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Powered by Dairy Opportunities for Growth- Preliminary Findings October, 2013 Lynn M. Stachura.

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Presentation on theme: "Powered by Dairy Opportunities for Growth- Preliminary Findings October, 2013 Lynn M. Stachura."— Presentation transcript:

1 Powered by Dairy Opportunities for Growth- Preliminary Findings October, 2013 Lynn M. Stachura

2 What we will cover: Why Is Powered By Dairy Important? Foundation for Powered By Dairy Research What Opportunities Can Dairy Leverage Within The Energy Space? Relative Size of Prize/Opportunities Quantified 2

3 Basis of Interest for “Powered By Dairy” Research 3 Energy drink market in US was $4.8BN in 2008 Functional drinks estimated to grow to $19BN by 2013 (160% growth from 2008) 63% of Americans are concerned about lack of energy 69% say ‘provides energy’ is important in determining products to buy Chocolate milk proven to be a good recovery drink 21% are regular energy drink users, including 43% of those ages 18–24 Only 29% of consumers strongly agree protein is naturally found in milk; only 25% familiar to whey protein Idea Thought Starters: Symbols on products to show ‘good source of protein’ Dairy energy bars/drinks Flavors associated with protein: peanut butter Mental energy drinks Fusions – milk + high protein products (granola, nuts) Supply Chain Thought Starters: Vending machines at health clubs, athletic centers at universities Machines that check energy levels (similar to blood pressure machines) in food stores and then recommend high protein items to buy Basis of Interest Potential Ways to Bring to Life DAIRY INGREDIENT Making dairy the go-to food/beverage for people who want more physical or mental energy Innovation Center research compiled by GfK identified 3 dairy categories that have possible opportunities within the energy space: MILKYOGURT

4 Team Work Plan to Uncover Opportunities Dairy Might Leverage Within The “Powered” Space 4 Making dairy the go-to food/beverage for people who want more physical or mental energy Dairy entry into new & existing “energy” markets GfK Qualitative Work:  Identify consumer needs by need state/ occasion/ segments  Conduct global scan for new product innovation across energy market Quantitative & Secondary Research:  Exploration of energy claims within food & beverage within the retail channel  E.g. understanding energy drink/shot categories TNS Landis Database Quantitative Work:  Identify potential categories focused in the “energy” arena so dairy can leverage equity and consumer acceptance What dairy opportunity can be leveraged within the energy space and who is the target consumer? Players within the “claimed” energy space? Understanding the Why behind consumer needs, habits/practices, attitudes, and behavior? Help identify emerging innovative energy territories

5 Executive Summary Dairy has permission to play within energy space Highest priority areas for innovation are – Regular yogurt, greek yogurt, smoothies, drinkable yogurt & low fat/skim milk Yogurt categories show most potential to compete w/ energy categories Uncovered preliminary roadmaps for both “close-in” and “farther-out” innovation – Closer-in growth doesn’t require new product development, rather leverages current dairy benefits – Farther-out growth requires greater innovation which can lead to higher incremental growth 5

6 Executive Summary Snack universe (defined by TNS): Regular and greek yogurt occasions have an opportunity to move into the energy space, which accounts for 21% of the snack occasions Learnings from regular and greek yogurt can be applied to other categories such as dessert yogurt, probiotic yogurt and frozen yogurt Relative potential for dairy-based energy snacks is $18.9 billion Beverage universe (defined by TNS): Smoothies, drinkable yogurt and low fat/skim milk occasions have opportunity to move into the energy space, accounts for 30% of the beverage occasions Learnings from smoothies, drinkable yogurt and low fat/skim milk can be applied to other categories such as reduced fat/calorie milkshakes, lactose free milk and organic milk Relative potential for dairy-based energy beverages is 15.9 billion gallons 6

7 INITIAL DISCOVERY Powered By Dairy: 7

8 Initial Discovery Uncovers Why “Powered By Dairy” Is Important To The Industry 8 The functional food/beverage category is a profitable market that grew 25% between despite the recession Energy is among the fastest growing claims with sales increasing 15% in the past year Adults are increasingly more interested in obtaining physical and mental energy in these hectic times Natural energy is becoming the new functional energy trend IRI Sales versus year ago (1 year ending July 15, 2012) New Nutrition Business 2011 New Nutrition Business Key Health and Nutrition Trends 2012

9 Consumers Are Changing Their Diets For A Variety Of Reasons 9 Weight management 67% Top Reasons for Changing Diet: % Made Dietary Changes in Past Year Overall improved health and wellness 54% Improve body shape/fat composition 46% Improve overall quality of life 46% Increase energy levels 34% Source: The NPD Group/Functional Foods & Beverages Custom Survey; June ‘12 Disclosed with permission of The NPD Group solely for the purpose for which it is being provided by DMI. The reproduction, dissemination or use of the information for any other purpose is strictly prohibited without NPD’s prior written consent.

10 Physical And Mental Energy Are Important To Consumers 10 Types of Energy Consumer Are Looking For In Functional Products (Foods & Beverages; % of Adult Sample) Source: The NPD Group/Functional Foods & Beverages Custom Survey; June ‘12 Disclosed with permission of The NPD Group solely for the purpose for which it is being provided by DMI. The reproduction, dissemination or use of the information for any other purpose is strictly prohibited without NPD’s prior written consent.

11 Energy Products Maintain Younger Consumers Interest, While Older Consumers Seek More Natural Sources 11 36% of adults would rather get their nutrients from foods and beverages as opposed to supplements Natural is a good point of difference Source: Package Facts dietary supplements us 2010 study Source: The NPD Group/Functional Foods & Beverages Custom Survey; June ’12 Disclosed with permission of The NPD Group solely for the purpose for which it is being provided by DMI. The reproduction, dissemination or use of the information for any other purpose is strictly prohibited without NPD’s prior written consent.

12 The Move To “Natural” Products Is Evident In The Product Introductions And Expanded Users 12 Does Dairy Have Permission to Expand Into Energy Space?

13 DAIRY OUTLOOK IN ENERGY SPACE Powered by Dairy: 13

14 Using The TNS Landis Database, Consumers Define “Energy” As… 14 Note: Energy is defined as a need within food and beverage Provides quick energy Picks me up/gets me going Is a supercharged energy source Is a good source of protein Is a good source of soy/ soy protein Enhances mental performance Helps me stay sharp and alert Is a good way to start the day Helps me stay on track Helps me concentrate Helps wake me up Helps manage my blood sugar Helps me get through my day Provides lasting energy Won't impair performance Helps me lead active lifestyle Is good after physical exercise Enhances physical performance Energy w/o making me crash later Will not slow me down/feel sluggish Protein Based Energy Physical Energy (Exercise) Sustained energy… Boosts of energy naturally Mental energy… Energy Quick energy… Natural energy… Gives me energy w/o the calories Boosts my metabolism Rejuvenates me Revitalizes me Other

15 Some Dairy Categories Have Opportunity To Move Into Energy Space Prioritized 5 Dairy Categories 52 Energy Categories Energy Attributes 25 Dairy Categories Dairy Categories 11 dairy categories in the Beverage Universe 14 dairy categories in the Snack Universe 1 Energy Attributes Energy attributes define the energy categories 2 Examples of energy attributes: Provides quick energy Helps me get through my day Enhances my physical performance Is a good source of protein Enhances my mental performance 52 Energy Categories The 26 energy attributes aligned with 52 energy categories 3

16 We Prioritized Five Opportunity Areas Where Dairy Has Greater Permission to Innovate Regular Yogurt Yogurt- Dessert Yogurt- Probiotic Packaged Frozen Yogurt Greek Yogurt Yogurt- Dessert Yogurt- Probiotic Packaged Frozen Yogurt Yogurt Smoothies Drinkable Yogurt Reduced Fat/ Calorie Milkshakes Low Fat/ Skim Milk Lactose Free Milk Organic Milk 16 Additionally, these dairy categories below have similar traits to innovate against: Lower Priority Dairy Categories (Don’t meet energy needs or other categories meet the needs) Snack opportunitiesBeverage opportunities String Cheese Individually Wrapped Cheese Slices Premium Ice Cream Non Premium Ice Cream Soft/ Spreadable Cheeses Cottage Cheese Chocolate Milk RTD Refrigerated Milkshakes Whole Milk Note: Reduced fat/ calorie milkshake category are products that require “adding milk and stirring”

17 17 4% NS12 Socialize & Entertain 6% NS8 14% NS1 13% NS2 7% NS7 7% NS6 6% NS9 9% NS5 4% NS % 12% NS3 10% NS4 U.S. Snack Universe Within TNS Landis Database: (Overview of Snack Need States) Enjoyment Multitasking Relieve Boredom Indulge With Family Do Other Things Fresh & Filling Enhance My Health Sharpen My Mind & Body Healthy Meal Replacement Energize Me Break the Routine Permit Plenty Save Time & Savor Speedy, Sweet & Portioned Nutritionally complete options for every day, made with the goodness of real fruit, that rehydrate and rejuvenate the body, enhancing health over the longer term Vitamin-fortified, energy and metabolism-boosting snacks that help you stay focused, physically active and looking your best A heart-healthy meal replacement with nutritional value that boosts bodily function and gives the body what it needs to feel good A natural energy source that revitalizes and sustains throughout the day, with built-in benefits (like antioxidants or calcium) to help improve the body’s function and endurance A freshly prepared, full-flavored option that is a meal in itself – served warm, tastes authentic, and is a good change of pace from the usual routine 4% NS11 Reward Me Simple/basic, shareable, savory snacks with big flavor, enjoyed while spending time with friends and family Spontaneous, spur-of-the-moment, easy, hand-to-mouth snacks to just open and eat to relieve boredom Sweet, full-flavored, uplifting, and craveable indulgent treats that are fun for the whole family Simple, no-prep, hand-to-mouth savory snacks that are not messy and can be enjoyed while doing other things, whether on the go, at the computer, or in front of the TV Bite-size, pop-in-your-mouth, low-calorie snacks, good anytime and portable for anywhere, whether on the go or at work or school, permissible for munching all day Savory options with crispy, baked texture, that come complete with all the ingredients and are quick to prepare, but with flavor you don’t want to rush Portable, single-serve, sweet, flavorful treats for any time of the day, that provide quick energy to keep going, whether working at a desk or driving in the car For personal moments of indulgence that are comforting and not rushed, to help you relax and escape during and after a stressful day

18 18 Dairy Category Need State/Consumer Segment Target Need StateNeed State Definition% of Snack Universe String Cheese Speedy, Sweet & Portioned Individually Wrapped Cheese Slices Speedy, Sweet & Portioned Regular Yogurt Enhance My Health Premium Ice Cream Sharpen My Mind & Body Non-Premium Ice Cream Sharpen My Mind & Body Soft/Spreadab le Cheeses Healthy Meal Replacement Greek Yogurt Energize Me Cottage Cheese Energize Me Dairy Opportunity Across Snack/Energy Need States (Relative Size of Prize)         14% 7% 13% Portable, single-serve, sweet, flavorful treats for any time of the day, that provide quick energy to keep going, whether working at a desk or driving in the car Nutritionally complete options for every day, made with the goodness of real fruit, that rehydrate and rejuvenate the body, enhancing health over the longer term Vitamin-fortified, energy- and metabolism-boosting snacks that help you stay focused, physically active, and looking your best A heart-healthy meal replacement with nutritional value that boosts bodily function and gives the body what it needs to feel good A natural energy source that revitalizes and sustains throughout the day, with built-in benefits (like antioxidants or calcium) to help improve the body’s function and endurance 13% 7% Dairy's share of the energy related snack occasions is… 54% However, regular and greek yogurt occasions have opportunity to move into the energy space which encompasses… 21%

19 19 11% NS3 The Real Deal All-natural, wholesome, and great-tasting beverages that have heart-healthy ingredients and help set a good example 11% NS2 Proper Health Management Beverages that make you feel fit/healthier, enhance your mental focus, aid your digestive system, and make you feel that your are taking care of yourself 9% NS5 An on-the-go beverage that gives you quick energy so that you can keep going while you’re doing other things Easy, Quick, Convenient 6% NS10 5% NS11 9% NS6 6% NS9 17% NS1 7% NS7 7% NS810% NS4 4% NS12 Craveable, indulgent, and fun beverages that make you happy and put you in a good mood Fresh beverages that have a homemade taste and help you de-stress and relax Sweet, full-flavored, and fun beverages that have a mix of tastes and are made with fresh fruit that my whole family can enjoy Fruit-flavored, vitamin and mineral-fortified beverages with a mix of tastes that boost your energy naturally Refreshing, thirst-quenching, and light-tasting beverages that are good to have with a meal Fresh, natural, and nutritionally complete beverages that strengthen teeth and bones, build muscle, and tide you over until your next meal Filling, energizing beverages that tide you over until your next meal and make you feel adventurous Natural Soothing Selections Sweet Fun with a Twist Sweet Fun with a Twist Fruity Goodnes s Fruity Goodnes s Healthy Meal Replacement Satisfying Energy Enhancement Easy Refreshment Indulgent Moments Indulgent Moments Healthy Weight Management Low This, Low That Low This, Low That Daily guilt-free beverages, lower in sugar and calories, that are not too filling and help you manage your weight Lower in sugar and calories beverages that are not too filling, don’t spoil your appetite, and help you feel in control Emotional Reward Portable Convenience Meal Replacement Health Management U.S. Beverage Universe Within TNS Landis Database: (Overview of Beverage Need States)

20 20 Dairy Category Need State/Consumer Segment (Beverage Universe) Target Need StateNeed State Definition % of Beverage Universe Fruit or Yogurt Smoothies From a Restaurant/ Smoothie Shop Fruity Goodness Chocolate Milk in Bottles/Cartons Easy, Quick, Convenient RTD Refrigerated Milkshakes Satisfying Energy Enhancement Drinkable Yogurt Proper Health Management Whole Milk Proper Health Management Low-Fat/Skim Milk Healthy Weight Management Dairy Opportunity Across Beverage/Energy Need States (Relative Size of Prize)       9% An on-the-go beverage that gives you quick energy so that you can keep going while you’re doing other things 5% 9% Filling, energizing beverages that tide you over until your next meal and make you feel adventurous Beverages that make you feel fit/healthier, enhance your mental focus, aid your digestive system, and make you feel that your are taking care of yourself 10% Daily guilt-free beverages, lower in sugar and calories, that are not too filling and help you manage your weight Fruit-flavored, vitamin and mineral- fortified beverages with a mix of tastes that boost your energy naturally Beverages that make you feel fit/healthier, enhance your mental focus, aid your digestive system, and make you feel that your are taking care of yourself 11% Dairy’s share of the energy related beverage occasions is… 44% However, smoothies, drinkable yogurt and low fat/ skim milk occasions have opportunity to move into the energy space which encompasses… 30%

21 The Study Defined Two Distinctive Types Of Innovation For Dairy Further-Out Innovation Closer-In Innovation 21 How to innovate: Develop communication that builds upon dairy benefits so it can be positioned against energy categories 1.Innovation that is quick but yields less growth; doesn’t require new product development 2.Leverage new benefits/positioning that communicate dairy categories strengths against existing competitive energy categories Helps build upon needs not met by energy categories yet delivered by dairy Capitalize on needs that dairy outperforms energy categories Example: Position drinkable yogurt messaging that delivers opportunities such as helping feel good, looking my best or helping family maintain health as a way to compete against other energy categories How to innovate: Create a new hybrid product that leverages dairy benefits and meets energy attribute needs 1.High Innovation needed but yields high growth Highly incremental opportunity 2.New hybrid product not created, consumers slower to grasp concept Requires longer lead time 3.Need to address consumer needs that are served well by energy categories however, not dairy categories Extending dairy into strongly connected energy categories Example: New to the world hybrid category… Nutritionally Balanced Drinkable Yogurt Shots: This product would deliver on helping consumer feel and look their best and can be considered an option for the family to stay healthy. Goal is to help consumer meet energy needs of feeling fit/ healthier and makes up for less nutritional choices

22 22 Where Does Regular Yogurt Currently Play? Defining… Enhanced My Health Health functions Fresh/natural ingredients Sound nutrition Better performance Natural lift Categories Competing Within Enhance My Health Need State Fresh fruit –whole or precut 100% RTD fruit smoothies Greek yogurt Dairy-based vegetable dips Cottage cheese Fruit cups Fruit Crisp Bars Cereal naturally sweetened Peanut butter in on-the-go cups Need State: Enhance My Health (Accounts for 14% of Energy – related Snack Occasions ) Who Is My Target Consumer…? Older consumers Proactive and disciplined Love food and are adventurous eaters Managing their food and nutrition choices Freshness and sources of the foods important Disciplined Eaters: Eat To Live How To Innovate…?

23 23 How To Innovate…? Enhances daily health Helps ensure long-term health Has redeeming nutritional value Helps me feel good about self Helps digestive system work at its best Helps maintain teeth/ bones strength Cheese/Queso dips Dairy-based vegetable dips Peanut butter OTG cups Low-calorie chocolate candy bars Reduced calorie brownies Reduced calorie cookies Needs Not Met By Energy Categories: Communicate Regular Yogurt Benefits*: Yogurt Outperforms Energy Categories: Note: *Must meet both criteria (1 and 2) before innovation Closer-In InnovationFurther-Out Innovation Innovate Against Energy Competitive Set:  Develop regular yogurt positioning that optimizes above communication/benefits  Ex: Regular yogurt needs to communicate some of its inherent benefits, such as bone health, to compete with the above competitive set  Regular yogurt competes against these energy based categories (competitive set): Important energy attributes needed to innovate: * Must communicate all the regular yogurt benefits (above) to innovate far-out: Build new dairy/energy product: Low to high innovation/risk factor: MODERATE INNOVATION NEEDED HIGH INNOVATION NEEDED LOW INNOVATION NEEDED Not applicable Fruit cups Reduced calorie brownies Peanut butter OTG cups Reduced-fat/sugar cookies Low-calorie chocolate candy bars Dairy-based vegetable dips Cheese/Queso dips Is naturally sweetened Use high quality ingredients Naturally rich in vitamins  Fuse regular yogurt with energy product to create new hybrid product  Higher innovation… higher growth  New product not yet invented  Ex: Expand regular yogurt into energy space by leveraging above benefits along with energy attributes to create breakthrough innovation fusion categories/products

24 24 Where Does Greek Yogurt Currently Play? Defining… Energize Me Gets me going, keeps me going Has sound nutrition Is a natural lift Has fresh/natural ingredients Supports body functions Categories Competing Within The “Energize Me” Need State Peanut butter Packaged frozen yogurt Regular Yogurt Fresh fruit – precut or whole Fruit cups Cereal – 100% nutritionally complete, 100% wholegrain Fresh, cooked or raw vegetables Heart-healthy spreads Need State: Energize Me (Accounts for 6% of Energy – related Snack Occasions ) Who Is My Target Consumer…? Image is important for these consumers “Live to eat” as mindful of health & nutrition Yet struggle with weight/guilt of eating Take time to exercise and look attractive Yet not truly satisfied w/ how they look Life- Balancing Weight Manager How To Innovate…?

25 25 How To Innovate…? Good source of calcium Helps build muscle Boost immune system Helps digestive system work at its best Fruit cups Cereal – high fiber Cereal – 100% wholegrain Cereal – 100% nutritionally complete Heart-healthy spreads Needs Not Met By Energy Categories: Communicate Greek Yogurt Benefits*: Greek Yogurt Outperforms Energy Categories: Note: *Must meet both criteria (1 and 2) before innovation Closer-In InnovationFurther-Out Innovation Innovate Against Energy Competitive Set:  Develop Greek yogurt positioning that optimizes above communication/benefits  Ex: Greek yogurt needs to communicate some of its inherent benefits, such as builds muscle, boosts immune system or helps digestive system work its best to compete with the above competitive set  Greek yogurt competes against these energy based categories (competitive set): Important energy attributes needed to innovate: * Must communicate all the Greek yogurt benefits (above) to innovate far-out: Build new dairy/energy product: Low to high innovation/risk factor: MODERATE INNOVATION NEEDED HIGH INNOVATION NEEDED LOW INNOVATION NEEDED Not applicable Cereal- high fiber Fresh fruit/precut with a dip Fresh fruit/whole Cereal – 100% nutritionally Cereal – 100% wholegrain Heart-healthy spreads Fruit cups Enhance physical/ mental performance Good source of antioxidants Fortified w/ vitamins and/or minerals Is made with fresh/real fruit Promotes healthy skin  Fuse Greek yogurt with energy product to create new hybrid product  Higher innovation… higher growth  New product not yet invented  Ex: Expand Greek yogurt into energy space by leveraging above benefits along with energy attributes to create breakthrough innovation fusion categories/products

26 26 Where Does Fruit/ Yogurt Smoothies Currently Play? Defining… Fruity Goodness Good for body Fruit- flavored Natural energy boost Kid-friendly Partner with exercising Complex taste Good for lunch/ as a snack Categories Competing Within Fruity Goodness Need State Bottle tea blend w/ fruit juice Fruit juice drinks/blends Sparking fruit juices Soft drinks fortified with vitamins and/or minerals Fortified fruit juice Regular RTD sports drinks Pre-game fuel drinks Post-game drinks Herbally enhanced drinks Need State: Fruity Goodness (Accounts for 9% of Energy-related Beverage Occasions ) Who Is My Target Consumer…? Eating is important to younger single men Rely on other to prepare food (at home & away) On-the-go consumers w/ active, busy lifestyle Don’t worry about weight or health issues Social Indulger: Live to Eat How To Innovate…?

27 27 How To Innovate…? Fruit flavored, sweet Kids can prepared/serve themselves Kids like/parents approve of… Good mixture of tastes Variety of tastes in every bite Good as a snack Flavored fitness water RTD sports drink (regular/low calorie) Pre-game fuel drinks Post-game drinks Herbally enhanced drinks Nutritionally complete drinks Calorie-burning drinks Needs Not Met By Energy Categories: Communicate Fruit/Yogurt Smoothie Benefits*: Smoothies Outperforms Energy Categories: Note: *Must meet both criteria (1 and 2) before innovation Closer-In InnovationFurther-Out Innovation Innovate Against Energy Competitive Set:  Develop fruit/yogurt smoothie positioning that optimizes above communication  Ex: Smoothies needs to communicate some of its inherent benefits, such as mixture or variety of taste or good snack and kid friendly to compete with the competitive set  Fruit/yogurt smoothies competes against these energy based categories: Important energy attributes needed to innovate: * Must communicate all the smoothie benefits (above) to innovate far-out: Build new dairy/energy product: Low to high innovation/risk factor: MODERATE INNOVATION NEEDED HIGH INNOVATION NEEDED LOW INNOVATION NEEDED Not applicable Flavored fitness water RTD sports drinks Pre-game fuel drinks Low-calorie RTD sports drinks Post-game drinks Nutritionally complete drinks Calorie-burning drinks Herbally enhanced drinks  Fuse smoothies with energy product to create new hybrid product  Higher innovation… higher growth  New product not yet invented  Ex: Expand smoothies into energy space by leveraging above benefits along with energy attributes to create breakthrough innovation fusion categories/products Good for fast paced lifestyle Easy to prepare Doesn’t drip when I drink it Provides quick energy Good for when I am surfing the web, blogging or texting

28 28 Where Does Drinkable Yogurt Currently Play? Defining Proper Health Management Feel and look my best Promotes healthier lifestyle Promotes brain function Better bodily function Controlling the “bads” Categories Competing Within Proper Health Management Need State Soy milk Bottle water fortified w/ vitamins Vegetable juices Weight-loss beverages Low-fat/skim milk Protein-enhanced water Unflavored fitness water Nutritionally complete drinks Calorie-burning beverages Need State: Proper Health Management (Accounts for 11% of Energy-related Beverage Occasions ) Who Is My Target Consumer…? Older consumers Proactive and disciplined Love food and are adventurous eaters Managing their food and nutrition choices Freshness and sources of the foods important Disciplined Eaters: Eat To Live How To Innovate…?

29 29 How To Innovate…? Helps me feel good Helps maintain family health Give my body what it needs to feel good Helps me look my best Nutritionally complete drinks Weight-loss beverages Needs Not Met By Energy Categories: Communicate Drinkable Yogurt Benefits*: Drinkable Yogurt Outperforms Energy Cat.: Note: *Must meet both criteria (1 and 2) before innovation Closer-In InnovationFurther-Out Innovation Innovate Against Energy Competitive Set:  Develop drinkable yogurt positioning that optimizes above communication/benefits  Ex: Drinkable yogurt needs to communicate some of its inherent benefits, such as making me feel good, maintaining family health to compete with the above competitive set  Drinkable yogurt competes against these energy based categories (competitive set): Important energy attributes needed to innovate: * Must communicate all drinkable yogurt benefits (above) to innovate far-out: Build new dairy/energy product: Low to high innovation/risk factor: MODERATE INNOVATION NEEDED HIGH INNOVATION NEEDED LOW INNOVATION NEEDED Not applicable Nutritionally complete drinks Weight-loss beverages Helps me feel fit/ healthier Helps make up for less sensible choices  Fuse drinkable yogurt with energy product to create new hybrid product  Higher innovation… higher growth  New product not yet invented  Ex: Expand drinkable yogurt into energy space by leveraging above benefits along with energy attributes to create breakthrough innovation fusion categories/products

30 30 Where Does Low Fat/Skim Milk Currently Play? Defining Healthy Weight Management Weight control/Better for me No-regret consumption Healthy ingredients Low/no sugar and Light/not too filling Better health management Categories Competing In Healthy Weight Management Need State Unflavored fitness water Bottled spring water Bottled purified water – plain Low-cal. fruit-flavored drink mix Sparkling water – unflavored Unflavored bottled teas Soy milk Low-cal. RTD sports drinks Need State: Healthy Weight Management (Accounts for 9% of Energy-related Beverage Occasions ) Who Is My Target Consumer…? Older consumers Proactive and disciplined Love food and are adventurous eaters Managing their food and nutrition choices Freshness and sources of the foods important Disciplined Eaters: Eat To Live How To Innovate…?

31 31 How To Innovate…? Low fat/low calories Can have every day Does not contribute to childhood obesity No added sugar Helps lower cholesterol Unflavored fitness water Soy milk Vegetable juices Needs Not Met By Energy Categories: Communicate Low Fat/Skim Milk Benefits*: Low Fat/Skim Milk Outperforms Energy Cat.: Note: *Must meet both criteria (1 and 2) before innovation Closer-In InnovationFurther-Out Innovation Innovate Against Energy Competitive Set:  Develop low fat/skim milk positioning that optimizes above communication  Ex: Low fat/skim milk needs to communicate some of its inherent benefits, such as providing no added sugar and lowers cholesterol to compete with the above competitive set  Low fat/skim milk competes against these energy based categories (competitive set): Important energy attributes needed to innovate: * Must communicate all low fat/skim milk benefits (above) to innovate far-out: Build new dairy/energy product: Low to high innovation/risk factor: MODERATE INNOVATION NEEDED HIGH INNOVATION NEEDED LOW INNOVATION NEEDED Unflavored fitness water Soy milk Not applicable Vegetable juices Is low in salt/ sodium Is sugar free  Fuse low fat/skim milk with energy product to create new hybrid product  Higher innovation… higher growth  New product not yet invented  Ex: Expand low fat/skim milk into energy space by leveraging above benefits along with energy attributes to create breakthrough innovation fusion categories/products

32 Relative Size of Prize For Dairy Snacking And Beverage Energy Occasions Energy Related Snack Occasions Energy Related Beverage Occasions 32 Snacking is a $90+ billion industry 21% of snacking occasions are energy-related, which creates a: $18.9 Billion15.9 Billion Gallon Beverage a 53 billion gallon industry 30% of beverage occasions are energy-related, which creates a: 1: Innovation Center of U.S. Dairy, Snacking white paper (2009) 2: Innovation Center of U.S. Dairy, Dairy Beverage Reinvented (2012) Opportunity 1 2

33 What Else Might We Uncover From This Initial Work? 33

34 Additional Mining of This Data Could: Look more deeply into protein energy connection Create work around energy dimensions – Example: sustained, natural or quick energy etc… Dig into the consumer target(s) of highest priority opportunities Explore some “lower priority” dairy categories Further refine sizing estimates based on new information Other issues of interest for your organization…? 34

35 APPENDIX Powered by Dairy: 35

36 36 Matrix™ Consumption Universe Methodology Overview – Overall Food & Beverage What is the Consumption Universe? A comprehensive insight resource for food and beverage marketers, leveraging the proprietary TNS Matrix™ methodology to model how consumers see the market and make their product choices Massive scope: 24,000 consumer interviews – 360 food, beverage, and snack products/ categories evaluated across 360 occasion-based needs and product benefits, plus over 50 statements defining differentiated consumer targets based on shared beliefs, behaviors, and lifestyle factors The Matrix™ Consumption Universe is designed to help you: Understand all factors impacting consumer choice in your category – or a new category of interest Quickly uncover bona fide gaps and opportunities grounded in consumer needs Efficiently expand your perspective beyond traditional category definitions to identify new opportunities

37 37 Survey Overview Many approaches, such as A&U’s, ask a lot of questions on a survey, the more the better, and then hope something interesting surfaces. Matrix instead leverages a consumer behavioral model to drive survey content and analytics/deliverables, and take the guesswork/risk out of research design and execution.

38 38 What is a consumer target? Consumers have varied lifestyles, behaviors, tensions, and beliefs which predispose them to act in certain ways. Matrix uncovers the differentiated consumer segments which comprise your market targets – each with different beliefs, behaviors, and/or lifestyle tensions – and sizes them to aid prioritization.

39 39 U.S. Consumption Universe – Consumer Segments Food AficionadosStrugglingDisciplinedCarefree Overview of Beliefs & Lifestyles These women provide basic home-cooked food, and eat with their families. They are not focused on health or nutrition, and do not limit themselves or feel guilty about it. They are not impacted by daily stresses in their lives. These “foodies” are adventurous in life, cooking, and eating. They moderate their eating to maintain a healthy lifestyle and an active social life. They enjoy freshly prepared foods more than fast food or junk food. Eating is important to these younger, single men, but they rely on others to prepare foods for them – whether at home or away. Their active, busy lifestyle means they are often eating on the go, and they don’t worry about weight or health issues. Life is stressful for these consumers, and they lack the energy to tackle life’s challenges. Although they struggle with weight issues, they rely on easy prep or simple meals to make their families happy. They tend to stick with the “tried and true” in their food choices, and often use food for comfort. These consumers struggle to maintain a healthy weight and try to eat better, but don’t always succeed. They are focused on fresh food and nutrition, and do not rely on fast food for their meals. For these single male consumers, food is fuel that supports their on-the- go lifestyle. Takeout and quick-cooking foods are the basis of their meals and snacks, and they rarely prepare their own food. Neither explorers nor adventurers, they regularly eat the same foods. They eat what they want without health concerns. These consumers are mindful of health and nutrition, but struggle with weight issues and guilt about eating. Image is important to these consumers, and they take steps to exercise and look attractive, but they are not truly satisfied with how they look. Although these older consumers are lovers of food and adventurous about eating, they are proactive and disciplined in managing their food and nutrition choices. Freshness and sources of the foods they choose are important to them. Home Cookin’ Family Pleaser (10%) (10%) Conflicted Stressed Manager (15%) (15%) Stressed Struggler (15%) (15%) Routine Convenience Seeker(10%) Seeker(10%) Social Indulger (11%) (11%) Life- Balancing Weight Manager (11%) (11%) Wellness Proactive (13%) (13%) Upbeat Food Explorer (14%) (14%) LIVE TO EATEAT TO LIVE

40 40 YogurtCereal Yogurt - with probioticsCereal - bran/high fiber Yogurt - Greek typeCereal - 100% wholegrain Yogurt - regular typeCereal - 100% nutritionally complete Drinkable yogurt Bars Nuts, Granola Energy bars Granola, fruit, and nut mix in pouchesProtein bars Granola/muesliChewy granola bars Fortified nut mixes such as for bone or heart healthChewy granola/cereal bars with fiber Trail MixesNutritional bars Fruit Based Crunchy granola/cereal bars Dried fruitFruit crisp bars Fresh fruit - wholeWeight-loss meal replacement bars Fruit cups Dips/Spreads 100% fruit smoothies - ready-to-drinkReduced-fat/fat-free vegetable dips Confections/Treats Heart-healthy spreads Low-calorie chocolate candy bars or clusters Crackers/Seeds Reduced-calorie browniesWhole wheat/multigrain crackers Peanut butter in on-the-go cupsSeeds (like sunflower, pumpkin, etc.) Natural/organic cookies Energy-Related Categories (Snack Universe)

41 41 Protein DrinksEnergy Beverages Protein-enhanced sports drinksEnergy shots (like 5-Hour Energy, etc.) Protein drinks - ready-to-drinkSingle-serve flavored powdered energy drink mix Protein-enhanced waterEnergy drinks Weight Management Beverages Single-serve flavored powdered energy drink mix Calorie-burning beverages Coffee Beverages Weight-loss beveragesBrewed coffee - regular Fuel/Functional Beverages Instant coffee Pre-game fuel drinksSingle-serve, one-cup-at-a-time coffee Post-game drinks with electrolytes and carbs Other Beverages Regular ready-to-drink sports drinksVegetable juices Low-calorie ready-to-drink sports drinksSoy milk Flavored fitness water Unflavored fitness water Herbally enhanced drinks Nutritionally complete drinks Energy-Related Categories (Beverage Universe)


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