the new conversation: international dairy show 2013

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SWEETENERS AND DAIRY: THE NEW CONVERSATION WHY UNDERSTANDING CONSUMER ATTITUDES TOWARD NUTRITIVE SWEETENERS IS CRITICAL

International Dairy Show November 2013  

CAPRI SUN® and logo are registered trademarks of Rudolf Wild GmbH & Co. GATORADE® and logo are registered trademarks of Stokley-Van Camp, Inc.. HEINZ® brands are registered trademarks of H.J. Heinz Co. HUNT’S® brands are registered trademarks of ConAgra Brands Inc. MIRACLE WHIP® and logo are registered trademarks Kraft Foods, Inc. POWERADE® and logo are registered trademarks of The Coca-Cola Company. YOPLAIT® and logo are registered trademarks of General Mills.

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TODAY’S SPEAKERS

Martin Concannon Founder and Managing Director, Lafayette Associates

Sara Martens Vice President, The MSR Group

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FIRST & FOREMOST: How can we continue to create food and beverage products that consumers will want to buy?

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TOP QUESTIONS FROM F&B INDUSTRY PROS •  Why do I read or hear that a large percentage of consumers are concerned

about HFCS?

•  How do I know that research that says different applies to my consumers?

•  If consumers say they want to avoid “sugar,” don’t they really mean HFCS?

•  Isn’t it true that consumer attitudes about HFCS drive their purchase decisions?

•  If nothing else, isn’t “HFCS-Free” a niche market for incremental volume and share?

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WHY WE ARE HERE: To share 3rd-party research that will help dairy processors and food and beverage business leaders make informed decisions about sweeteners.

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WHAT WE WILL COVER Consumer Attitudes Toward Sweeteners & HFCS

Sweeteners & Consumer Purchase Decisions

Sweetener Strategies

Summary & Looking Ahead

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WHAT DO CONSUMERS THINK?

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FIRST, WHAT DO YOU THINK CONSUMERS ARE THINKING?

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“Mom: High fructose corn syrup caused diabetes”

(6/24/13)

“You Really Can’t Eat Just One, and Here’s the

Reason” (3/17/13)

“High fructose corn syrup linked to global diabetes crisis”

(11/27/12)

Fructose changes brain to cause overeating,

scientists say (1/2/13)

“New Research Suggests High Fructose Corn Syrup Triggers

Addictive Consumption Similar to Drugs”

(6/6/13)

“Is Sugar Toxic?” (4/01/12)

TOP QUESTIONS FROM F&B INDUSTRY PROS •  Why do I read or hear that a large percentage of consumers are concerned

about HFCS?

•  How do I know that research that says different applies to my consumers?

•  If consumers say they want to avoid “sugar,” don’t they really mean HFCS?

•  Isn’t it true that consumer attitudes about HFCS drive their purchase decisions?

•  If nothing else, isn’t “HFCS-Free” a niche market for incremental volume and share?

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THE BIG GAP: WHAT PEOPLE SAY AND WHAT THEY DO

It’s the difference between what people say and what they actually do – as conclusively shown in extensive research by Mintel, NPD Group, and Nielsen.

Responses to unaided questions reveal top-of-mind concerns, true attitudes and likely behavior.

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American consumers are much more concerned about total sugars in their diet than about any specific sweetener.

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In fact, consumers avoid added sugars more than any other ingredient.

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TOP QUESTIONS FROM F&B INDUSTRY PROS •  Why do I read or hear that a large percentage of consumers are concerned

about HFCS?

•  How do I know that research that says different applies to my consumers?

•  If consumers say they want to avoid “sugar,” don’t they really mean HFCS?

•  Isn’t it true that consumer attitudes about HFCS drive their purchase decisions?

•  If nothing else, isn’t “HFCS-Free” a niche market for incremental volume and share?

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HOW DO WE KNOW? WE TALKED TO CONSUMERS.

MINTEL OCTOBER 2012 SURVEY: •  2,400 primary household grocery shoppers •  Nationally representative, regionally balance samples •  Methodology: Unaided and aided questions HOUSEHOLDS: + Children under 18yrs + No children INCOME RANGE: < $35,000 through >$85,000 EDUCATION: < High school through doctorate degree

Mintel research focuses on moms, the primary shopper.

Sample weighted by age and education prior to analysis. 75% of primary shoppers being women is within range of other studies. Results accurate +/- 2.0% at a 95% confidence level..

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TOP QUESTIONS FROM F&B INDUSTRY PROS •  Why do I read or hear that a large percentage of consumers are concerned

about HFCS?

•  How do I know that research that says different applies to my consumers?

•  If consumers say they want to avoid “sugar,” don’t they really mean HFCS?

•  Isn’t it true that consumer attitudes about HFCS drive their purchase decisions?

•  How do I know that consumer research is relevant to my brand?

•  If nothing else, isn’t “HFCS-Free” a niche market for incremental volume and share?

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SEGMENTATION BASED ON COMBINATION OF AIDED AND UNAIDED

•  Q3. In the last six months, have there been any  particular foods, beverages, or specific ingredients that you and your family are trying to consume less of or avoid? (Multiple responses accepted) *Includes HFCS & Corn Syrup (Unaided)

•  Q8. Which of the following statements best describes your beliefs regarding the foods and beverages that you or your family consume? (Aided)

–  I/we limit or try to avoid high fructose corn syrup specifically

–  I/we have no real concerns with respect to the sweet content of the foods and/or beverages I/we consume

–  I/we limit or try to avoid sugar of any kind

–  It is the overall sugar content that matters more to me/us, not the high fructose corn syrup

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CONSUMERS FALL INTO THREE MAIN SEGMENTS.

•  Sugars Avoiders: Say they avoid or limit sugars on an unaided basis. –  This segment includes HFCS Avoiders – those who mention HFCS specifically on

an unaided basis.

•  Sugars Concerned: On an aided basis, say they limit all sugars, or that total sugars matter more than HFCS.

–  This segment includes HFCS-Concerned – those who say on an aided basis that they limit or avoid HFCS specifically.

•  Eaters: No concerns about sweeteners in foods and beverages.

Source: Mintel, October 2012; N = 2,400

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“HFCS AVOIDERS” – WHAT PART OF THE POPULATION?

79.7% of consumers are concerned about total sugars.

HFCS CONCERNED:

23.1%

unaided aided

aided unaided

Only 2.9% of consumers avoid HFCS specifically.

EATERS: 20.3% SUGARS CONCERNED: 58.4% SUGARS AVOIDERS 21.3%

Source: Mintel, October 2012; N = 2,400

HFCS AVOIDERS:

2.9%

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WHAT ARE CONSUMERS DEMANDING? LESS ADDED SUGAR. In the last six months, have there been any particular foods, beverages, or specific ingredients that you and your family are trying to consume less of or avoid? (UNAIDED)

3%

3%

3%

4%

5%

8%

13%

17%

21%

22%

Red meat

Processed/packaged foods

High fructose corn syrup

Fast food

Carbohydrates/white foods

Soda/carbonated beverages

Salt/Sodium

Fats/oils, hydrogenated fats

Sugar, added sugar

Not avoiding or purposefully consuming less of anything

Source: Mintel 2012; N = 2,400 Q3. In the last six months, have there been any particular foods, beverages, or specific ingredients that you and your family are trying to consume less of or avoid? (multiple responses accepted) * “HFCS” Includes HFCS and corn syrup

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PRIMARY SHOPPERS DON’T LOOK FOR HFCS ON LABELS.

Frequency of label-reading (UNAIDED) Information sought on labels (UNAIDED)

Hardly Ever 15%

Never 12%

Regularly 48%

Occasionally 30%

38% 30% 28%

24%

13% 5% 5% 4% 4% 4%

Source: Mintel 2012; N = 2,173 Q2. When you read labels, what information are you looking for? (multiple responses accepted) * “HFCS” Includes HFCS and corn syrup

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FEWER THAN 3% OF SHOPPERS SPECIFICALLY AVOID HFCS IN 12 HIGH-VOLUME FOOD AND BEVERAGE CATEGORIES.

Source: Mintel 2012; N = 2,008 Q11. You said that you consider sugar or other sweeteners when buying …… Please tell us why. (Open-ended response = “Avoid/dislike HFCS”)

Category Shoppers Specifying HFCS as a Concern When Buying Products (UNAIDED)

2.7% 2.2% 2.1% 2.0% 1.9% 1.9% 1.7% 1.5% 1.5% 1.3% 1.3% 0.7%

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SHOPPERS ARE FAR MORE CONCERNED ABOUT ADDED SUGARS OVERALL THAN ABOUT HFCS SPECIFICALLY.

Category Shoppers Specifying HFCS as a Concern When Buying Products (UNAIDED)

Source: Mintel 2012; N = 2,008

Category shoppers specifying HFCS as a concern when buying products Category shoppers who consider sugar/sweeteners when buying products

Q10. Do you consider ….when buying ...? Q11. You said that you consider sugar or other sweeteners when buying …… Please tell us why. (Open-ended response = “Avoid/dislike HFCS”)

36%

60%

21%

43%

56% 54%

29%

45% 42% 52%

24% 35%

2.7% 2.2% 2.1% 2.0% 1.9% 1.9% 1.7% 1.5% 1.5% 1.3% 1.3% 0.7%

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42.2 42.9 47.1

53.6

68

1.4 1.3 1.3 1.2 1 0

10

20

30

40

50

60

70

80

July 1, 2009 July 1, 2010 July 1, 2011 July 1, 2012 July 1, 2013

Sear

ch In

dex

"Sugar"

"Soda"

"Stevia"

"High Fructose Corn Syrup"

LOW SEARCH VOLUME FOR “HFCS” INDICATES LOW INTEREST. Search volume for “Sugar” is more than 60x greater than for “HFCS” – a clear sign of what matters more to consumers.

*”High Fructose Corn Syrup” search combines commonly used terms, “High Fructose Corn Syrup and “Corn Syrup” Source: Google Trends, Scale is based on the average traffic in US only from January 4, 2004

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SOCIAL MEDIA “BUZZ” DOES NOT REFLECT HIGH INTEREST.

>60% of posts about HFCS are by people who post only once or twice a year – clearly not a high priority issue for them.

Additional 15% of posts from people paid to post & from automated “bots.”

Actual conversation: Mainly on forums and personal blogs by people heavily engaged in activities such as organic farming and body-building.

“…We need to take into account the motivations of some commentators seeking to create false controversies. A high volume of comments on sites such as Facebook and Twitter does not necessarily translate to high consumer interest.”

K.D. Paine, CEO, KDPaine & Partners

Source: KDPaine & Partners, 2011 Base: 301,497 comments, posts and published conversations

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CONSUMER ATTITUDES: Research shows that consumers are focused on added sugars overall, not on the sweetener type. Unaided questions reveal top-of-mind concerns, true attitudes, and likely behavior.

KEY TAKEAWAY

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SWEETENER & CONSUMER PURCHASE DECISIONS

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TOP QUESTIONS FROM F&B INDUSTRY PROS •  Why do I read or hear that a large percentage of consumers are concerned

about HFCS?

•  How do I know that research that says different applies to my consumers?

•  If consumers say they want to avoid “sugar,” don’t they really mean HFCS?

•  Isn’t it true that consumer attitudes about HFCS drive their purchase decisions?

•  If nothing else, isn’t “HFCS-Free” a niche market for incremental volume and share?

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Source: Nielsen

RETAIL SCAN DATA SHOWS WHAT SHOPPERS ARE REALLY DOING. Nielsen scanner data tracked sales performance of brands that switched from HFCS to sugar: more than 3,200 SKUs across 25 leading brands in three major product categories.

BEVERAGES BAKED GOODS PREPARED FOODS

Soft Drinks

Ready to Drink Teas

Juice Drinks

Sports Drinks

Refrigerated Yogurt

Drinks

Fresh Bread

English Muffins

Bagels

Rolls

Buns

Snack Crackers

Canned Soup

Condiments

Syrup

Granola

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YOPLAIT YOGURT SHARE ($) OF TOTAL YOGURT MARKET Starting in April 2010 Yoplait reformulated most of its products to sugar and has widely promoted “HFCS-free.” Even so, the brand has lost significant share, and the “HFCS-free” message has not helped. Eliminating HFCS altogether in May 2013 has done nothing to regain share for the brand.

Source:  Nielsen  US  Retail  Sales  All  Outlets  Combined  (including  Walmart).  August  31,  2013.    

0% 5%

10% 15% 20% 25% 30% 35% 40% 45% 50%

HFCS Sugar Low / No Sugar

KEY TAKEAWAY

CONSUMER PURCHASE DECISIONS: The overwhelming majority of consumers don’t respond to strategies based on promoting single type of sweetener.

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SWEETENER STRATEGIES

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SWEETENER STRATEGIES VARY WIDELY ACROSS BRANDS.

APPROACH DESCRIPTION

Replace Reformulate brand without promotion

Extend Offer HFCS-free line extension

Promote Reformulate brand with heavy promotion (including package label call-outs)

Reduce Offer lower-sugars line extension

Maintain Stay with HFCS

New data emerging on performance of brands with different approaches. Many have already switched back to HFCS – including “Mom & Kid” brands.

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REPLACE: MIRACLE WHIP

HFCS Sugar 52 wk trailing

$0 $5

$10 $15 $20 $25 $30 $35 $40 $45

1/1/

2009

4/1/

2009

7/1/

2009

10/1

/200

9

1/1/

2010

4/1/

2010

7/1/

2010

10/1

/201

0

1/1/

2011

4/1/

2011

7/1/

2011

10/1

/201

1

1/1/

2012

4/1/

2012

7/1/

2012

10/1

/201

2

1/1/

2013

$ Sa

les

(Mill

ions

) 52-week sales trend shows no sales gain from either sweetener change.

Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March 2013.

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TOP QUESTIONS FROM F&B INDUSTRY PROS •  Why do I read or hear that a large percentage of consumers are concerned

about HFCS?

•  How do I know that research that says different applies to my consumers?

•  If consumers say they want to avoid “sugar,” don’t they really mean HFCS?

•  Isn’t it true that consumer attitudes about HFCS drive their purchase decisions?

•  If nothing else, isn’t “HFCS-Free” a niche market for incremental volume and share?

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EXTEND: HEINZ GIVES UP AS MUCH AS IT GAINS. Low-salt, HFCS-free SKUs cannibalized about 7% share from their existing base.

Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March 2013.

0%

10%

20%

30%

40%

50%

60%

70% Ja

n-09

M

ar-0

9 M

ay-0

9 Ju

l-09

Sep

-09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-1

0 S

ep-1

0 N

ov-1

0 Ja

n-11

M

ar-1

1 M

ay-1

1 Ju

l-11

Sep

-11

Nov

-11

Jan-

12

Mar

-12

May

-12

Jul-1

2 S

ep-1

2 N

ov-1

2 Ja

n-13

M

ar-1

3

Mar

ket S

hare

, $ S

ales

HFCS

Sugar

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PROMOTE: HUNT’S BRAND REFORMULATION DIDN’T PAY OFF.

“Overall, consumer demand for HFCS-free ketchup was not as strong as expected.” - Hunt’s spokesperson, May 31, 20121

1. Source: http://www.foodnavigator-usa.com/Market/ConAgra-switches-back-to-HFCS-in-Hunt-s-ketchup-citing-lackluster-demand Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March 2013.

0%

5%

10%

15%

20%

25%

30%

Mar

ket S

hare

, $ S

ales

HFCS

Sugar

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HFCS Sugar 24 wk trailing

CAPRI SUN SALES: GAINS FROM PROMOTIONS, NOT FROM SWITCHING SWEETENER.

0%

2%

4%

6%

8%

10%

12%

1/1/

2009

4/1/

2009

7/1/

2009

10/1

/200

9

1/1/

2010

4/1/

2010

7/1/

2010

10/1

/201

0

1/1/

2011

4/1/

2011

7/1/

2011

10/1

/201

1

1/1/

2012

4/1/

2012

7/1/

2012

10/1

/201

2

1/1/

2013

Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March 2013.

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CAPRI SUN “ROARIN’ WATERS”: HFCS-SWEETENED, AND LOWER-TOTAL-SUGARS STRATEGY BOOSTS SALES.

HFCS 52wk trailing

Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March 2013.

$0

$1

$2

$3

$4

$5

$6

$7

1/1/

2009

4/1/

2009

7/1/

2009

10/1

/200

9

1/1/

2010

4/1/

2010

7/1/

2010

10/1

/201

0

1/1/

2011

4/1/

2011

7/1/

2011

10/1

/201

1

1/1/

2012

4/1/

2012

7/1/

2012

10/1

/201

2

1/1/

2013

Mill

ions

Success of HFCS-sweetened Roarin’ Waters reflects the fact that lower sugars overall, not a specific type of sweetener, is what matters to primary shoppers (moms) – which Capri Sun purposely leveraged.

Consolidated sales: $259.9 million

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MAINTAIN: POWERADE GAINS ON GATORADE Gatorade share was flat (up .3%) over this period. Staying with an HFCS formulation, Powerade share rose from 9.5 % to 11.5 %.

Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March 2013.

HFCS

Sugar

0% 5%

10% 15% 20% 25% 30% 35% 40%

9/1/

2009

11/1

/200

9

1/1/

2010

3/1/

2010

5/1/

2010

7/1/

2010

9/1/

2010

11/1

/201

0

1/1/

2011

3/1/

2011

5/1/

2011

7/1/

2011

9/1/

2011

11/1

/201

1

1/1/

2012

3/1/

2012

5/1/

2012

7/1/

2012

9/1/

2012

11/1

/201

2

1/1/

2013

3/1/

2013

Mar

ket S

hare

, $ S

ales

HFCS (No change)

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SWEETENER STRATEGIES: A “reduce” strategy (reduction of total sugars) is aligned with current consumer needs. Consumer purchase data confirms HFCS-free as a brand point of difference does not impact market share.

KEY TAKEAWAY

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SUMMARY & LOOKING AHEAD

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WHY DO COMPANIES SWITCH FROM HFCS? Most cite one reason:

“Our consumers are demanding it.”

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THIRD-PARTY RESEARCH TELLS A DIFFERENT STORY.

Consumers care more about total sugars, not about which nutritive sweetener is added.

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THE SWEETENER LANDSCAPE IS CHANGING. F&B companies have focused on changing the type of sweetener they use. •  But sales data clearly show that changes in the type of sweetener

have no significant positive effect on sales.

By taking a new look at consumer attitudes about sweeteners and healthier eating, we now understand: •  How consumer attitudes translate into purchase decisions. •  How leading brands are leveraging a successful sweetener strategy.

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LOOKING AHEAD: THE ISSUE OF TOTAL ADDED SUGARS

1.  Are you incurring unnecessary costs to develop or promote HFCS-Free products that few of your consumers care about?

2.  Instead, should you consider lowering added sugars overall in your products, in response to changing consumer needs?

Key questions for food and beverage manufacturers:

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Who else in your company needs to know?

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THANK YOU For more information, visit or call 1-877-825-6635.

Copyright 2013 Corn Refiners Association

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LEARN MORE •  Whitepaper: The New Conversation About Sweeteners: Changing

Consumer Perceptions and the Impact on Consumer Purchase Decisions

•  Schedule a Free Lunch and Learn at Your Company

•  Follow us on LinkedIn

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