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International Baking Industry Exposition October 2013 THE NEW CONVERSATION ABOUT NUTRITIVE SWEETENERS CHANGING CONSUMER PERCEPTIONS AND THE IMPACT ON CONSUMER.

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Presentation on theme: "International Baking Industry Exposition October 2013 THE NEW CONVERSATION ABOUT NUTRITIVE SWEETENERS CHANGING CONSUMER PERCEPTIONS AND THE IMPACT ON CONSUMER."— Presentation transcript:

1 International Baking Industry Exposition October 2013 THE NEW CONVERSATION ABOUT NUTRITIVE SWEETENERS CHANGING CONSUMER PERCEPTIONS AND THE IMPACT ON CONSUMER PURCHASE DECISIONS 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. NUTRI-GRAIN® and logo are registered trademarks of The Kellogg Company. POWERADE® and logo are registered trademarks of The Coca-Cola Company. SARA LEE® and logo are registered trademarks of Sara Lee™ Holdings used under license.

2 TODAY’S SPEAKERS Martin Concannon Founder and Managing Director, Lafayette Associates President and Founder, White Technical Research John S. White, Ph.D.

3 FIRST & FOREMOST: How can we continue to create food and beverage products that consumers will want to buy? 3

4 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? 4

5 WHY WE ARE HERE: To share 3 rd -party research that will answer those questions and help you make informed business decisions about sweeteners. 5

6 WHAT WE WILL COVER Consumer Attitudes Toward Sweeteners & HFCS The Science of Sweeteners Sweeteners & Consumer Purchase Decisions Sweetener Strategies Summary & Looking Ahead 6

7 7 WHAT DO CONSUMERS THINK?

8 FIRST, WHAT DO YOU THINK CONSUMERS ARE THINKING? Is the media coloring your perception of consumer attitudes? “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) 8 “Is Sugar Toxic?” (4/01/12)

9 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? 9

10 Source: Mintel. 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. 10

11 11 American consumers are much more concerned about total sugars in their diet than about any specific sweetener.

12 12 In fact, consumers avoid added sugars more than any other ingredient.

13 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? 13

14 HOW DO WE KNOW? WE TALKED TO CONSUMERS. MINTEL OCTOBER 2012 SURVEY: 2,400 primary household grocery shoppers Nationally representative, regionally balanced samples Methodology: Unaided and aided questions HOUSEHOLDS: + Children under 18yrs + No children INCOME RANGE: $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.. 14

15 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? 15

16 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 Source: Mintel, October 2012; N = 2,400 16

17 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 17

18 “HFCS AVOIDERS” – WHAT PART OF THE POPULATION? EATERS: 20.3%SUGARS CONCERNED: 58.4%SUGARS AVOIDERS 21.3% HFCS AVOIDERS: 2.9% 79.7% of consumers are concerned about total sugars. Source: Mintel, October 2012; N = 2,400 HFCS CONCERNED: 23.1% unaided aided unaided Only 2.9% of consumers avoid HFCS specifically. 18

19 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) 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 19

20 PRIMARY SHOPPERS DON’T LOOK FOR HFCS ON LABELS. Frequency of label-reading (UNAIDED) Information sought on labels (UNAIDED) 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 20

21 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) 21

22 SHOPPERS ARE FAR MORE CONCERNED ABOUT ADDED SUGARS OVERALL THAN ABOUT HFCS SPECIFICALLY. 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”) 22 Source: Mintel 2012; N = 2,008

23 HFCS IS A CONCERN FOR THREE OUT OF 100 FRESH/PACKAGED BREAD BUYERS. Q11 You said that you consider sugar or other sweeteners when buying fresh packaged bread. Please tell us why? (open ended) Response % of all respondents buying bread Limit/watch sugar/sweeteners12% Avoid/dislike sugar/sweeteners5% Diabetic reasons/avoid diabetes4% Avoid/dislike added sugar/sweeteners4% Watching calories/weight/fattening3% Avoid/Dislike HFCS/Corn Syrup3% Like natural sweeteners/ingredients2% Sugar unhealthy/bad for teeth/junk food2% Control carbohydrates1% Prefer Diet/Sugar Free/Light products0% Total36% 2012 Base n =2, Base n Buy Fresh/Packaged Bread =1,649 Q10 Do you consider ….when buying...? 23

24 TWO IN 100 COOKIE/CAKE/PASTRY BUYERS MENTION HFCS AS A CONCERN. Q11 You said that you consider sugar or other sweeteners when buying cookies, cakes and pastries Please tell us why? (open ended) Response % of all Respondents buying Cookies, Cakes and Pastries Limit/watch sugar/sweeteners 15% Family member likes it/All Other 11% Avoid/dislike sugar/sweeteners 6% Watching calories/weight/fattening5% Like natural sweeteners/ingredients3% Diabetic reasons/avoid diabetes3% Avoid/dislike added sugar/sweeteners 3% Sugar unhealthy/bad for teeth/junk food 2% Avoid/Dislike HFCS/Corn Syrup 2% Prefer Diet/Sugar Free/Light products1% Control carbohydrates1% Total*49% 2012 Base n =2, Base n Buy Cookies, Cakes and Pastries= 1,024 Totals equal more than 43% due to multiple responses Q10 Do you consider ….when buying...? 24

25 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, July 2009 July 2010 July 2011 July 2012 July 2013

26 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 26

27 KEY TAKEAWAY CONSUMER ATTITUDES: Research shows that consumers are focused on added sugars overall, not on the sweetener type. 27 Unaided questions reveal top-of-mind concerns, true attitudes, and likely behavior. 27

28 28 THE SCIENCE OF SWEETENERS

29 HFCS IS MORE THAN JUST A SWEETENER. Maintains freshness in condiments Promotes browning of baked goods Enhances fruit and spice flavors in marinades Aids fermentation in breads and yogurts Retains moisture in breakfast bars and cereals Makes high-fiber baked goods and cereals more palatable Maintains consistent flavors in beverages Keeps ingredients evenly mixed in salad dressings 29

30 30 CLEAR SCIENTIFIC AGREEMENT … with no nutritive difference. HFCS and table sugar are safe …

31 31 IS HFCS NATURAL? YES, UNDER FDA POLICY. HFCS meets the Food and Drug Administration’s test for use of the term “natural.” HFCS is made from corn, a natural grain product, and enzymes used in production of HFCS are found in nature. Source: Letter from Geraldine June, FDA Center for Food Safety and Applied Nutrition, to Audrae Erickson, President of the Corn Refiners Association, July 3, 2008.

32 OBESITY HFCS Data: USDA Economic Research Service (U.S. per capita loss-adjusted food availability: “Total Calories”); Flegal et al, JAMA, 2010; Flegal et al, JAMA, HFCS USE DECREASED AS OBESITY RATES CONTINUED TO RISE. Data for the last 10 years do not support the HFCS hypothesis. 32

33 OBESITY = EXCESS CALORIES HFCS is not a significant part of the calorie increase. Average Calories Consumed Daily Per Capita (U.S.) Percentage of Caloric Growth 2,0762, Calories Source: Economic Research Service, USDA (U.S. per capita loss-adjusted food availability: “Total Calories”) 33

34 34 THE SWEETENER CONVERSATION HAS SHIFTED. USDA 2010 dietary guidelines emphasize total caloric intake; industry labeling initiatives are in sync, highlighting total sugar content. It’s not the type of added sugar that matters to consumers; the issue is total sugar consumption.

35 CONFUSION ABOUT HFCS MISCHARACTERIZED Some nutritionists and researchers have erroneously suggested a direct and unique causation between the consumption of HFCS and obesity. MISUNDERSTOOD Consumers have been told that sugar is a more natural substitute for HFCS. MISALLOCATED Some companies have begun to replace HFCS with other sweeteners in their brands for marketing purposes. 35

36 KEY TAKEAWAY There is no meaningful nutritional difference between HFCS and sugar. There is widespread agreement among health and science experts that 36

37 37 SWEETENERS & CONSUMER PURCHASE DECISIONS

38 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? 38

39 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. 39 BEVERAGESBAKED GOODSPREPARED 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

40 NUTRI-GRAIN BREAKFAST BAR SHARE ($) OF TOTAL BREAKFAST BAR MARKET Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March Nutri-Grain brand dollar sales share has not increased with recent reformulation to HFCS-free. 40

41 SARA LEE BREAD SHARE ($) OF TOTAL FRESH BREAD MARKET Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March Product reformulation to HFCS-free in 2010 has not increased brand dollar share. The uptick in sales the last four months is likely due to retail promotions. 41

42 KEY TAKEAWAY CONSUMER PURCHASE DECISIONS: 42 The overwhelming majority of consumers don’t respond to strategies based on promoting single type of sweetener. 42

43 43 SWEETENER STRATEGIES

44 SWEETENER STRATEGIES VARY WIDELY ACROSS BRANDS. 44 APPROACHDESCRIPTION ReplaceReformulate brand without promotion ExtendOffer HFCS-free line extension Promote Reformulate brand with heavy promotion (including package label call-outs) ReduceOffer lower-sugars line extension MaintainStay with HFCS New data emerging on performance of brands with different approaches. Many have already switched back to HFCS – including “Mom & Kid” brands.

45 45 REPLACE: MIRACLE WHIP HFCS Sugar 52 wk trailing Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March week sales trend shows no sales gain from either sweetener change.

46 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? 46

47 EXTEND: HEINZ GIVES UP AS MUCH AS IT GAINS. 47 Low-salt, HFCS-free SKUs cannibalized about 7% share from their existing base. Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March HFCS Sugar

48 PROMOTE: HUNT’S BRAND REFORMULATION DIDN’T PAY OFF. 48 “Overall, consumer demand for HFCS-free ketchup was not as strong as expected.” - Hunt’s spokesperson, May 31, Source: Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March HFCS Sugar

49 CAPRI SUN SALES: GAINS FROM PROMOTIONS, NOT FROM SWITCHING SWEETENER. 49 Source: Nielsen US Retail Sales All Outlets Combined (including Walmart). March HFCS Sugar 24 wk trailing

50 50 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 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

51 MAINTAIN: POWERADE GAINS ON GATORADE 51 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 HFCS Sugar HFCS (No change)

52 KEY TAKEAWAY 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. 52

53 53 SUMMARY & LOOKING AHEAD

54 WHY DO COMPANIES SWITCH FROM HFCS? Most cite one reason: “Our consumers are demanding it.” 54

55 THIRD-PARTY RESEARCH TELLS A DIFFERENT STORY. Consumers care more about total sugars, not about which nutritive sweetener is added. 55

56 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. 56

57 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: 57

58 Who else in your company needs to know? 58

59 THANK YOU For more information, visit or call Copyright 2012 Corn Refiners Association 59

60 60 APPENDIX

61 DR. ROBERT LUSTIG & THE EB2012 “SUGAR SHOWDOWN” “Dr. Robert Lustig, of University of California, San Francisco, who is famed for sensationalizing the position that sugar is "toxic" in media coverage and the scientific literature, was seriously challenged by not only speakers, but also by fellow scientists (from industry and non-industry alike) in the crowd during the question-and-answer period.” “One of those scientists was Dr. John Sievenpiper, of St. Michael's Hospital, University of Toronto, who told me in an interview after the event, ‘Having both sides better represented was far more balanced than what came out of his two-million hit sensation on YouTube and a lot of the media coverage.’” Experimental Biology 2012 conference in San Diego "Videos from the EB2012 Sugar Showdown and a Few Comments from Dr. Lustig,“ David Despain, Evolving Health: Food, Nutrition, and Medicine, June 8, showdown.html?elq=aca3b504ae564602a45bae581f1acfbf&elqCampaignId=46 61

62 JAMA STUDY: MISLEADING CLAIMS ON EFFECTS OF FRUCTOSE ON HUNGER & WEIGHT GAIN -“ Exploratory” study in Journal of the American Medical Association - Conclusions based on test conducted on just 20 people fed massive doses of sugar in a manner not consumed in real life. “When consumed together, as they are almost always are, fructose and glucose balance each other out and would likely have no effect on normal hypothalamic blood flow. […] Any suggestion that this artificial experiment has implications for human nutrition or obesity is unwarranted speculation.” Dr. James Rippe Founder, Rippe Lifestyle Institute Professor of Biomedical Sciences University of Central Florida 62 Sources Page KA et al. Effects of fructose vs glucose on regional cerebral blood flow in brain regions involved with appetite and reward pathways. JAMA 2013;309:63.

63 NEITHER HFCS NOR TABLE SUGAR INCREASES LIVER FAT UNDER “REAL WORLD” CONDITIONS Provides compelling evidence that HFCS and sucrose consumed at levels consistent with average daily consumption do not increase liver fat in humans, a leading cause of non-alcoholic fatty liver disease. Supports the well-established body of science that shows HFCS and table sugar are nutritionally and metabolically equivalent. Implication for food and beverage manufacturers is clear – as companies formulate safe, nutritious products, consumers are more concerned about total sugar consumption than about which type of sweetener is used. 63 Recent study published by Dr. James Rippe in Journal of Applied Physiology, Nutrition, and Metabolism (JAPNM) Source:

64 STANFORD DIABETES STUDY: DATA “SIMPLY INSUFFICIENT TO THE TASK” “[It] seems more to confirm what dietitians and the medical community have known for years; over-consumption of calories, combined with a sedentary lifestyle, leads to obesity and obesity related diseases such as type-2 diabetes.” –Dr. James Rippe “Some of the data go against the basic conclusion. For example, the five highest increases in diabetes were in countries where sugar availability went down.” –Dr. Richard David Feinman 64 Recent study published by PLOS ONE suggests sugar may have a direct, independent link to diabetes. Basu, S., Yoffe, P., Hills, N. and Lustig, R.H. “The Relationship of Sugar to Population-Level Diabetes Prevalence: An Economic Analysis of Repeated Cross-Sectional Data,” PLoS One. 8:2(2013). (http://www.plosone.org/article/info%3Adoi%2F %2Fjournal.pone )http://www.plosone.org/article/info%3Adoi%2F %2Fjournal.pone )

65 “AN INCOMPLETE STORY CAN LEAD READERS TO DRAW INACCURATE CONCLUSIONS.” “Fat Chance…is the product of one individual’s point of view – a perspective that is not supported by the vast majority of scientific research on nutrition and metabolism” (1). “Numerous scientific authorities, including the Academy for Nutrition and Dietetics, have acknowledged that the most effective way to achieve and sustain a healthy weight is to exercise regularly and eat a balanced, nutrient- dense diet that allows for the enjoyment of all foods within individual calorie limits” (10). 65 Mark Kern, PHD, RD, CSSD, Professor of Exercise and Nutritional Sciences at San Diego State University, analyzed the concepts presented in Fat Chance, by Robert H. Lustig, MD. Source: “Scientific Review of Robert Lustig’s Fat Chance”

66 THE BODY ABSORBS HFCS JUST AS IT DOES TABLE SUGAR. 66

67 Melanson et al, 2007, Nutrition 67

68 Zukley et al, June 2007, Endocrine Soc Program Abstract #P2-46. Lowndes et al, June 2007, Endocrine Soc Program Abstract #P2-45. Melanson et al, 2007, Nutrition 68


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