F&B Company StrategiesCAGNY 2015 Summary, March 2015

Introduction

• This presentation demonstrates the strategic trends regarding innovation and marketing, as demonstrated by the leading food & beverage companies at the recent CAGNY - Consumer Analyst Group New York conference (Feb., 2015), following our monitoring of the 2014 conference.

• We have researched selected companies’ CAGNY 2015 reports in order to gather major market trends expected to impact the industry going forward in the United States, including: Pepsico, JM Smuckers, Hershey, General Mills, Kellogg’s, Campbell’s, Mondelez and WhiteWave.

Key Trends at the Heart of Innovation

As demonstrated by the CAGNY presentations:

Health & Wellness

•Real food, super-ingredients, protein still in focus

•BFY indulgence, healthy premiumization

Channels & Customer Centricity

•Retailer focus and co-operation

•The AFH / foodservice opportunity

•Focus on activation and engagement in physical, and digital channels

Marketing

•Using data to execute & monitor better

•Multi-channel and personal

•Continued digital emphasis

Platforms

•From “bigger better innovation” to platforms

•Serving need states and innovating through insights and data

Consumer Trends

• Main consumer trends that were mentioned by the presenters, are:

• Health & Wellness – simple, natural, real ingredients, free from

• Personalization

• Digital Lives

• Convenience, snacking and consumption opportunities

• Indulgence and delight

Consumer Trends

• Campbell’s: “Revolutionary changes in the definition and composition of the family; increasing diversity, new economic realities and powerful social transformations”

Consumer trends according to JM Smuckers

Consumer Trends

According to Keurig, core trends which are relevant to the company’s beverage systems include freshness, sustainability, personalization, choice, simplicity, sensual experimentation, natural, democratization and wellness.

Innovation Platforms

• Hershey says it will accelerate its snacking portfolio with nutrition snack Krave (Jerky) responding to the nutritional trend, as well as to the snacking trend. The company also uses brand expansion in order to build platforms.

As in 2014, companies continued to discuss innovation platforms, including brand expansion, ingredient platforms and occasion-based platforms.

Innovation Platforms

• General Mills established product platforms around key ingredient trends: protein, fiber, gluten-free and less sugar.

• Mondelez

Innovation Platforms

• Campbell’s innovation platforms

Innovation Platforms

• WhiteWave

Innovation Platforms

• JM Smuckers has expended its core brands into platforms

Health & Wellness

• Today’s health and wellness is about inclusion and holistic wellness, as we’ve

discussed on other Schieber Research reports. This concerns “real” ingredients, natural and clean label snacks, nutrition and protein, and allergy-free living.

• Unlike previous years, super-fruit did not take the center stage, however other ingredients (protein and fiber rich ingredients) did.

• Organic food is expected to grow, since “organic” fits the clean label / natural preferences more than non-organic food and beverage.

• Hershey discussed the “clean label” trend, which turned to be one of the company’s key focus areas in snacks.

Health & Wellness

• Kellogg’s aims to “delight” via BFY products, recognizing that consumers are no longer seeking “diet” foods; rather, they are seeking wellness and flavor.

Health & Wellness

• WhiteWave’s analysis of the health & wellness trend and other macro trends.

Consumption Occasions

• Hershey uses point of sale marketing to expand usage occasions, with special off-shelf displays and multiple display locations.

Digital Lives

• The digital revolution has already affected nearly every aspect of the

consumer’s life, but companies are still struggling to adjust to this connected world, via marketing, shopping and communication methods.

• Most companies discussed their digital efforts, including marketing, mobile and e-commerce.

• P&G

Digital Lives

• Campbell’s

• Hershey

Pricing

• Premiumization trends include either “special indulgence”, “super-healthy” or highly innovative products – or mass-premium products. Price points are still on the companies’ menu, achievable through various packaging sizes.

Hershey: special treat / mass premium

Kellogg’s new packaging sizes

Pricing

Campbell’s: Super Premium cold pressed beverages.

Channels

• The presenters stated that they are seeking growth through

channel expansion, including away from home channels and e-commerce.

• Also, companies are joining forces with retailers (both online and brick and mortar), as well as with away from home customers, in order to expand the proposition to the end-consumer.

Pepsico channel strategy and retailer / foodservice collaborations

Channels

Pepsico channel strategy and retailer / foodservice collaborations

Channels

Pepsico: retailer collaborations

Channels | E-Commerce

Hershey designs its approach and portfolio to win in e-commerce

Channels | Reigniting the Store

• Companies are

leveraging events in order to connect with the shoppers at the point of sale.

Hershey

Pepsico

Shopper Data

• Companies are

leveraging consumer and shopper data in

order to enhance their marketing & execution capabilities.

Pepsico

Hershey

Shopper Data

Hershey

Growth Strategy | Organic Growth

• The presenters continued to discuss the new shopper journey, influenced by

the digital revolution.

• P&G presented a roadmap designed to enhance Total Shareholder Return (TSR) through focusing on the consumer

Growth Strategy | Deals

• M&A’s were mostly bolt-on, aimed at strengthening companies’ positioning in more healthful / snackable categories.

• General Mills and its acquisitions

• Mondelez acquired Enjoy Life in order to enter the US allergen-free segment

How is this different from 2014?

• Health & wellness continues to be a major subject, focusing on real food, and providing taste and indulgence through better ingredients. However, changes include:

More talk:

In-store activation

Multi-channel

Data leveraging

Innovation platforms

Less talk:

Demographic changes

JVs and M&A

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