Progressive Grocer Product

Summer 2015

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1 8 Progressive Grocer Products Showcase / Summer 2015 CENTER STORE Two areas of interest in center store today are the fastest-growing categories, and in contrast, the categories marking the sharpest declines. A look at the segments making a positive impact and those struggling paints a picture of what's happening – or needs to be – in center store. Contributing a large part to the $276.3-billion center store, beverages including ready-to-drink tea and coffee, energy drinks, bottled water and coffee all reported strong growth in the past year. According to Chicago-based IRI's IRI MarketAdvantage data, ready-to-drink tea and coffee grew 8.8%, energy drinks 6.9%, bottled water 5.8% and coffee 5.7% in the 52 weeks ending April 19, 2015. Drivers of performance include: • Healthier profles • Provide an energy boost • Portable/on-the-go offerings • New/exciting favor options Bakery snacks reported a little more than 5% growth as shoppers seek some indulgence but with convenience attached. In contrast to this growth segment, the baking aisle is struggling and baking mixes, in particular, report sales declines. The baking aisle has been negatively impacted by a few infuences: • Healthy-eating efforts • Recovering consumer confdence • Increased comfort and desire to eat out or buy pre-made bakery • Proliferation of bakery-like snacks in other aisles Further, the baking aisle is heavily reliant on the grocery channel, which is facing increased competition from other channels as retailers grow their assortments of food/beverage solutions. New Product Pacesetters Every year Chicago's IRI tracks and evaluates the consumer-packaged-goods industry's top- selling key new product launches, recognizing products that hit a certain sales threshold and the infuence they have on market trends. In their frst year, brands highlighted throughout IRI's 2014 New Product Pacesetters (NPP) report earned an average of $35 million, across IRI's multi-outlet geography. In center store, key NPP products and insights include: • Starbucks Iced Coffee ($29.7) • Red Bull Editions ($83.0) • Rockstar Pure Zero ($17.5) • Glaceau fruitwater ($35.4) • Peets K-Cup Packs ($51.2) • Sara Lee Snack Cakes ($43.6) Source: IRI New Product Pacesetters; Year-One Sales, MULO, $ Millions In particular, Beer/Ale/Alcoholic Cider grew 3.8% for the year, with performance driven by consumers' quests for new and different alternatives to traditional beer and marketers' ability to answer the call. Pacesetter launches include: • Bud Light Lime Straw-Ber-Rita ($128.6) • REDD'S Apple Ale ($75.1) • REDD'S Strawberry Ale ($36.1) • Third Shift Band of Brewers ($16.8) Source: IRI New Product Pacesetters; Year-One Sales, MULO, $ Millions Also interesting to note was the decline in cereal, as cereal dollars fell 3.5% and volume was down 2.5%, despite nine NPP brand launches, according to IRI's report. Again pointing to healthier eating, consumers have a huge focus on protein and whole grains, especially during breakfast to start the day FaSteSt-GrowinG CateGorieS $ ChanGe vs. Year aGo volume ChanGe vs. Year aGo Tea/CoFFee - reaDY-To-DrInK $2,501,641,180 8.8% enerGY DrInKs $2,696,969,364 6.9% BoTTleD WaTer $9,198,425,729 5.8% CoFFee $8,976,385,923 5.7% BaKerY snaCKs $2,302,134,859 5.2% SharpeS t DeClineS CarBonaTeD BeveraGes -0.1% -2.8% CIGareTTes -2.8% -4.5% suGar -8.0% -4.6% DrY PaCKaGeD DInner mIXes -4.1% -5.1% BaKInG mIXes -6.2% -5.4% Source: IRI MarketAdvantage, 52 weeks ended 4/19/15 and same period year ago; based on dollar sales percent change versus year ago; among 50 largest center store categories Center Store total SaleS $276.3 billion

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