Reimagining Health and Wellness Presented by Laurie Demeritt, CEO, The Hartman Group Reimagining Health and Wellness

© 2013 The Hartman Group, Inc

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Hartman Group Overview About The Hartman Group

The Hartman Group is a consumer culture consultancy serving consumer packaged goods companies, retailers, and organizations in foods and beverages, foodservice, personal care, pharmaceutical, technology, shopper marketing and other businesses that comprise the consumer marketplace. Powered by primary qualitative, quantitative and trends research we know how consumers live, shop and use brands, products and services within the contexts of real life. We specialize in understanding how consumer attitudes, lifestyle and behaviors lead to purchase. We are an organization of more than 40 dedicated, curious and driven social scientists, marketers, numbers geeks and

designers committed to one goal: your success. Reimagining Health and Wellness

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Presentation Overview Evolving Food Culture and Changing Eating Occasions Health and Wellness Today

Expressions of Health and Wellness • Fresh, real, less processed • Organic

• Sustainable

Retail Landscape Parting Thoughts

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Evolving Food Culture and Changing Eating Occasions Reimagining Health and Wellness

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Who We Are as a Nation Has Changed Today •

70% of U. S. households have no children under the age of 18, down 23% since 1960



28% of U.S. households are single person households



The U.S. has the highest percentage of single-parent families among developed countries



46% of primary shoppers are men

Tomorrow

Reimagining Health and Wellness



By 2015, those aged 50+ (Baby Boomers and Silent Generation) will represent 45% of the US population



By 2015, Millennials will comprise over 1/3 of adults in the US



By 2050, the Hispanic population will double from 16% in 2010 to over 30%

© 2013 The Hartman Group, Inc

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American Culture At Large Is Changing Too

TRADITIONAL CULTURE Status Quo: Utilitarian

CONSUMER CULTURE Distinction: Experiential

REIMAGINED CULTURE Creative Consumption: Imagination

clear societal roles

families are democracies

families as a social network

belief in rules, hierarchy

relativist & transient values

values in flux

class-based identity

lifestyle-based identity

malleable identity

focus on basic needs

focus on experience & desires

focus on creation

production drives economy

consumption drives economy

co-design, customization

quality as uniformity

quality as distinctions

quality as self-expression

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And, Therefore, Food Culture is Shifting

PAST Planned, Rational, Utilitarian

PRESENT Distinction, Specialization, Authenticity

S O M B E R , S E R I O U S , U N I F O R M , P R E D I C TA B L E ,

R I C H E X P E R I E N C E , Q U A L I T Y, D I V E R S I T Y,

F U N C T I O N A L , R E L I A B L E , E F F I C I E N T,

ADVENTURE, PLEASURABLE,

ECONOMICAL

BEAUTIFUL

PACKAGED/PROCESSED

FRESH/LESS PROCESSED

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The influence of food culture and changing demographics in the U.S. are impacting how, when and what consumers eat. Using OCCASIONS as the lens through which to view these changes is the best way to capture, leverage and capitalize on the opportunities. Occasions include: Who: what person(s) were involved When: circumstance or time period (routine snack, holiday dinner) Where: the place of consumption (at home, office, on the go) What: the key needs relevant to the occasion Why: the emotional stakes of the occasion Cultural perspective: instrumental, savoring or inspirational Reimagining Health and Wellness

© 2013 The Hartman Group, Inc

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Eating Occasions are Numerous and Differentiated

1.INSTRUMENTAL AFTERNOON SNACKS 9.9% 2. SAVORING DINNERS 9.4% 3. INSTRUMENTAL LUNCHES 9.1% 4. INSTRUMENTAL BREAKFASTS 9.1% 5. INSTRUMENTAL DINNERS 9.0% 6. SAVORING AFTER DINNER SNACKS 7.0% 7. INSTRUMENTAL MORNING SNACKS 6.5% 8. INSTRUMENTAL AFTER DINNER SNACKS 6.3% 9. SAVORING LUNCHES 6.1% 10. SAVORING BREAKFASTS 5.4% 11. SAVORING AFTERNOON SNACKS 5.0% 12. INSTRUMENTAL EARLY MORNING SNACKS 4.6% 13. INSTRUMENTAL LATE NIGHT MEALS 4.3% 14. 15. Source: Hartman Eating Occasions Compass, 2012 ; N= 14,697

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SAVORING LATE NIGHT MEALS 3.1% SAVORING MORNING SNACKS 2.6% SAVORING EARLY MORNING SNACKS 2.5% © 2013 The Hartman Group, Inc

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Occasions Tell Us That…..There are Now More Snacks Than Meals Snacking has risen from 49% of all eating occasions in 2010 to 53% of all eating occasions in 2012. Snacking:

• Is no longer infrequent • Is no longer just for children (55% of all Millennials eating occasions are snacking vs. 52% of Boomers eating occasions are snacking) • Is no longer just about indulgence (56% wanted something healthy for their last snack occasion)

• Is no longer just taking place in the afternoon (after dinner snacking has increased 54% in the past three years and pre-breakfast snacking has increased 15%) Reimagining Health and Wellness

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Occasions Tell Us That…..Many Consumers Now Eat Alone 46% of all adult eating occasions happen alone, with nobody present. This is a 7% increase from 2010.

40% of all adult meals (not just snacks) are eaten alone. 31% of adult alone-eating is about savoring, a higher quality food experience.

Eating alone: • Has become as normal as eating together • Allows for a new way of eating that is customized and personalized • Allows for new types of connectivity with others

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Occasions Tell Us That…..Immediate Consumption is Increasing Fewer than half of the trips to the grocery, club and mass discount stores are pantry stocking trips (and the meaning of “stock up” shopping has changed among consumers). Immediate Consumption (consuming the product within an hour of purchase) drives nearly 1 out of 10 adult eating occasions. The largest adult immediate consumption occasions are: • Instrumental afternoon snack • Savoring dinner • Instrumental lunch

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More than three-quarters of all eating occasions involve some prepared food

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We are Becoming a Nation of Eaters

From cook…

…to eater

EVERYONE EATS! We have become a culture of Intentional Eaters. Intentional Eaters are actively involved in food. Food is part of everyday life and is a definition of who we are. As cooks we: • Shopped for ingredients • Engaged in more planning • Did more pantry stocking • Shopped for familiar foods

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As eaters we: • Shop for meals and snacks • Are more spontaneous • Do more fill-in shopping • Shop for new and unique foods

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This Shift is Affecting the Traditional Meaning of Loyalty

Loyalty is changing for stores • Consumers prefer stores where they can always find unique products to eat • Non-food commodity items become less important • There isn’t the same reliance on pantry staples and ingredients • Over time, consumers are increasing the number of stores they shop for food and beverage Loyalty is changing for brands • Consumers who think of themselves as eaters will try a new brand just to have something different • Eaters are more brand agnostic than cooks Reimagining Health and Wellness

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Eaters Have Influenced the Rise of Private Label and Specialty Brands

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Health and Wellness Today Reimagining Health and Wellness

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Wellness in Now Seen as “Positive” Rather than “Perfunctory” C O N S U M E R S M O V I N G T O WA R D T H I S M O D E

POSITIVE, EXPERIENTIAL | CONTEMPORARY + GROWING

VITALITY

TAKING CARE

PREVENTATIVE

LONG-TERM

PROACTIVE

INDULGENCE

EXPERIENCE

FUN

ILLNESS

CRISIS

TREATMENT

QUICK FIX

REACTIVE

MEDICINAL

HAVE TO

BORING

P E R F U N C T O R Y | D O M I N A N T M O D E O F T H E PA S T C O N S U M E R S M O V I N G AWAY F R O M T H I S M O D E Reimagining Health and Wellness

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Wellness Has Become Quality of Life

Consumers have a vision for how they want to live and even what they don’t want life to be like Individuals are unique in what that vision may entail, how forwardlooking those aspirations are (today, tomorrow, 30 years?), and to what extent they intentionally make choices to achieve that quality of life “To me the point of doing these things now is to be able to live the kind of life I want later. I want the freedom to enjoy my family, do things important to me, be independent.” Reimagining Health and Wellness

Above reflects a consumer’s explanation of what living well means to her © 2013 The Hartman Group, Inc

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Emotional Wellness is Becoming Paramount

“Not being ill” has decreased to number 5 from number 2 in 2007. Consumers are focusing slightly less on illness and more on other meanings of wellness

Q10/Q15. To me, health and wellness means … Base n=2928-2007; 2744-2010.

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There is important overlap between health and wellness and indulgence in several categories

Product Freshness cues Unique flavor profiles Premium cues

HEALTH & WELLNESS

Integrity of ingredients Narrative

INDULGENCE

Usage Occasions Moderation Balance Pleasure

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Wellness Segmentation

13%

62%

“Wellness is a comprehensive lifestyle. It’s physical, emotional, spiritual. And being preventive and proactive about things.”

25%

─ Shelley, Core Consumer

“For my lifestyle, I want to spend less time in the car.” ─ Kevin, Mid-level Consumer

“I have to laugh every single day.” ─ Bethany, Periphery Consumer

Core is the smallest segment and most intensely involved - early adopters, trendsetters, evangelists

Mid-level is the majority of consumers and not as intensely involved with or committed as Core consumers though they exhibit some attitudinal and behavioral characteristics of the Core

Periphery is where consumers least involved in Wellness reside.

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The Core Wellness Consumer Leads the Trends

Periphery Price Convenience Brand

Purchase Criteria

Mid-level

Core

Experience, Expert Opinion Fun/Enjoyment Quality

Opportunity (The Periphery borrow quality cues from the Mid-level)

Strategic Implication

Add value beyond Price, Convenience

Reimagining Health and Wellness

Authenticity Sustainability Knowledge Quality

Trends

(The Mid-level is influenced by the Core)

Combine pragmatic sensibilities with Core aspirations and quality distinctions

Track their dynamic values and behavior due to their influence on future market trends

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The Meaning of Wellness Becomes More Sophisticated as Consumers Evolve

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There are Significant Differences in How the Segments Make Food Choices

Q55. When shopping at a store for food, how important are the following features to you when deciding which product to purchase? (Top-2 box: Extremely/Fairly important). Bases: Overall (n=778), Core (n=104), Mid-level (n=560), Periphery (n=114). 2011. Reimagining Health and Wellness

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Consumers are continuing to invest more in fresh wellness product categories than any other categories

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Day-to-Day Concerns are Triggering Attitudinal Change Among Younger Cohorts

“Right now I’m getting my MBA at night and working full-time and trying to fit in time for my friends. Just juggling everything is my big challenge right now, not really physical ailments.” ~Dan, age 30, Mid-level Consumer

Q18: What caused you to change your views on health and wellness? Base: consumers that changed their views on what health & wellness means n=1404. 2010

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The Internet Has Become the Principal Source of Wellness Information internet sites dedicated to health information (e.g., WebMD) product label

28%

doctor books/magazines friend/other relative

immediate family member tv/radio newspapers advertisements

internet sites not dedicated to health information (e.g., Wikipedia) pharmacist store display

none of these

57%

36% 37%

31% 30%

36%

30% 28% 27% 25% 32% 25%

20% 22% 22% 19% 16% 19% 18% 14% 13% 16% 18% 22% 16% 14% 15% 15% 13% 10% 13% 12% 10% 21% 24%

45%

34%

42%

Core consumers over-index on all the top sources of information. The Periphery are more likely than others to listen to friends and relatives if they utilize any sources at all.

Core Mid-level Periphery

Q36. In the past 3 months, which of the following information sources have you used to learn more about health and wellness? Bases: Overall (n=1,713), Core (n=217), Mid-level (n=1,198), Periphery (n=298). Reimagining Health and Wellness

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Wellness Category Adoption is Cumulative as Knowledge Grows Categories are not simply replaced, but added to those presently and habitually used

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Specific Food Attributes Ladder to Health Benefits Ingredients added for special health benefit (e.g., added calcium or fiber)

64%

Higher in nutrients (e.g., protein, fiber, whole grains, Omega-3, etc.)*

61%

Ingredients I recognize

60%

No trans fats

60%

Lower in calories (due to fat, carbohydrates or sugars)

57%

Lower in salt

57%

Made with simple, real ingredients

56%

Made with natural ingredients

54%

Absence of artificial ingredients

50%

Absence of artificial sweeteners (e.g., aspartame, Splenda, saccharin)

49%

No high fructose corn syrup

48%

Absence of preservatives

46%

Absence of artificial flavors

45%

Absence of artificial colors

41%

Shorter list of ingredients

41%

Absence of ingredients I'm allergic to (e.g., gluten, nuts, dairy) Made with local ingredients

36% 33%

Made with seasonal ingredients

32%

Made with organic ingredients

32%

* Complete survey item read “Higher in nutrients (e.g., protein, fiber, whole grains, Omega-3, probiotics, vitamins, minerals)” Q56. How important are the following attributes to making a FOOD PRODUCT good for your HEALTH AND WELLNESS? [Top-2 box (Extremely/Fairly important) in 5-point scale.] Bases: Respondents assigned to food or company category: Consumers in general (n=1,160). 2011.

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The Nutrition Facts Panel is the Key Indicator of Health Benefits

Q50. Earlier, you indicated that you get health and wellness information from product labels. On what occasions do you use the following kinds of information to judge the healthfulness of products when shopping for food and beverages? Bases: Respondents who have used product labels to learn more about health and wellness in the past 3 months. Overall (n=570), Core (n=99), Midlevel (n=387), Periphery (n=84). 2011.

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Consumers are INCREASING Various Ingredients in Their Diets

Slow and steady growth: Fiber and calcium Continuing to rise: Whole grains and protein Rising stars: Vitamin D and Omega 3

Q32. Please indicate whether you DELIBERATELY avoid/reduce or add/increase any of the following ingredients or nutrients in your daily diet. – add/increase. Base n=2744.

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Top Ingredients that Consumers AVOID

Cholesterol

61%

Saturated fat

61%

Trans fat

58%

Sodium/Salt

56%

Preservatives

50%

High fructose corn syrup (HFCS)

50%

MSG

49%

Artificial flavors

47%

Artificial colors/dyes

44%

Aspartame (e.g., Equal)

44%

Saccharin (e.g., Sweet N' Low)

44%

Refined sugar

41%

Caffeine Sucralose (e.g., Splenda)

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39% 32%

Q32. Please indicate whether you DELIBERATELY avoid/reduce or add/increase any of the following ingredients or nutrients in your daily diet. Base n=2744.

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Food is Used to Prevent Many Health Conditions but its Reliance is not as Strong for Treatment Food Used to Treat

Food Used to Prevent Diabetes

58%

Diabetes

Overweight

57%

Overweight

High cholesterol

56%

Digestive disorders

48%

Cancer

46%

Heart or cardiovascular…

42%

Food allergy/sensitivity

42%

Eating disorders

42%

High blood pressure

41%

Memory/mind health

28%

Osteoporosis

27%

Hyperactivity

Auto Immune Disorder

24% 22%

Menopause difficulties

21%

Sensitivity to irritants

20%

ADHD

32% 59%

High cholesterol

30%

Digestive disorders Cancer

27%

10%

Heart or cardiovascular…

21%

Food allergy/sensitivity

45%

Eating disorders High blood pressure

Memory/mind health Osteoporosis Hyperactivity

48% 15% 18% 10% 17%

Auto Immune Disorder

12%

Menopause difficulties

11%

Sensitivity to irritants

11%

ADHD

Food is still relied upon for certain obvious issues

9%

18% Q21. Are you treating or preventing these health conditions with food? Base: Consumers that are preventing or treating health condition (n varies from 235 for ADHD to 1667 for High cholesterol).

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Expressions of Health and Wellness Reimagining Health and Wellness

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The Meaning of Food Quality is Evolving

The trend toward fresh, real, less processed foods is a historical process

trends

Cultural

Consumers were in pursuit of … Reliability

Health & Wellness

Efficiency

Experience

Uniformity

Authenticity

Predictability

Distinction

1950s / 1960s expectations

FACTORY-MADE represented Quality

Quality

Consumers are now in pursuit of …

Big brands delivered convenience, consistency, affordability and safety through mass produced food.

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Now REAL and FRESH represents Quality There is a cultural shift toward products that are not perceived as factory made.

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The Perimeter of the Store is Resonating with Consumer Health Aspirations

Consumers link the processed foods found in the center aisles with: • Weight problems • Various health conditions (e.g., diabetes)

• Behavioral problems (e.g., ADD, energy crashes) • Food allergies

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Consumers look to a wide range of signs as they evaluate freshness and quality Common industry understanding of fresh:

Consumer understanding of fresh:

Fresh foods are those in their most natural state without any processing or preservatives, and minimal, if any, packaging.

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Product Cues are Becoming More Important than Specific Ingredient “Call-outs”

What’s in it?

Negatives, positives, uniqueness

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How’s it made?

Processing, production stories

How’s it packaged?

Ingredient list, packaging materials and imagery, store placement

Who made it?

Origin and producer narratives

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Cues: What’s In It Absence of negatives No artificials, preservatives or “chemicals” • No trans fats, hydrogenated oils • No HFCS •

The following are important when I shop for healthy foods…..

Presence of positives/inherently health Organic, seasonal, local • Complex carbs, protein, fiber, whole grains • Low sugar, “good” fats • No GMOs •

Unique varietals Heirloom products • Heritage meats •

Source: Healthy Eating Trends.. Q19: How important would you say each of the following descriptions is to your household when shopping for healthy foods? Think about what really matters to you when reading labels and product descriptions. – Top-2 box scores on a 8-point scale ranging from 0=“Don't know/Never heard of this” to 7=“Extremely important to healthy food shopping.” Base n=1501. 2009.

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Cues: How’s It Made Known processing method • “Something I could make at home” • Descriptive words such as simmered, steamed, etc.

Minimal processing • Product retains more of its “real” ingredients and flavors

Unique production techniques tell a story of how a product “came to be” • More care went into producing the product • There was a “human touch” as part of production

• “Hand picked”, “specially selected”, “harvested when ripest”

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Cues: How’s It Packaged/Where’s It Placed

Ingredient list Short • Recognizable •

Packaging • • •

See through packaging Images of raw ingredients Close-in expiration date

In-store • Perimeter store placement • Refrigerated section

Source: Wellness Lifestyle Insights: Q29: Please read each statement and indicate how well it describes your own behavior regarding shopping for food and beverages. – Describes me well and describes me somewhat (n= 2744). 2010.

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Cues: Who Made It Want to understand who is behind a product •

Believable/trustworthy



Actual people involved in production



Values relevant to their lifestyle



Inspiration!

Geographic origin narratives also provide points of distinction and quality for products •

Certain categories of products “should” come from only specific growing regions



“Local” (subjective in nature)



Terroir/provenance

Narratives must include three key elements: • Transparency – the story must be true/verifiable • Raison d’etre – there must be a compelling reason for why the product came to market • Emotional hook – the story must resonate with consumers at an emotional level, not just a functional level Reimagining Health and Wellness

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Today, about three quarters of U.S. consumers purchase organic food/beverage products

Q7. How often have you used organic foods or beverages in the past three months? If you use some organic products more often than others, please indicate the greatest frequency. For example, if you used organic milk daily and organic fruit occasionally, choose daily. Base: All respondents (n=1,569).

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Organic is primarily understood as pertaining to what happens to food at origin (e.g. the farm, the plant, the animal) 64% 64% 62% 65% 65%

Absence of pesticides

60% 62% 54%

Absence of herbicides

62%

57% 59% 64% 56%

Absence of growth hormones

61% 59%

No artificial flavors-colors-preservatives

All Organic Users

56%

Core

59% 58% 55%

Inner Mid-level

51%

Outer Mid-level Periphery

55%

59% 57% 55%

Absence of antibiotics 48%

54% 62% 55% 52% 50%

Absence of genetically modified foods

48% 52% 49% 49%

Absence of food irradiation 44%

Q3. From the following list, what properties do you think are implied or suggested by the term "organic"? Bases: Respondents who used organics in past 3 months (n=1,120), Core (n=250), Inner Mid-level (n=261), Outer Mid-level (n=428), Periphery (n=181).

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Natural is primarily understood as what happens to the food after it is grown (e.g., processing steps, production additives)

No artificial flavors-colors-preservatives

53% 53% 49%

Absence of growth hormones

45%

47%

Real

42%

48%

46% 48% 42% 43%

43% 44% 43% 46%

Absence of pesticides

44% 43% 42% 45%

Fresh

Absence of antibiotics

40% 41%

53%

51%

All Organic Users Core

50%

Inner Mid-level Outer Mid-level

50%

Periphery

49% 50%

45% 46% 46% 42% 40% 45%

Absence of herbicides

53%

45%

46%

Absence of genetically modified foods

57%

50%

41%

Pure

56% 56%

41%

50%

44% 42%

Q2. From the following list, what properties do you think are implied or suggested by the term "natural"? Bases: Respondents who used organics in past 3 months (n=1,120), Core (n=250), Inner Mid-level (n=261), Outer Mid-level (n=428), Periphery (n=181).

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Despite the growing significance of natural foods, consumers remain unconvinced by natural as a marketing term



Consumers view “natural” as a subjective rather than objective term: There are no agreed upon criteria for what it means.



Consumers believe that anyone can put the word “natural” on their product, regardless of what it contains.



Even as the Organic label becomes diluted, it retains more meaning on packaging because consumers know there are regulations that back its use.

!

Consumers are highly suspect of the natural label on packages.

Natural is a marketing ploy everybody knows labels don’t mean what they say. Sometimes I feel like these companies think we’re all stupid.” – Mark, Seattle

When formulating truly natural products, consumers will be most receptive to messaging that does not rely exclusively on the word “Natural.”

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Organic and natural produce, meat and dairy absorb most household organic dollars 28%

Fruits and Vegetables

53%

33%

13% 12% 26%

Meats, Poultry, Fish and Eggs 8%

52%

28%

12%

24%

Dairy Products

49%

24%

11% 10%

21%

Cereals and Grain Products and Bakery Products 6%

42%

25%

8%

All Organic Users* 20%

All Other Food

9% 7%

5%

10%

42%

21%

Core

Inner Mid-level 19%

Non-Alcoholic Beverages (other than Dairy or 100% Fruit/Vegetables Juices)

Core and Inner Mid-level consumers spend far more on Organic and Natural products than do the Outer Mid-level or Periphery segments

21%

37%

Outer Mid-level Periphery

* All organic users who purchased organics in past 3 months. Q16. What portion of the last 30-days spending in each category was spent on organic, natural, or hormone-free foods and beverages? Bases: All respondents who purchased organics in past 3 months (n=1,036), Core (n=250), Inner Mid-level (n=261), Outer Mid-level (n=382), Periphery (n=143). Source: Organic and Natural 2012 survey (fielded July 2012).

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Organic users are most willing to try fresh fruits and vegetables as they enter into the World of Organics Example: 24% of organic users tried organic fresh vegetables first and 55% included them as one of the 1st five organic categories they tried

Fresh vegetables

50%

Fresh fruit

% Organic Users

40%

Milk

30%

Eggs Yogurt

20%

Juice

Red meat

Breads White meat Cheese

10%

0% 1st categ. tried

Among first 2 categs. tried

Among first 3 categs. tried

Among first 4 categs. tried

Among first 5 categs. tried

Q19. Thinking back to when you first tried organic products, what was the [first/second/third/fourth/fifth] category of organic products that you tried? Base: All organic users who purchased organics in past 3 months (n=1,036). Source: Organic and Natural 2012 survey (fielded July 2012)..

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Retail Landscape Reimagining Health and Wellness

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Consumers are Constantly in Shopping Mode

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Culture is Changing How We Shop for Food

Planning is hard when we eat in the moment according to our moods, whims and ‘schedules’. Even when plans are made [lunch is brought from home] we’re likely to upgrade for a better offer because food is everywhere, enticing us. We are shopping up & down the food chain [from Aldi to Trader Joe’s, Walmart to Whole Foods Market].

More than 50% of “trips” to shop for food/beverage involve going to 2+ stores.

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Successful Retailers are Evolving from Mere Editors to Curators

The fastest growing banners can be seen as curators. Either because of limited selection (Dollar General, Aldi) or high quality product selection (The Fresh Market, Whole Foods Market). Reimagining Health and Wellness

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All Channels are Relatively Low in Consumer Satisfaction

grocery

dollar

club

mass

drug

% Shopped last month

92%

61%

46%

74%

78%

% Satisfied with last trip

56%

44%

45%

54%

47%

GROCERY PERFORMS BEST. Grocery is one of only two channels in which the majority of consumers were satisfied with their last trip. Despite this, there is certainly room for improvement. DOLLAR DISSATISFACTION. Shoppers often disappointed in the quality for the price and often cannot find what they need. CLUB DISSATISFACTION. Shoppers concerns about waste/spoilage and how to store large quantities continue to grow. DRUG DISSATISFACTION. Shoppers tell us that they are tied to their drug store because of their prescriptions/insurance, but are not particularly happy with the overall shopping experience. N=1,900; Club n=665; Dollar n=901; Drug n=371; Grocery n=968; Mass n=909 Reimagining Health and Wellness

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Club and grocery are home to the stock-up trip; drug and dollar trips gravitate toward immediate consumption trips

Trip Mission

grocery

dollar

club

Stock-up

47%

23%

50%

42%

29%

Fill-in

25%

23%

23%

21%

21%

Event-based

12%

8%

8%

14%

6%

Immediate Consumption

11%

21%

8%

7%

24%

mass

drug

CONSUMERS CLAIM that they still go on their weekly or monthly stock-up trips to grocery, club stores and, increasingly, mass stores but during the week the stock-up trip needs to be supplemented with fill-in trips to a variety of different channels, depending on needs, occasions, forgetfulness and, in the case of immediate consumption, hunger and thirst. According to IRI, all outlet pantry stock-up trips have declined by 1.1% of channel $ sales and quick trips have increased by 1.2% (2008 vs. 2011). For your most recent trip to a (insert selected channel), what made you initially decide to go on this trip? N=1,900; Club n=665; Dollar n=901; Drug n=371; Grocery n=968; Mass n=909 Reimagining Health and Wellness

© 2013 The Hartman Group, Inc

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The New Value Paradigm Traditional

Current

(functional)

(functional + emotional)

Price

Price

Quantity

Quantity

Convenience

Convenience Quality Price Experience Experience Lack of Waste Quantity

Consumers are now transitioning to a more purposeful and emotional perspective on value, and are asking themselves the following types of questions: •

Is this item really necessary?





Will my family actually use / consume / eat / drink this item?

Will the item in question last a long time? Will I get a lot of use out of this item?



Will I enjoy using/consuming this item?



Will the item meet my taste/efficacy/quality standards?



Will I be able to avoid throwing t he item in question away unused?

Reimagining Health and Wellness

© 2013 The Hartman Group, Inc

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The Impact of the Recession

What has changed: • More pronounced evidence of channel shifting

• More orientation to promotional strategies • Dining out less often so looking for “restaurant quality” meals at grocery stores

What hasn’t changed: • Consumers are not radically changing their food and beverage preferences » They are making trade-offs, but not leaving entire categories

• Consumers are not abandoning their interest in high quality food experiences » For example, wellness product attributes are currently a sign of product quality and are interpreted by many consumers as getting good “value” for their money

Reimagining Health and Wellness

© 2013 The Hartman Group, Inc

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Consumers “Channel Surf” for Value

THERE IS NO ONE VALUE CHANNEL, each channel has a unique value proposition that taps different dimensions of the New Value Paradigm. Consumers assess value at channels on a category-by-category basis. • Fresh departments create quality halo; premium offerings allow for distinction. • Service, safety, cleanliness, proximity, atmosphere and opportunities for discovery.

QUALITY EXPERIENCE

grocery

PRICE RELEVANCE

dollar

• Ability to procure basics at bargain-basement prices; deeply discounted national brands. • Sizing, format options allow buying-as-needed and caters to individual or family use.

QUANTITY QUALITY

club

• Routine commodities in bulk sizing allow purchase of national brands at notable price per unit. • Fresh departments provide quality comparable to grocery at a compelling price.

mass

• Everyday low price (EDLP) across categories; large selection of private brand. • Competitively priced national brands set bar for quality.

PRICE QUALITY RELEVANCE QUALITY

drug

Reimagining Health and Wellness

• Sizing and format options in many categories, including grab-n-go food caters to individual use and immediate consumption. • National brands reflect familiar quality among personal care and OTC.

© 2013 The Hartman Group, Inc

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Grocery is the Key Channel for Wellness Product Purchase

The Core is more likely to seek H+W in specialty and natural food channels

Q37. Which of the following kinds of stores do you regularly shop (i.e., at least 4 times a month) for health and wellness products? Bases: Overall (n=1,713), Core (n=217), Mid-level (n=1,198), Periphery (n=298). 2011.

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Produce is a Key Driver for Grocery Store Choice Large selection of healthy fresh/perishable foods such as fruits, vegetables, lean meats

56%

Large selection of personal care products

40%

Large selection of over-the-counter (i.e., non-prescription) medications

39%

Signs or labels at shelf indicating products’ nutritional value

36%

Large selection of vitamins and minerals

36%

Large selection of healthy prepared foods

34%

Large selection of natural and organic products, fresh and packaged

33%

Special section of the store for natural and healthy foods, beverages and products

32%

Pharmacist who supports complementary healthcare practices (e.g., naturopathy)

31%

Large selection of specialty supplements (herbals, probiotics, etc.)

30%

Health and wellness information oriented to prevention rather than treatment

28%

Health and wellness information to treat/manage specific health conditions

28%

Seamless connection between an in-store pharmacy and the rest of the store

27%

Availability of in-store health services such as flu shots, cholesterol screenings, etc.

25%

Health and wellness information tools on its website

24%

Healthy cooking "how-to" information (recipes, techniques, etc.)

23%

Health and wellness education programs about specific health topics*

23%

Health and wellness education programs about general health management Large selection of magazines and cookbooks relevant to my lifestyle

Healthy cooking "how-to" classes/demonstrations

22% 20% 19%

* Complete survey item read “Health and wellness education programs about specific health topics (e.g., weight management, diabetes, heart health)” Q75. How important are the following in-store features to making the [food] store a health and wellness destination for you? (Top-2 box: Extremely/Fairly important). Base: Respondents assigned to food store category: Consumers in general (n=1,298). 2011. Reimagining Health and Wellness

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Parting Thoughts •

Demographic shifts are changing the landscape of America – consider targeting some of the “new” households (single person, no kids, etc.)



Food culture is evolving at break-neck speed – look at the “margins” to identify the next trends



New eating occasions are emerging – explore the snacking occasions where health is a top concern



Wellness is about far more than health – target emotional concerns as well as physical



Fresh, real, less processed is a long-term trend in how consumers are describing their food goals – leverage the appropriate category cues to position your product in this space



As consumers shop more and more channels for food, retailers need to determine what their value proposition is (it’s not just about lowest price) and how they can become curators in the categories that matter to consumers

Reimagining Health and Wellness

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