2016 Avocado Shopper
Segmentation
Avocado Shopper Segmentation Shopper Groups, Purchase Trends, Demographics and Growth Opportunities
Using Shopper Insights to Drive Retail Sales of Hass Avocados
Table of Contents
Objective and Methodology
3
Executive Summary
4
Segmentation
6
Key Purchase Trends - Annual
9
Key Purchase Trends - Quarterly
16
Demographics
24
Appendix
33
2
Objective and Methodology Objective Understanding fresh avocado shoppers and their purchase behaviors can help marketers and retailers create strategies that build loyalty, drive traffic and grow sales of Hass avocados. The objective of this study is to better understand avocado shoppers by developing a shopper segmentation based on their actual avocado purchase levels (Super Heavy, Heavy, Medium and Light), and to identify the underlying purchase behaviors and demographics. Additionally, this study aims to understand how avocado purchase behaviors vary quarterly throughout the year to identify opportunities for further category growth.
Methodology •
Time Periods: –
Current Year: 52 weeks ending 6/12/2016 • • • •
Q3, 2015: 13 weeks ending 9/13/2015 Q4, 2015: 13 weeks ending 12/13/2015 Q1, 2016: 13 weeks ending 3/13/2016 Q2, 2016: 13 weeks ending 6/12/2016
Prior Year: 52 weeks ending 6/16/2015 Data source: IRI Consumer NetworkTM - Consumer Purchase Trends –
•
– – –
Household panel data from the National Consumer Panel (NCP), an operational joint venture between IRI and Nielsen.The panel consists of a representative sample of approximately 120,000 U.S. households, balanced to the general U.S. population, who electronically record all purchases In this study, “General Population” refers to the total panel The NCP captures the dollar value of fresh avocado purchases, not the volume (eaches). Throughout this report, “purchases” refers to purchase dollars
3
Executive Summary Fresh avocados is one of the most successful categories in fresh produce, with double-digit growth rates fueled by annual household purchases in excess of $1.6 billion. Driving this growth are the nearly 60% of U.S. households that purchase fresh avocados throughout the year. While most households are repeat buyers, a very large proportion of avocado purchase activity is concentrated in a relatively small slice of households. This top-spending quartile (25%), designated as Super Heavy households, accounts for nearly three out of every four avocado purchase dollars. With an average annual avocado spend of nearly $70, Super Heavy households are extremely influential and important to the future of the category. The other three quartiles each account for a smaller share of avocado dollars than their respective share of households would suggest. As the second-highest spending quartile (25%), Heavy households account for 18% of avocado purchases. On a combined basis, Super Heavy and Heavy households account for 91% of all avocado purchases at retail. These two shopper groups are the key to the growth that the avocado category has been experiencing.
In stark contrast, on a combined basis, Medium and Light households comprise 50% of all avocado purchasing households, yet only 9% of the spend. Light households in particular represent a set of shoppers that are only minimally engaged in the category. Light households buy infrequently and their average annual household spend is less than $2. Moving this segment up the ladder may prove challenging. 4
Executive Summary Because of their greater involvement in the category, Super Heavy and Heavy households may be more apt to respond positively to marketing efforts to increase their purchases.
Some clues to stimulating purchases by Super Heavy and Heavy households are revealed in their quarterly purchase patterns. Household avocado purchases are highest in Q3* and dip to a quarterly low in Q4. Three percent of Super Heavy households and seven percent of Heavy households drop out of the avocado category altogether in Q4. Finding ways to keep these influential shoppers interested in avocados at this time of year could add as much as $16 million to the category. Improving purchase frequency and spend per trip could yield even greater gains. This study also provides demographic detail for each of the segments and for avocado households in total. In many respects, the four segments reflect the general U.S. population. In other respects, the figures reveal distinct skews that may signal marketing opportunities and provide insights on the future make up of avocado purchasing households.
Building sales and marketing strategies that leverage the segmentation, seasonality and demographic insights in this study can help strengthen and expand sales of Hass avocados in the retail marketplace.
* See Methodology for dates
5
SEGMENTATION
6
Segmentation Segment Share of Avocado Purchasing Households
Segment Annual Household Avocado Spend Range
Super Heavy = $26. 95 or more Heavy = $10.45 to $26.94 Medium = $3.90 to $10.44 Light = $3.89 or less
• • • • •
This segmentation ranked avocado purchasing households according to each household’s total annual avocado spend (high to low). This ranked list was then divided into four equal segments (buyer groups) Households in the top-spending quartile (Super Heavy), spend $26.95 or more annually on avocados Households in the second highest-spending quartile (Heavy), spend between $10.45 and $26.94 annually Households in the third highest-spending quartile (Medium), spend between $3.90 and $10.44 annually Households in the lowest-spending quartile (Light), spend $3.89 or less annually 7
Super Heavy households account for one out of four households, but three out of four avocado purchases Segment Share of Avocado Purchasing Households
• • • •
Super Heavy households account for 73% of annual avocado purchases Heavy households account for 18% of annual avocado purchases Together, Super Heavy and Heavy households account for 91% of avocado purchases. These two segments are essentially driving the growth trends in the avocado category and represent key targets for marketers and retailers seeking to drive continued growth In contrast, Medium and Light households comprise fifty percent of all avocado purchasing households but account for only 9% of annual avocado purchases
8
KEY PURCHASE TRENDS ANNUAL 9
Nearly 6 out of 10 U.S. households purchase avocados, and spend on average $24 per year Annual Purchase Dollars = $1.6 Billion* Household Penetration 57% of U.S. households buy avocados
Spend per Household Avocado spend per household averages $23.91 annually
Number of Trips per Household Avocado buying households average 6.9 trips annually
X
Spend per Trip Avocado buying households spend $3.49 per trip
Data Source: IRI Consumer NetworkTM 2016 All figures are rounded *Total number of U.S. households = 121MM. Annual avocado penetration = 57% = 69MM households purchasing avocados annually (57% * 121MM = 69MM). Annual purchase dollars = $1.6B (69MM households with an annual spend per household at $23.91)
10
Most households that purchase avocados are repeat buyers
• •
78.3% of total avocado households purchase avocados more than once per year Nearly all Super Heavy and Heavy households purchase more than once per year
11
Super Heavy households spend four times more per year than Heavy households
4X Higher!
• •
Average annual avocado spend per household (All Buyers) is $23.91 Super Heavy households spend an average of $69.77 per household, more than four times that of Heavy households 12
Super Heavy households buy more often and spend more per trip than the other groups
2X Higher!
2X Higher!
•
Super Heavy households average 15 purchases annually, more than twice that of Heavy households
•
At $4.64 per trip, Super Heavy households have the highest spend per trip of the four groups, and nearly twice that of the Heavy group 13
Low
Super Heavy
All Buyer Average = $3.49
Dollars Per Occasion
High
Together, the number of trips and the spend per trip, account for each group’s usage level profile
All Heavy Medium Light Low
All Buyer Average = 6.9
High
Purchase Occasions
• • •
Super Heavy and Heavy households purchase avocados more often, and spend more per trip, than Medium and Light households On these two key purchase metrics, Super Heavy households far outpace even the second highest group, Heavy households These two purchase metrics are key to understanding the underlying shopper dynamics driving growth in this category, and also help identify developmental opportunities
14
The value of a +1% increase in number of purchase trips or spend per trip for Super Heavy households is 4 times higher than for Heavy households Number of Trips Opportunity Household
Current # of
Group
Trips
Super Heavy
+1% Increase Opportunity 15.0
15.2 $12,033,010
Spend Per Trip Opportunity Household
Current $
Group
Spend
+1% Increase Opportunity
Super Heavy
$4.64
$4.69 $12,033,010
Heavy
7.3
7.4
$2,983,044
Heavy
$2.37
$2.39
$2,983,044
Medium
3.5
3.6
$1,140,729
Medium
$1.87
$1.89
$1,140,729
Light
1.5
1.6
$328,954
Light
$1.24
$1.25
$328,954
•
A +1% increase in number of purchase trips or spend per trip for Super Heavy households represents a +$12MM opportunity for the category
•
In contrast, a +1% increase in number of purchase trips or spend per trip for Heavy households represents a +$3MM opportunity for the category
*See Appendix page 41 for full opportunity calculation
15
KEY PURCHASE TRENDS QUARTERLY 16
Quarterly purchase dollars dip in Q4 for all buyer groups
Total Q3 $450
• • • •
Total Q4 $345
Total Q1 $420
Total Q2 $433
Avocado purchases reach their lowest point in Q4 at $345 million This drop in purchases occurs across all four buyer groups However, each buyer group’s relative share of purchases remains approximately the same quarter-by-quarter, with Super Heavy households accounting for approximately three-fourths of each quarter’s purchases Subsequent pages examine the purchase trends driving these results 17
Not all avocado purchasing households purchase avocados every quarter, with penetration at its lowest in Q4
44 MM*
• •
39 MM*
46 MM*
46 MM*
While annual household penetration is 57%, quarterly penetration is lower: Not all avocado purchasing households purchase avocados every quarter Household penetration reaches its lowest point in Q4, with only 32% of U.S. households buying
*Total # of U.S. households = 121MM. Annual avocado penetration = 57% = 69MM households purchasing avocados annually (57% * 121MM = 69MM). However, not all of these 69MM households buy avocados every quarter.
18
Average spend per household is lowest in Q4 and does not fully recover in the following two quarters
• •
Average spend per household is lowest in Q4 at $8.77 The low Q4 penetration (page 18) and the low spend per household (above) are the key purchase trends underlying the low overall Q4 purchase dollars (page 17)
19
Both the number of purchase trips, and the household spend per trip, decline in Q4
• • •
The number of purchase trips hits a low in Q4 at 2.5 trips Spend per trip shows a sharp decline in Q4 and continues to decline steadily throughout the next two quarters The next page examines these quarterly purchase trends by buyer group 20
Household penetration and spend per household drop for all four buyer groups in Q4
SH and H $ spend per household drops more than other buyer groups in Q4
Household penetration dips in Q4 across all four groups
• •
Q4 household penetration drops for all buyer groups, but less so for Super Heavy households While the penetration decline is less pronounced for Super Heavy households, this group shows the deepest Q4 decline in avocado spend per household
21
All* buyer groups display a Q4 decline in number of trips and spend per trip
SH, H and M households purchase less often in Q4
* L household # trips increased nominally after Q4
• •
The number of trips hits a low in Q4 for Super Heavy, Heavy and Medium households, with Super Heavy households showing the greatest decline Q4 spend per trip declines for all buyer groups from its high in Q3, and does not recover in the subsequent two quarters
22
Retaining Q3 penetration and per household spend levels in Q4 would result in large sales gains for the category Household Penetration Opportunity*
Household
Household Group
Spend per Household Opportunity*
Q3
Q4
Gap
Group
Opportunity
Super Heavy
Q3
Q4
Gap
$21.12
$17.28
-$3.84
$57,421,590
Opportunity
Super Heavy
90%
87%
-3.6
$10,667,492
Heavy
77%
70%
-6.8
$5,790,360
Heavy
$6.14
$4.92
-$1.22
$14,385,406
Medium
55%
47%
-8.2
$3,874,614
Medium
$3.27
$2.75
-$0.52
$3,842,945
Light
34%
26%
-8.0
$1,939,065
Light
$1.51
$1.41
-$0.10
$456,804
•
For example, lifting Q4 penetration to match Q3 for Super Heavy and Heavy households represents a +$16MM sales opportunity for the category
•
For example, lifting Q4 dollar spend per household to match Q3 for Super Heavy and Heavy households represents a +$72MM sales opportunity for the category
*See Appendix page 42 for full opportunity calculation
23
DEMOGRAPHICS
24
Notes on Demographic Groups Each of the demographic categories presented in this report reflects the standard sub-breaks available from the IRI National Consumer Panel (NCP) •
•
Age – – – – –
• 18-34 35-44 45-54 55-64 65+
Income – Under $20,000 – $20,000 - $24,999 – $25,000 - $34,999 – $35,000 - $44,999 – $45,000 - $49,999 – $50,000 - $59,999 – $60,000 - $69,999 – $70,000 - $99,999 – $100,000+
• Marital Status – Married – Single – Other (Divorced, Separated, Widowed)
Race – – – –
White Asian Black Other
• Hispanic/Non-Hispanic – Hispanic (Acculturated) – Non-Hispanic/Unknown • Household Size – 1 – 2 – 3 – 4 – 5+
• Children/No Children – Households with Children – Households without Children
25
The two youngest age groups account for 47% of avocado purchases
$ Purchases
% pop
37.0%
• •
$ Purchases
46.9%
$ Purchases
49.2%
41.9%
The two youngest age groups comprise 46.9% of avocado purchases but only 37.0% of the general population In the Super Heavy group, the two youngest age groups account for an even larger share of avocado purchases (49.2%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light households demographic information
26
The top two income groups account for nearly half of avocado purchases
$ Purchases
% pop
39.5%
• • •
$ Purchases 47.3%
$ Purchases 48.4%
46.4%
Across many of the income groups, avocado purchase distribution is similar to the distribution of households in the general population The top two income groups comprise 47.3% of avocado purchases but only 39.5% of the general population In the Super Heavy group, the top two income groups account for an even larger share of avocado purchases (48.4%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light households demographic information
27
Married households make up 63% of the general population but 72% of avocado purchases
% pop
• •
$ Purchases
$ Purchases
$ Purchases
Married households account for 62.9% of households in the general population, but account for a greater percentage of avocado purchases (71.7%) In the Super Heavy group, Married households account for an even larger share of avocado purchases (73.6%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light households demographic information
28
White households account for 72% of avocado purchases, slightly less than their share of the general population
% pop
• • •
$ Purchases
$ Purchases
$ Purchases
White households account for 76.4% of the general population, but they account for 71.7% of avocado purchases Asian and Other households account for a larger share of avocado purchases (19.8%) than their representation in the general population (11.2%) In the Super Heavy group, Asian and Other households account for an even larger share of avocado purchases (21.9%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light households demographic information
29
Non-Hispanic households make up 88% of the general population but only 76% of avocado purchases
% pop
• • •
$ Purchases
$ Purchases
$ Purchases
Non-Hispanic households account for 87.7% of households in the general population, but a lesser percentage of avocado purchases (76.0%) Hispanic households account for a larger share of avocado purchases (19.9%) than their representation in the general population (11.4%) In the Super Heavy group, Hispanic households account for an even larger share of avocado purchases (21.5%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light households demographic information
30
Households with 2 people account for the largest share of avocado purchases
% pop
• • •
$ Purchases
$ Purchases
$ Purchases
Households with 2 people account for 32.1% of avocado purchases Combined, households with 3, 4 and 5+ people account for a larger share of avocado purchases (49.1%) than their representation in the general population (40.7%) In the Super Heavy group, households with 3, 4 and 5+ people account for an even larger share of avocado purchases (50.8%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light households demographic information
31
Households without children account for a larger share of avocado purchases than households with children
% pop
• • •
$ Purchases
$ Purchases
$
$ Purchases
Households without children make up two-thirds of the general population, but a lesser share of avocado purchases (59.1%) Households with children account for a larger share of avocado purchases (40.9%) than their representation in the general population (33.2%) In the Super Heavy group, households with children account for an even larger share of avocado purchases (42.4%)
Super Heavy and Heavy households account for 91% of total avocado purchases. Please see appendix for Medium and Light households demographic information
32
APPENDIX ADDITIONAL DEMOGRAPHIC DETAIL 33
Demographics – Age
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases
34
Demographics – Households Income
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases
35
Demographics – Marital Status
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases
36
Demographics – Race
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases
37
Demographics – Hispanic vs. Non-Hispanic
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases
38
Demographics – Household Size
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases
39
Demographics – Households with Children
% pop
$ Purchases
$ Purchases
$ Purchases
$ Purchases
$ Purchases
40
Annual purchase trips and spend per trip opportunity: +1% increase valuation Number of Trips Opportunity Current Purchase Household Current $ Current # Group
Spend
of Trips
New Purchase Dollars
#
Dollars (Spend *
+1% Increase (Spend * New Trips *
of Buyers
Trips * Buyers)
in # of Trips
Buyers)
Opportunity (New Purchases Old Purchases)
Super Heavy
$4.639
15.041 17,245,397
$1,203,301,005
15.191
$1,215,334,015
$12,033,010
Heavy
$2.366
7.305 17,259,362
$298,304,435
7.378
$301,287,480
$2,983,044
Medium
$1.870
3.545 17,207,774
$114,072,916
3.580
$115,213,646
$1,140,729
Light
$1.242
1.536 17,243,367
$32,895,377
1.551
$33,224,331
$328,954
Spend Per Trip Opportunity Current Purchase Household Current $ Current # Group
Spend
of Trips
#
Dollars (Spend *
of Buyers
Trips * Buyers)
New Purchase Dollars +1% Increase (New Spend * Trips * in Spend
Buyers)
Opportunity (New Purchases Old Purchases)
Super Heavy
$4.639
15.041 17,245,397
$1,203,301,005
$4.685
$1,215,334,015
$12,033,010
Heavy
$2.366
7.305 17,259,362
$298,304,435
$2.390
$301,287,480
$2,983,044
Medium
$1.870
3.545 17,207,774
$114,072,916
$1.889
$115,213,646
$1,140,729
Light
$1.242
1.536 17,243,367
$32,895,377
$1.254
$33,224,331
$328,954
41
Q4 vs. Q3 opportunity gap calculation Household Penetration Opportunity
Household
Q3 Purchase
Q4 Purchase
Q3
Q4
Group
Dollars
Dollars
Penetration
Penetration
Dollars Per Point of Q4
Penetration Point
Penetration (Q4 Purchase
Gap
Opportunity ($ Per
Dollars/Q4 Penetration * 100) (Q4 Pen - Q3 Pen)
Point * Pen Gap)
Super Heavy $328,894,440 $258,446,009
90.289%
86.710%
$2,980,579
-3.579
$10,667,492
Heavy
$81,195,913
$59,261,841
76.631%
69.810%
$848,902
-6.821
$5,790,360
Medium
$30,929,246
$22,096,357
54.950%
46.752%
$472,629
-8.198
$3,874,614
$8,728,480
$6,217,609
33.530%
25.559%
$243,265
-7.971
$1,939,065
Light
Spend per Household Opportunity B Household
Q4 # of
Group
Buyers
Q4 Spend Per Q3 Spend Per Household
Household
A
Q4 Purchases at Q4 Spend Rate Q4 Purchases at Q3 Spend Rate Gap
(Q4 Buyers * Q4 Spend Rate)
(Q4 Buyers * Q3 Spend Rate)
Opportunity (A - B)
Super Heavy
14,953,539
$17.283
$21.123 -$3.840
$258,442,017
$315,863,607
$57,421,590
Heavy
11,781,660
$4.918
$6.139 -$1.221
$57,942,202
$72,327,608
$14,385,406
Medium
7,333,865
$2.747
$3.271 -$0.524
$20,146,127
$23,989,073
$3,842,945
Light
4,614,179
$1.411
$1.510 -$0.099
$6,510,606
$6,967,410
$456,804
42
Thank You
43
