Greek FMCG Market Trends
Reverse the Trend
Angelo Massaro
General Manager Greece and Italy
October 2nd, 2013
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 2
KEY MACROECONOMICS INDICATORS
The reco...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 3
GREEK FMGC SUPERMARKETS TREND
And FMCG...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 4
• Global Analytics Center of Excellenc...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 5
Volume dynamics exclusively based on a...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 6
TREND BY DEPARTMENT
The trade-off betw...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 7
VALUE SALES MONTHLY % CHANGE
Short ter...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 8
CATEGORIES PERFORMANCE MATRIX INSIGHTS...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 9
MANUFACTURERS AND PRIVATE LABELS
Every...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 10
STORE FORMATS TREND
Modernization of ...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 11
MARKET TREND OTHER CHANNELS
But that ...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 12
SHOPPER STORE SELECTION CRITERIA
Gree...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 13
FMCG PRICE INFLATION AND BASKET INFLA...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 14
VALUES SALES AND PRICE PROMOTED SALES...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 15
Sub-text sub-text sub-text sub-text s...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 16
QUESTIONS REQUIRING APPROPRIATE ANSWE...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 17
And the size of these opportunities c...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 18
CASE STUDY BRAND X (2013)
IRI has bee...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 19
What do you think?
We would like to h...
Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 20
Thanks for your attention!
FOR MORE I...
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Reverse the trend v1.0 (english)

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How to improve Greek FMCG sector performance

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  • Cash & Carry Total MarketValue SalesUnit SalesMAT Jul 13 vs MAT Jul 12-4.30%-0.60%YTD Jul 13 vs YTD Jul 12-5.80%-4.00%
  • % annual change VOL Value FMCG_Priceidx2012 -1,4% -3,1% -1,7%2013 1,1% -4,3% -5,3%2014 0,1% -2,9% -3,0%
  • Reverse the trend v1.0 (english)

    1. 1. Greek FMCG Market Trends Reverse the Trend Angelo Massaro General Manager Greece and Italy October 2nd, 2013
    2. 2. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 2 KEY MACROECONOMICS INDICATORS The recovery from the existing situation risks to be a slow process -10 -8 -6 -4 -2 0 2 4 6 2008 2009 2010 2011 2012 2013 2014 GDP Private Consumption Inflation Source: OECD Economic Outlook 93 Projection, May 2013, summary of projections
    3. 3. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 3 GREEK FMGC SUPERMARKETS TREND And FMCG sector is no exception, 250 millions will be lost by the end of 2013. Can part of that be recovered? Sources: IRI InfoScan®, FMCG DB. Data at August 2013. Data in Million EUR. Bazar and Random Weight excluded. 5,930 5,748 3,501 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2011 2012 2013 YTD 2014 Fcst -3,1% -4,4%
    4. 4. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 4 • Global Analytics Center of Excellence in Athens • 12 North America Offices – HQ in Chicago • 8 European Offices – Headquarters in UK • 3 offices in Asia Pacific and 1 office in Africa Aztec(1) • Global Operations Center in Bangalore - Partnership around the world expand coverage: CCR, Intage, BMI - Global Panel coverage via partnership with Worldpanel IRI is a global market research leader, partnering with clients to drive profitable growth from strategy development to outcome enablement • Heritage of Innovation Since 1979 - InfoScan Data (1987) - ScanKey Panel Data (1993) - First scanning data service in Greece (1998) - IRI Liquid Data (2008) • Partner to >95% of Fortune 100 CPG and Retail Companies • Full Range of Tools and Services from Comprehensive Information to Predictive Analytics to Strategic Consulting • Supported by 3,500 Professionals Globally - Deep industry and domain expertise; average associate has >15 years industry experience • 40% Organic Growth from 2007-2012 • Clients Value IRI: >95% Contract Renewal ADVISOR TO THE WORLD’S LEADING CPG AND RETAIL COMPANIES ESTABLISHED GLOBAL PRESENCE AND NETWORK 1 Aztec acquisition announced on September 4, 2013
    5. 5. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 5 Volume dynamics exclusively based on a spending review of the shopper basket TOTAL FMCG DYNAMICS Source: IRI InfoScan® FMCG DB. Data at August 2013. Volume Sales Trend = Value Sales at constant Price. Bazar and Random Weight excluded. -3.4% 1.0% -4.4% -4.4% 0.7% -5.1% Value Volume Price YTD Aug 13 MAT Aug 13 • Are FMCG manufacturers dramatically lowering their price cards? • Are we observing a loss of loyalty toward major brands? • Is there a reshaping of shopper basket?
    6. 6. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 6 TREND BY DEPARTMENT The trade-off between price and volume highlights a relevant sensitivity to price -1.7% -0.6% 3.0% 8.7% 0.9% -8.5% 1.0% -3.5% -2.5% -7.1% -10.9% -4.0% 1.8% -4.4% Alcoholic Beverages Food HBA HH Care Non Alcoholic Beverages Petfood Total FMCG Var % Price Var % Volume • What is food loss of volume describing? Is this a shift toward other channel and shopping occasions? How to attract shopper back to Supermarkets? • Non food baskets are full and purely driven by price based decisions. Volumes are there but what about margins? Source: IRI InfoScan® FMCG DB. MAT August 2013. Volume Sales Trend = Value Sales at constant Price. Bazar and Random Weight excluded.
    7. 7. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 7 VALUE SALES MONTHLY % CHANGE Short term dynamics showing that things are getting worse. Negative are reported against other negatives. -10 -8 -6 -4 -2 0 2 4 Var % vs Previous Year Underlying trend Source: IRI InfoScan® FMCG DB. Total FMCG Value Sales % Change. Underlying Trend: basic sales trend net from seasonality and irregular fluctuations
    8. 8. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 8 CATEGORIES PERFORMANCE MATRIX INSIGHTS • 42 categories performing above market averages including: - Milk - Soft Drinks - Beer - Chocolate Tablets - Margarines - Choco Wafers - Fabric Conditioners - Dishwash - Infant Milk • These categories on average are showing a better price and promotion elasticity management • Prices are down only -1,1% and volume growing above market averages (+3,1%) • Is this only due to shopper migration from other channels or there is a better trade marketing mix management? However not everything is doing badly. ¼ of the categories are growing in supermarkets Source: IRI InfoScan® FMCG DB. Matrix showing categories performing above and below Total Market Average on Volume and Pricing % Change on a MAT basis  43 Categories  25% of Value  - 1,0% decline  42 Categories  25% of Value  +3,1% growth  24 Categories  6% of Value  - 12,5% decline  124 Categories  43% of Value  - 6,2% decline -%Volume+1,0%+ - % Price - 4,4% +
    9. 9. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 9 MANUFACTURERS AND PRIVATE LABELS Everybody is playing the pricing game although with different results. The market is concentrating Source: IRI InfoScan® FMCG DB. MAT August 2013. Volume Sales Trend = Value Sales at constant Price. Bazar and Random Weight excluded. -6.5% 2.2% -2.9% -3.3% 6.6% 1.7% -3.3% -4.1% -4.5% -8% -6% -4% -2% 0% 2% 4% 6% 8% All Others Private Labels Top 25 Var % Price Var % Volume Var % Value 45,1% +0,2pp 17,7% +1,0pp 37,2% -1,2pp • Significant shift of market share points with Private Labels gaining competitive advantage. • Top branded manufacturers (still favorite destination of Greek Shopper) holding volume via price pressure • The remainder, representing 37% of the market seems to be stuck in a price war they can’t probably sustain
    10. 10. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 10 STORE FORMATS TREND Modernization of Greek retail structure making a step back. Smaller supermarkets performing better Source: IRI InfoScan® FMCG DB. MAT August 2013. Volume Sales Trend = Value Sales at constant Price. Bazar and Random Weight excluded. 8.0% 2.0% -3.0% -4.0% -3.7% -4.3% -6% -4% -2% 0% 2% 4% 6% 8% 10% 0-400 Sqm 400-1000 Sqm 1000 + Sqm Var % Price Var % Volume • Volume shift from larger surfaces to smaller? • Smaller surfaces seems to be more aggressive on price (91 and 96 index vs. large Hypermarkets) - 7,1% - 1,8% + 3,7%
    11. 11. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 11 MARKET TREND OTHER CHANNELS But that does not seem to be the case for traditional retail reporting a significant step back Sources: IRI Cash & Carry Service, IRI Traditional and Impulse service, Moving Annual Total August 2013 (*) Trend based on the basket of categories audited representing c. 40% of total channel sales -4.7% -9.7% -7.7% Cash & Carry Self Service (*) Impulse (*) Var % Value Sales
    12. 12. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 12 SHOPPER STORE SELECTION CRITERIA Greek Shopper is more demanding and willing to switch stores in order to find what he is looking for. 39% 14% 19% 21% 25% 25% 24% 30% 30% 32% 32% 36% Familiarity with the store Good Quality at Low Price Products Big Range of Prices Promotions Low Prices at Favoured Brands Brand Range 2013 2010 Source: IRI Shopper Dynamics™ . Answer to Question: What are the criteria to select stores?
    13. 13. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 13 FMCG PRICE INFLATION AND BASKET INFLATION … and his behavior is clearly showing a defensive strategy to protect his purchasing power. Source: IRI InfoScan® FMCG DB. Price Inflation calculated on Top 10000 EAN selling across 24 months representing 63% of Sales. Basket Inflation = average index of the basket price (influenced by the mix) 88 90 92 94 96 98 100 102 104 Price Inflation Basket Inflation
    14. 14. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 14 VALUES SALES AND PRICE PROMOTED SALES Manufacturers and retailers reaction heavily based on price promotions with clear impacts on margins 90 95 100 105 110 115 120 MAT 2011 MAT 2012 MAT 2013 Value Sales Index MAT 2011 = 100 Promo Sales Index Source: IRI InfoScan® FMCG DB. MAT August 2013. Bazar and Random Weight excluded.
    15. 15. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 15 Sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text sub-text FORECAST The formula used in the past few months does not seem to generate value. If nothing changes this is what we can expect for 2014 Forecasted data points based on historical trends analysis and dynamic regression models leveraging variables such as available income trends, pricing, promotional pressure evolution by sector Value Sales % Change Volume Sales Price Actuals 2012 H1 -3,7% -3,2% -0,5% 2012 H2 -2,4% 0,5% -2,9% 2013 H1 -3,3% 2,1% -5,3% Forecast 2013 H2 -5,4% 0,0% -5,4% 2014 H1 -4,0% -0,4% -3,6% 2014 H2 -1,8% 0,6% -2,4% Source: Statistical projection on IRI InfoScan® FMCG DB.
    16. 16. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 16 QUESTIONS REQUIRING APPROPRIATE ANSWERS • Are we using the best promotional mechanics? • Is there an alternative to price cuts? • Are we planning the activities properly? • Are we differentiating our tactics? • Where are Shopper thresholds in terms of price sensitivity? • Are there Shopper segments or trip missions for which price strategies are not relevant? • Do we have the right range of products on the shelf? What is the impact on sales and margin of range optimization? • Are we balancing the investment between media and trade to maximize the margin? • … We believe that there are opportunities for both manufacturers and retailers if we have proper solutions to answers difficult questions
    17. 17. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 17 And the size of these opportunities can be as big as €120m. more in 2014 “DO NOTHING SCENARIO” FORECAST VALUE RECOVERY 5,930 5,748 5,339 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 2011 2012 2013 Fcst 2014 Fcst Sources: IRI InfoScan®, estimation based on existing case studies 5.498 -3,1% -4,4% -2,9% 5,498 5,459 2013 Fcst Current Fcst Promo Pricing Range Media vs Trade 2014 Fcst illustrative -0,7%
    18. 18. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 18 CASE STUDY BRAND X (2013) IRI has been delivering measurable value to clients around the world leveraging its Analytical engine in Athens (ACE) ANALYTICAL CAPABILITIES • Completing over 2,000 custom client projects annually • Team of experienced and dedicated IRI Analytics professionals • A total of ~300 professionals engaged in Analytics central production at the Athens Analytics Center of Excellence (ACE)… • … which consists of modelers with diverse backgrounds and rich analytical expertise PhDs, MBA, MS and Mas • Partnering with leading FMCG manufacturers and retailers Business Issue Background: • Client was using two promotional mechanics (price cut and multi-buy) at the same discount level Business Need: • Understand effectiveness of each mechanic and provide strategic direction for the price and promo strategy. Findings& recommendation Findings: IRI Brand Advantage Price & Promotion Optimisation identified that: • The multi-buy mechanic delivered 65% higher value uplifts compared to price cut when promoted from display and 166% greater when promoted on shelf. Recommendation: • Move all promotions behind the multi-buy mechanic. • An estimated EUR 3M opportunity was identified by moving focus to the more effective promotional mechanic across the entire range in the 4 major retailers. Impact
    19. 19. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 19 What do you think? We would like to hear from our panelists now… BRAND AND STORE LOYALTY • Shoppers are recomposing their baskets to cope with a limited budget • In the meantime they are prepared to visit more stores • How do you plan to protect your brand and store franchise? HOW EQUIPPED ARE WE TO REVERSE THE TREND? • This context poses to manufacturers and retailers leaders serious challenges with respect to how, where and when invest scarce resources. • How does the decision making process work today? Are you leveraging solid information, insights and analytics? Is there anything more you need? SUSTAINABILITY • The market has pursued a volume strategy pushing on price and promotions. • This is eroding market value, how sustainable this strategy is in the long run? • Is the market supposed to further concentrate i.e. only the stronger will survive? PRODUCT MIX • Private Labels continue to grow. Do you see further opportunities? • What should a branded manufacturer do to cope with this situation? • What are the processes and tools to define the optimal assortment in this context?
    20. 20. Copyright © 2013 Information Resources, Inc. (IRI). Confidential and Proprietary. 20 Thanks for your attention! FOR MORE INFORMATION Angelo Massaro Angelo.Massaro@IRIworldwide.com +30 210 2787648 Nancy Tziola Nancy.Tziola@IRIworldwide.gr +30 210 2787648 ABOUT IRI IRI is a leader in delivering powerful market and shopper information, predictive analysis and the foresight that leads to action. We go beyond the data to ignite extraordinary growth for our clients in the CPG, retail and over-the-counter healthcare industries by pinpointing what matters and illuminating how it can impact their businesses across sales and marketing. Move your business forward at IRIworldwide.gr IRI Greece 47 Ifigenias St. p Nea Ionia, 142 31 Athens, Greece

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