What’s driving demand around the globe   united states - dennis simonis
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  • 1. International Macadamia SymposiumGlobal Conference – Brisbane, AustraliaU.S. Market Profile Dennis J. Simonis September 2012
  • 2. U.S. Economic Environment Economic Measure 2008 2009 2010 2011 GDP (% chg) 2.2% -1.7% 3.8% 1.7% For Use by Intended Recipient Only Unemployment (%, SA) 5.8 9.3 9.6 9.2 Consumer Price Inflation (% Chg) 3.8% -0.3% 1.6% 1.7% Retail Sales (% Chg) -1.0% -6.4% 6.6% 6.5% Residential Permits, Total (Mil) 3.6 2.3 2.4 3.5 2 Source: Moody’s, February 2011
  • 3. Many consumers pessimistic For Use by Intended Recipient Only 3 Personal Financial Health versus Last Year % of Consumers Source: Moody’s, February 2011
  • 4. And expect more COL increases Improve Pt Chg YA (2.6) For Use by Intended Recipient Only (0.1) (7.1) 4 Consumer Perceptions of Economic and Financial Health % of Consumers Source: Moody’s, February 2011
  • 5. U.S. Snack Market Profile For Use by Intended Recipient Only5
  • 6. Snack food industry overview For Use by Intended Recipient Only 6 • Large industry generating $67.7 billion in FDMWC during 2010 Source: Symphony/IRI Group “State of the Snack Industry 2010”
  • 7. Snack food industry overview For Use by Intended Recipient Only 7 • Overall flat sales with some segments growing +5% annually Source: Symphony/IRI Group “State of the Snack Industry 2010”
  • 8. Snack food market drivers For Use by Intended Recipient Only The Health & Company Satiation PortabilityEconomy Wellness Values 8
  • 9. Consumers more health focused 71% of consumers For Use by Intended Recipient Only are trying to eat healthier 9 Source: Symphony/IRI Group “State of the Snack Industry 2010”
  • 10. Influencing snack choices 60% of consumers are trying to eat foods that 40% of consumers help prevent health problems and/or manage existing health view snacks as an For Use by Intended Recipient Only conditions important part of a healthy eating plan throughout 24% of consumers seek snacks that offer benefits the day beyond basic nutrition 10 Source: Symphony/IRI Group “State of the Snack Industry 2010”
  • 11. Snack consumer driversProven attributes Emerging attributes • Low Fat 50% • For Use by Intended Recipient Only Low Salt/Sodium 45% • Low Cholesterol 47% • All Natural/Natural 39% • Low Sugar 47% Ingredients • High Fiber 46% • Gluten Free 37% • Low Calorie 45% • Whole Grains 44% 11 Important Product Attributes Source: Symphony/IRI Group % of Consumers “State of the Snack Industry 2010”
  • 12. Emerging attributes potential Organic/Natural Snacks Gluten Free Foods For Use by Intended Recipient Only 12 Source: Symphony/IRI Group “State of the Snack Industry 2010” Packaged Facts, “2011 Gluten Free Foods Report”
  • 13. Healthy outpacing indulgentNutritional Snacks/Trail Mixes +9.8%Yogurt +8.1% TotalSnack Nuts +7.6% Healthier +4.4%Snack/Granola Bars +7.4% For Use by Intended Recipient OnlySalsa +6.7%Prepared Pudding +13.7%Chocolate Covered Salted Snacks +13.5% TotalDried Meat Snacks +10.0% IndulgentRfg. Appetizers/Snack Rolls +8.9% +1.2%Chocolate Candy +4.7% 13 FDMx $ Growth Source: Symphony/IRI Group 2011 v 2010 “State of the Snack Industry 2010”
  • 14. Causing a share shift For Use by Intended Recipient Only 14 Share of Dollar Sales- FDMx 2010 v 2006 Source: Symphony/IRI Group “State of the Snack Industry 2010”
  • 15. Satiation is an important benefit For Use by Intended Recipient Only 15 Perception of the Role of Snacks % of Consumers Source: Symphony/IRI Group “State of the Snack Industry 2010”
  • 16. Portability is also important• Consumers are spending more time in transit• Products that provide healthy satiation are benefitting 39% For Use by Intended Recipient Only of consumers seek snacks that can be eaten on the go 16 Source: Symphony/IRI Group “State of the Snack Industry 2010”
  • 17. Company Values Do Matter• Customers that care about healthy eating care about: • Environmental and safe growing practices • Green packaging • Clean ingredient statements • Do you have a higher “cause”? • Key Partnerships and Influencers • Doing business ethically
  • 18. Snack Nut Segment For Use by Intended Recipient Only18
  • 19. Snack nut sales Sales of nuts, 2005-15 7,000 6,500Millions of dollars ($) 6,000 5,500 5,000 For Use by Intended Recipient Only 4,500 4,000 3,500 3,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (est.) (fore.) (fore.) (fore.) (fore.) (fore.) • Nut sales were $5B in 2010, up 46% versus 2005 • Health is the primary sales driver • Favorable trends will drive 6% CAGR through 2015 19 Source: The Mintel Group Nuts and Dried Fruit Report, January 2011
  • 20. Snack nut consumer Past month snack consumption, by gender, September 2010 Percent of respondents (%) 0 10 20 30 40 50 60 70 80 90Fresh fruit 79 84 Chips 83 82 Crackers 60 68 For Use by Intended Recipient Only Nuts 62 64Vegetables 56 66 Popcorn 51 59 Pretzels 41 44Dried fruit 26 Male 30 Trail mix 26 Female 27 • Over 60% of consumers snack on nuts monthly • Only Fresh Fruit and Chips are consumed at a higher rate 20 Source: The Mintel Group Nut and Dried Fruit Report, January 2011
  • 21. Snack nut consumer For Use by Intended Recipient Only• Consumers view nuts as a good source of energy• Energy is a key benefit that is being used to increase sales 21 Source: The Mintel Group Nuts and Dried Fruit Report, January 2011
  • 22. U.S. Macadamia Nut Market For Use by Intended Recipient Only22
  • 23. IMS Conference – September 2012U.S. Supply Metric Tons 2010 2011 2012 est. Domestic Production 3,890 4,500 4,300 Kernel Imports Kenya 1,498 2,578 2,600 For Use by Intended Recipient Only S. Africa 2,336 2,437 2,500 Australia 1,384 396 750 All Others 2,013 2,026 1,950 Total 7,231 7,437 7,800 Kernel Exports (733) (735) (800) Consumption 11,202 11,300 11,300 Est. Global Crop 27,574 29,000 32,500 Est. % of Global Crop 40.6% 39.0% 34.8% 23 Source USDA NSS Reports
  • 24. Macadamia commodity priceHistorical and Projected Price per pound$8.00$7.00$6.00$5.00$4.00 For Use by Intended Recipient Only$3.00$2.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016• Pricing driven up primarily by increased demand, China consumption and lower then expected Australian crop • Weather has affected crop size • Pricing is projected to decline as the global crop increases • Normal weather in Australia 24 • New acreage in South Africa
  • 25. Continental U.S. macadamias Situation •52 weeks FDM sales ending were $10.0MM (-6.0%) •Private label is the leading brand with a 49% share •Mauna Loa is #2 with a 34% share For Use by Intended Recipient Only •Macadamia sales shifted to other nuts, primarily almonds Key issues •Loss of distribution in major continental US FDM retailers •Lack of brand support with consumers and trade •Lack of product innovation capitalizing on wellness trends 25 (1) IRI FDM Sales data
  • 26. Macadamia nut consumer For Use by Intended Recipient Only 26 Source: The Mintel Group Nuts and Dried Fruit Report, January 2011
  • 27. IMS ConferenceU.S. Macadamia ConsumptionMix by Geographic Market: Hawaii 20 % 2.200 MT For Use by Intended Recipient Only U.S. Mainland 80% 9.100 MT Total 100 % 11.300 MT 27 • Internal estimates only
  • 28. IMS ConferenceU.S. Macadamia ConsumptionContinental USMacadamia Nuts and Related ProductsMix by Channel($ million) For Use by Intended Recipient Only Grocery 23.0 38% Drug 3.4 6% Mass 0.8 1% Club 33.3 55% Total 60.5 100% Internal estimates only. 28
  • 29. IMS ConferenceU.S. Macadamia ConsumptionUS Market Potential• If marketed aggressively and properly, the U.S. market could absorb 100% of the global macadamia crop. • Direct selling opportunities offer tremendous potential • Club stores, mainly Costco, are carrying the weight, but Food, Drug and Mass channels are largely underserved • Health attributes have not been adequately communicated • Inconsistent quality of foreign kernel has been an issue • Consistent supply is a challenge in the current market