1. How to capitalize on growing Fence Sitter segment without alienating Core Customer 2. How to drive Fence Sitter demand 3. Ways to implement in-store
34 1. How to capitalize on growing Fence Sitter segment without alienating Core Customer
35 Need to Re-think Customer Audience WELL BEINGS : 20% FOOD ACTIVES : 16% MAGIC BULLETS : 21% FENCE SITTERS : 25% EAT, DRINK & BE MERRYS : 18% Healthy eating a priority Self-directed health Seek easy solutions Health strivers Not very health motivated BFY (= Growth) CORE
36 BFY vs. Core Most top selling items* are less healthy and skew to Core users EAT, DRINK & BE MERRYS : 18% 1. Cigarettes/other tobacco 2. Food prepared on site (mostly sandwiches, hot dogs, pizzas and chicken) 3. Beer 4. Hot/cold/frozen dispensed beverages 5. Packaged CSDs 6. Salty snacks 7. Alternative beverages 8. Candy 9. Packaged sweet snacks 10. Liquor Source: NACS State of the Industry Report 2014 * 92% of sales
37 BFY vs. Core BFY growth categories skew to Fence Sitters 2014 v 2013 Fence Sitter Category Growth Rate Index FENCE SITTERS : 25% Pkgd. Beverages - Alternative 6.6% 153 (Energy Drinks) - Sports Drinks 7.4% Bottled Water 7.4% 110 Alternative Snacks - Meat Snacks 11.9% Health/Energy Bars 4.6% Granola* 9.9% 129 Source: NACS State of the Industry Report 2014 * Granola yogurt bars
38 Targets Express Divergent Attitudes Stores must ensure they don t swing too far either way to avoid alienating customers FENCE SITTER attitudes Early adopters Very interested in following a healthier eating plan High concern about their personal health Giving up tobacco products is not so much of an issue EAT, DRINK & BE MERRY attitudes Low new trial behavior Lukewarm interest in following a healthy eating plan Not very concerned about their personal health Inability to give up tobacco products
39 2. How To Drive Fence Sitter Demand
40 Availability Convenience and availability are major barriers to buying healthier foods and beverages for Fence Sitters this is a Sweet Spot for C-Stores No convenient locations nearby It is not convenient to buy/easy to find 34% 41% Source: NMI Fence Sitters
41 On-the-go On-the-go healthy options desired by Fence Sitters I am interested in healthy food/ beverages that can be eaten on-the-go General population 54% It s extremely/very important to food/beverage purchase decision that foods can be eaten on-the-go General population 30% Fence Sitters Child in HH Source: NMI Denotes high index vs. GP ( 120)
42 Foodservice Why demanding healthier on-the-go options Time crunched Kids Stressed Struggling with how to ready BFY meals Barriers to not eating healthy more often GP Fence Sitters My children won t eat it (HH w/children) 40% It takes too much effort to plan a meal 35% I don t have enough time to prepare it 34% It is too difficult to prepare 29% Source: NMI Denotes high index vs. GP ( 120)
43 Foodservice Huge opportunity for C-store foodservice Grocery segment under-delivering in BFY foodservice Starting to catch up with BFY private label offerings Still selling a high % of products that contribute the most calories to children Lack the convenience factor of C-Stores Foodservice is a huge economic contributor to C-Stores 19% of sales 33% of gross margin contribution Source: NACS State of the Industry Report 2014; NMI
44 Foodservice Grocery and QSR segments falling short on delivering BFY options for Children Of the product categories that contribute the most calories to kids, 70% of $ sales are in higher-calorie versions NRA s Kids LiveWell program standards are weak Only requires 1 meal and 1 side to meet calorie and ingredient criteria Source: Hudson Institute Supermarket and Restaurant Business Case Studies
45 Foodservice Breakfast appears to be the meal occasion where C-Stores can offer healthier options to attract Fence Sitters 57% % Fence Sitters indicating they currently eat extremely/very healthy during each meal occasion 50% 40% 33% Breakfast Lunch Dinner Snacking Source: NMI
46 Education Fence Sitters are confused about what is really healthy Opportunity to help educate them at POS Barriers to not eating healthy more often GP Fence Sitters I m confused about what is healthy 26% Don t know enough about what is healthy 26% I am not sure if it s really that beneficial 25% Source: NMI Denotes high index vs. GP ( 120)
47 Education Confusion Manifests With Common Brands % consumers indicating the following products are extremely/very healthy (top 3 box) Honey Nut Cheerios Chips Ahoy! 100 Calorie Packs McDonald s Premium Grilled Chicken Sandwich Diet Pepsi Kraft Macaroni & Cheese GP 51% 26% 16% 11% 11% Fence Sitters 62% 38% 25% 21% 25% Source: NMI Red font denotes high index vs. GP ( 120)
48 Labeling is Much More Important for Fence Sitters Than Core Customers % general population who indicate 62% 64% % 54% 53% 44% 35% 22% I usually read labels on food and beverage packages I select foods based on the nutritional facts panel on the package I select foods based on the ingredient list on the package I select foods because of the nutritional claims on the front of the package FENCE SITTERS 70% 61% 60% 53% vs. vs. vs. vs. EAT, DRINK & BE MERRYS 38% 29% 27% 14%
49 3. Ways to Implement In-store
50 In-Store Opportunities 1. Increase visibility of BFY/lower-calorie items a CPG study highlighted that lower-calorie products were more responsive on promotion/display and stayed in distribution longer compared to higher-calorie items
51 In-Store Opportunities 2. Educate about BFY at Point of Purchase a. Identify which products are better-for-you to guide customer decision making b. Highlight healthy ingredients contained in products as they are Label Readers c. Communicate how BFY tastes great and is quick & easy to prepare OR can be eaten on-the-go
52 In-Store Opportunities Merchandise the right products to the right targets Snack/Beverage Merchandising - by Target High Index BFY Products High Index Core Products Education/Labeling@POP
53 Best Ways to Message to the BFY Fence Sitter Target Fence Sitters Tipping Points Quick, effortless preparation Fast food convenience (and taste) Benefits children/child-friendly Good value over expense Highlight ingredient interests: All-natural Vitamin, nutrient rich (fortified/inherent) No additives, preservatives Pro-protein Source: NMI
54 In-Store Opportunities 3. Expand BFY Breakfast options a. Convenience store shoppers view breakfast as the most nutritious daypart b. Opportunity to go beyond baked sweet goods and indulgent breakfast items and offer BFY ready to heat & eat/on-the-go items to buttress foodservice sales
55 In-Store Opportunities 4. Carve out BFY Kids section for rushed parents a. Fence Sitter households have the most children b. Grocery and QSRs not doing an adequate job in servicing this need
56 Core + Fence Sitters for growth Emphasis areas: On-the-Go Breakfast Kids Key Takeaways
57 Thank You! Hudson Institute th Street NW, Sixth Floor Washington, DC Hank Cardello Senior Fellow Natural Marketing Institute (NMI) 272 Ruth Road Harleysville, PA Steve French Managing Partner , x214
58 Session Survey Question #1 I would recommend this session to my peers. ( Swipe your rating on your phone or tablet) Please complete the three survey questions if you wish to receive the presentation
59 Session Survey Question #2 I can apply the content from this session in my job. ( Swipe your rating on your phone or tablet) Please complete the three survey questions if you wish to receive the presentation
60 Session Survey Question #3 Please share what you liked most or least about this session as well as future topics for education sessions (Type your response in the text field. The last edit is your final submission) Please complete the three survey questions if you wish to receive the presentation
61 Copyright Notice The copyright law of the United States (Title 17, United States Code) governs the making of photocopies or other reproduction of copyrighted material. Under certain conditions specified in the law, libraries and archives are authorized to furnish a photocopy or other reproduction. One of these specified conditions is that the photocopy or reproduction is not to be "used for other purpose than private study, scholarship or research." If a user makes a request for, or later uses, a photocopy or reproduction for purposes in excess of "fair use," that person may be liable for copyright infringement. Disclaimer The opinions of the contributors expressed herein do not necessarily state or reflect those of the National Association of Convenience Stores. Reference herein to any specific commercial products, process, or service by trade name, trademark manufacturer, or otherwise, shall not constitute or imply an endorsement, recommendation, or support by the National Association of Convenience Stores. The National Association of Convenience Stores makes no warranty, express or implied, nor does it assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, product, or process described in these materials.
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