1、PartFebruary2021INNOVATION FOR A POST-PANDEMIC WORLDDiscovering Pockets of Demand17?2EXECUTIVE SUMMARY2020 changed the CPG retail landscape, most notably fueling unprecedented growth that in February 2021 remains up 10% from year-?how should product innovation address the dramatic, home-centric way
2、lives are lived and as we begin our journey to return to the new normal? In this report, we discuss emerging consumer trends to guide innovation now and in the future.Current Innovation Trends?Dramatic changes impacting new product success in 2020 include work / working out from home; shift to at-ho
3、me consumption; new approaches to leisure and holidays; changes to how we shop, especially with adoption of e-commerce; and investments made to our homes. ?Product innovation progressed at nearly a level pace in 2020, but line extensions were down. ?National and private / store brand product innovat
4、ion leveraged and adapted many existing and emerging trends, including self-care and societal care, indulgence and convenience. Innovation Opportunities?Seize areas ripe for product innovation, including home-centric work and leisure, increased consumption at home, new ways of celebrating and new sh
5、opping behaviors. ?Innovate on the macro themes of self- and societal care, indulgence and convenience, as current trends, including plant-based, premium, and health and wellness continues in 2021. These themes will be redefined in the new normal (e.g., at-home cooking and on-the-go convenience, eas
6、e of searching and shopping).?Be adept at detecting shifts in consumer needs and preferences, and leverage information including unconscious and unarticulated needs, in addition to search, social media and purchase data.?Determine which preferences are must-haves using advanced analytics and algorit
7、hms from actual purchases of millions of shoppers across broad demand spaces, not just within your categories.?Articulate product attributes so consumers understand benefits and are willing to pay the right price. Leverage trade-off models to understand which benefits matter to consumers. Communicat
8、e product origins, sustainability and societal care, as appropriate.?Market innovation via search-friendly, shoppable recipes, and as samples in click & collect or home delivery orders as product discovery evolves in the new normal.?3Industry Leaders on the Value of Innovation Source: *IRI C-Suite C
9、onversations, *AP, Earnings, Calls, NRF 2021.?attract new buyers to your ?Retailers want to sustain growth, and they view ?Tom McGough, EVP, Co-COOConagra Brands*?It went inside the ?Fabian Garcia, PresidentUnilever, North America* ?higher hurdle before it gets into the market?Ram Krishnan, Global C
10、hief Commercial OfficerPepsiCo*?to be solved. Doing more dishes in the sink? Spray on Dawn. ?Marc Pritchard, Chief Brand OfficerP&G*Weve seen a dramatic acceleration of food e-commerce adoption. and well benefit from these changes by leveraging our digital capabilities, including significant first-p
11、arty consumer interactions, to drive differential growth. Were leaning into our B and P food websites to deliver recipe ideas and build consumer connections that drive growth for our brands. Jeff Harmening, Chairman & CEOGeneral Mills*Hershey leaned into analytics to leverage the spike in retail and
12、 e-commerce sales of Hershey Milk six-packs, resulting in 40%-50% sales increase of the product. Hershey also changed its ?backyard themes, resulting in a 24% increase in household penetration and 36% sales growth. Kristen Riggs, SVP & Chief Growth OfficerHershey Company*?4Work and Workout At HomePh
13、ysical home space changed to accommodate stay-at-homeShopping ShiftsIncreased adoption of e-commerce, fewer trips, bigger baskets, less product discovery in storeHome Upgrades, Inside & Out, Especially DigitallyOutdoor spaces, gardens, workspaces, cookery, kitchen appliances, streaming servicesLeisu
14、re & HolidaysEntertainment, holidays, and celebrations look differentSelf- and Societal CareConvenienceIndulgenceConsumer Lifestyle Shifts Influence Innovation Consumption ShiftsMore spending at-home vs. away-from-home, increase in cleaning?5Working and Working Out at Home Means Elevated In-Home Con
15、sumption Across Many CategoriesSales of home fitness equipment grew more than 40% in 2020, hitting $9.5B.Athleisure sales account for 31% of apparel spending in 2020. Work commute trips nationally remain 30%-40% below pre-pandemic levels.Many who are working from home will continue to do so ? at lea
16、st part of the time ? post-pandemic.?was added to the name for Tide Power Pods.Source: *https:/ *https:/ Upgraded Their Homes, Inside and Out, and Especially Digitally Source: *https:/ *https:/ movie theaters closed, streaming services saw a 37%* increase in 2020.Ben & Jerrys introduced a variety of
17、 Netflix Original flavors, including Netflix & ? and Boots on the ? ice creams, appealing to binge watchers. Top flavored malt beverages, which include hard seltzers, saw dollar sales up 68% in 2020 to $6.8B across multioutlet and convenience stores. Staycations got a lift in 2020 with upgrades to o
18、utdoor spaces. 26%* of adults started a food garden because of the pandemic.?marketing promoted backyard fun.?7Consumption Shifts: The Kitchen Has Regained Center Stage in the HomeConsumers were introduced and reintroduced to the kitchen during COVID-19; ?continue to create meals from scratch more t
19、han pre-pandemic. The focus on the kitchen led to sales of convenient kitchen appliances, like air fryers, sous vide, coffee and cocktail makers. Tyson launched new flavors of Instant Pot Kits. ?Dawn dish soap answers a need for consumers who wash dishes one at a time. Retailers can own meal inspira
20、tion and solutions, from meal kits to ingredient bars, even partnerships with local restaurants. Gelo plant-based cleaners are biodegradable pods that are added to water at home to make liquid hand soap. Source: IRI Consumer Survey fielded among Primary Grocery Shoppers in the National Consumer Pane
21、l, May 1-3, 2020.?8Much of Our Entertainment Shifted to Screens, and How We Celebrate Holidays and Special Occasions Has Changed Parties are virtual or drive-by, and party fixings might show up in a box. Mot Hennessy built virtual settings for consumers for at-home celebrations for anniversaries, bi
22、rthdays and weddings ? even mundane events.Grocery retailers do the holiday cooking. Energy drinks and snack subscriptions appeal to gamers. 12 million people ?Travis Scott concert in April 2020. ?9In-Store Shopping Impacted by Assortment On-Shelf and Out-of-Stocks, Fostering Brand Switching % Chang
23、e in Average Weighted Weekly Assortment Selling vs. YAMULOC+C % chg. vs. YASource: IRI POS Data. MULO+C.Lowest Assortment Period-12-10-8-6-4-2024681020194 w/e 10-04-204 w/e 07-12-204 w/e 04-19-204 w/e 01-26-204 w/e 02-23-204 w/e 03-22-204 w/e 05-17-204 w/e 06-14-204 w/e 08-09-204 w/e 09-06-204 w/e 1
24、1-01-204 w/e 11-29-204 w/e 12-27-20EdibleNonedibleAssortment across edible categories is back to normal. Nonedible assortment declines continue, mostly due to out-of-stock in paper products, home care and other general merchandise.Lower demand categories like cosmetics are selling fewer unique items
25、 and are ripe for innovation.?10Changes in Shopping Behavior Impact New Product Discovery; In-Store Searches Are Down, Online Searches IncreaseApproach to Looking for New Products During COVID-19% of Respondents3130191815121035252124131410May 2020January 2021Focused on Looking for BasicsSpending Min
26、imal Time in StoreOnly Looking if Usual Products Are UnavailableNot Noticing Many New Products in StoreTight on MoneyAvoiding Touching Too Many ItemsHard to Find New Products OnlineSource: IRI Consumer Survey fielded among Primary Grocery Shoppers in the National Consumer Panel, May 2020. n=1,400 (f
27、ood and beverage only) ; January 2021, n=2,327. Q. How has your approach to shopping for new consumer goods products - including food and beverage, health care, beauty and personal care, home care, and pet care ? changed during the COVID-19 pandemic? -4+5-6?11Awareness and Search Are Key Elements in
28、 Online Shopping Experience; Target Shoppers With Simple Language and Beneficial AttributesIn Addition to Search, Click & Collect or Home Delivery Makes a Great New Product Sampling Platform59% Used the search tool to type in the name of a specific item35% Used the category menus to browse for optio
29、ns within a category 32% Accessed list of pre-purchased items and reordered from that list29% Checked for sales items before making a purchase decision 12% Looked for new items to trySource: ? 5/22 ? 5/24Shopping behaviors during last online shopping experience;those who have shopped for groceries o
30、nline in the past two months: ?12Recipe Recommendations and Brand Trust Drive New Product Trial?Source: IRI Consumer Survey fielded among Primary Grocery Shoppers in the National Consumer Panel, January 2021.Consumers Identify Key Influencers of New Product Trial:80% Previous Usage / Trust in Brand4
31、2% RecipesUse Coupons From Home:47%in 2021 vs. 55%in 2019Use Newspaper Circulars:25%in 2021 vs. 34%in 2019New product trial driven by coupons from home and newspaper circulars is declining significantly. ?13?142020 Saw Fewer Introductions of New Brand ExtensionsNumber of New Line Extensions Launched
32、 / MULO+C6,4084,5593 Year Average (2017-2019)2020-29%4,3723,6333 Year Average (2017-2019)2020-17%NONEDIBLEEDIBLENote: Considered innovations with sales $10k at the Brand/Line extension level. Analysis does not include flavor or pack type innovations / Source: IRI POS Data. MULO+C. ?152020 % chg. vs.
33、 YA2020 Abs chg. vs. YA ($B)10.4%$88B11.9%$16B18.3%$13B15.4%$16B9.5%$14B7.5%$29BOut-of-Stocks Widened the Door for Smaller Manufacturers, Who Drove as Much Market Growth as Large Players in 2020% Share of Total Store Sales by CPG Manufacturer SizeMULO+C, 52 Weeks Ending 12/27/2044.933.417.916.412.61
34、7.88.814.416.018.02020 ShareContribution to GrowthShare PPT Change vs. YACategory and Manufacturer TrendsPrivate LabelExtra Small ($100M)Medium ($1B)Large ($6B)$933B100%+$29BSource: IRI POS Data MULO+C. IRI Executive Insights / Note: Large is $6B+ in L52W, Medium $1-6B, Small $100M-1B and Extra Smal
35、l $150MLife Cuisine(Low Carb Frozen Meals)4 WE 4/19/20$50-$100MAir Wick Botanica4 WE 1/26/20$10-$50MAdvil Dual Action4 WE 8/9/20$50-$100MPersonal care includes health and wellness claims, improving diet, mental health and immunity support and sustainability. Product (Launch Date)Est. Y1 Sales1Hagen-
36、Dazs Heaven4 WE 2/23/20$10-$50MCorona Hard Seltzer Variety Pack4 WE 2/23/20$150MCheetos Mac and Cheese4 WE 8/9/20$50-$100MArnold Brownberry Oroweat Organic Disney4 WE 8/9/20$100MTide Plus Downy4 WE 3/22/20$10-$50MHerbal Essences Color Me Happy4 WE 1/26/20$10-$50MMicroban 24-hour Disinfecting Spray4
37、WE 3/22/20$150MNew flavors and habits from cooking at home expected to continue into a post-pandemic worldSource: IRI POS, Data ending 12/27/20, Edible & Nonedible, products launched in 2020; evaluated at the brand/line extension level. Dollar Sales $10,000.1. Estimated remaining quad period sales b
38、ased on ACV growth in latest 2020 quad week. IRI Executive Insights.?23Self-Care Expands to Include Personal, Pet, Home, Society and Even the Planet CBD-infused products are marketed for sleep support and anti-anxiety, even as an anti-inflammatory. Products can be topical or ingested. Immunity suppo
39、rt was one of the most sought product characteristics of 2020. Leading the charge in the vitamin, mineral, supplement category was elderberry, which saw sales gains of more than 200%.?refillable deodorant, made from durable stainless steel, packaged in 100% FSC-graded paper. One of the top-selling h
40、ome care products of 2020, Mr. Clean Clean Freak Mist gets at hard-to-reach surfaces and is made with bleach. Dr. Squatch natural toothpaste duo for men provides a breath-freshening solution for morning and a stain-fighting variety for night. Greenies natural pet care includes dental treats.?24Retai
41、lers Also Invest in Innovation Focused on Trending ThemesConvenienceIndulgenceSelf and Societal Care?Truth better-for-you and Private Selection premium products outpaced overall private brand market growth. The company expanded with global flavors and restaurant quality. Walmart partnered with Unile
42、ver to develop and launch Find Your Happy Place candle and body care products.?number-one-selling food brand. Refrigerated pizza dough is available from The GIANT Co.?are available in-store and for home delivery.By the end of 2022, Albertsons waterfront Bistro and Open Nature brands feature the Resp
43、onsible Choice sustainable sourcing logo. ?essentials are made with biobased, recycled materials or natural fibers. ?supplements are made without preservatives, flavors or colors. ?25Direct-to-Consumer (D2Cs) Are Coming from Large CPG CompaniesStart-?in retail stores. In a reversal, several manufact
44、urers launched D2C websites to connect with consumers and test and bring targeted innovations to market faster.Advantages of Direct-to-Consumer Websites? Allows manufacturers to connect with consumers and increase brand awareness and collect feedback from consumers to iterate on new launches? Enable
45、s a test platform for innovations within and beyond the category. For example, Lighthouse Incubator enabled Ocean Spray to launch Atoka and enter the wellness drinks category with oat milks, tea tonics and herbal shots? Allows manufacturers to offer a customized and personalized experience (e.g., Ki
46、t Kat Chocolatory)? Manufacturers can target new cohorts (e.g., millennials and younger generations)EXAMPLESSweetS, a direct-to-consumer website that ships Bimbo Bakeries brands directly to consumersLighthouse Incubator, an innovation platform to bring new health and wellness products to the industr
47、yObjective Wellness, a supplement company targeting younger audiencesKit Kat Chocolatory, a direct-to-consumer website that allows consumers to customize Kit Kat productsLaunched two direct-to-consumer websites, and , which allow consumers to purchase for themselves and ship products as gifts, with
48、most orders arriving in two business days?26Brands Are Continuing to Win With a Steady Stream of Limited-Time Offerings to Drive Variety, Particularly Indulgent Products Oreo continues to drive significant growth via LTOs, including a wide variety of seasonal, one-time and licensed items.Kraft Heinz
49、 offers new shapes tied to ?blue-box Mac & Cheese is turning pink. PepsiCo drives interest with limited-time beverage offerings, particularly in the convenience channel.Pillsbury LTOs contribute to the ?multiple seasonal and licensed SKUs.EXAMPLES?27From Delivery-?Foodservice Innovations Address New DemandShuttered restaurants and limited social mobility have spurred new business models: ? Delivery-only foodservice, or ghost kitchens, could account for $1 trillion in global foodservice sales by 2030, according to Euromonitor. ? Meal kits and pantry items ? some supported by free delivery ?Sou
