UK FMCG and Retail Trends, Let IRI guide you through what's been happening in the UK FMCG market by our industry experts Martin Wood & Tim Eales

1. UK FMCG and Retail Trends
Q3 2016 update
Martin Wood and Tim Eales
Strategic Insight

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Key UK Retailing Trends
Convenience shopping is still increasing
Promotions are reducing, especially multi-buy. Price-off now
used almost 90% more often than multi-buy
Prices are still falling although we expect them to rise soon
The big four are divesting stores and space
Major retailers are still cutting range, -450 SKUs in last 12wks
Discounters are still expanding, but at a slower rate
Online sales are revolutionising the way people shop
…as a result…

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Discounter growth
Aldi / Lidl (Value share of Total Grocers)
5.4 5.3 5.0
5.8
6.7
8.3
9.4
10.5 10.8
2009 2010 2011 2012 2013 2014 2015 2016 Latest
quarter
MARKET SHARE - TOTAL TILL ROLL
% Change
£millions % ** £millions % ** %
Total Grocers 25,391 100.0% 25,378 100.0% -0.1%
12 Weeks to 21 June 201512 Weeks to 22 June 2014
Includes all expenditure through main store tills and excludes petrol & instore concessions
Total Till Roll - GB Consumer Spend
12 w/e June
12 w/e 9th
October 2016
Latest quarter
annual growth
rate
10.1%

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1.1
1.4
-2.1
-2.8
-1.8
0.5
0.2
-2.4
-1.2
-1.4
0.9
-0.4
-0.5
0.6
0.5
0.7
-2.7
-1.4
-0.5
-0.6
2.1
1.0
-2.7
-2.1
-1.3
1.2
-2.5
-3.8
-1.7
-2.0
Value Sales Volume Sales Price Trend
Sales trends: Non-food declines as prices drop with competition from discounters
and bargain stores. Drink boosted by Euros and warmer weather in the summer
Beer / lager / cider
Soft drinks
Food / milk / hot drinks
Pet food
Confectionery
Health care
Personal care
Household
Total Inc. Alcohol
Total Exc. Alcohol
SOURCE: IRI InfoScan All Outlets
% Change v Year Ago
52 w/e 8 Oct, 16

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-3.6
-0.3
-0.2
1.4
-1.5
-0.5
-1.1
0.4
-0.4
-0.5
-4.0
-1.3
0.3
1.0
-2.1
Value Sales Volume Sales Price Trend
Ambient food
Chilled food
Frozen food
Soft drinks
All food & drink Exc.
Alcohol
Food trends: Ambient foods showing the biggest decline. Water is the
long-term growth driver of soft drinks.
SOURCE: IRI InfoScan All Outlets
% Change v Year Ago
52 w/e 8 Oct, 16

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-2.8 -2.8 -2.5 -2.4
-2.0 -2.2 -2.0
-1.5
-2.0 -2.1 -2.3 -2.0 -2.0 -2.3
-1.8
-2.1
-1.8 -2.0 -1.7 -1.7 -1.7
-0.9
-
-
0
2
4
6
8
£9,400
£9,600
£9,800
£10,000
£10,200
£10,400
£10,600
£10,800
£11,000
Feb,
15
Mar,
15
Apr,
15
May,
15
Jun,
15
Jul,
15
Aug,
15
Sep,
15
Oct,
15
Nov,
15
Dec,
15
Jan,
16
Jan,
16
Feb,
16
Mar,
16
Apr,
16
May,
16
Jun,
16
Jul,
16
Aug,
16
Sep,
16
Oct,
16
ALL ITEMS EXC ALCOHOL
FMCG All-SKU Shopping Basket Price trends – prices are still not rising
% CHANGE vs. LAST YEAR
Prices have fallen by % since the
price war started, saving the average
family per week
-4.3
£3.96
4 weekly basket of all skus
SOURCE: IRI InfoScan All Outlets

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25
26
27
28
29
30
31
32
33
34
35
40
43
46
49
52
55
Aug, 15 Sep, 15 Oct, 15 Nov, 15 Dec, 15 Jan, 16 Jan, 16 Feb, 16 Mar, 16 Apr, 16 May, 16 Jun, 16 Jul, 16 Aug, 16 Sep, 16 Oct, 16
DEAL DEPTH : % PRICE REDUCTION
% VOLUME SOLD ON DEAL
Less volume sold on promotion overall but at increasing levels of discount
SPLIT
SCALE
4 week periods ending
SPLIT
SCALE
SOURCE: IRI InfoScan Major Multiples

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Simpler price–off promos are replacing multibuys
- 31% + 6%
% Change, number of promotions by type
(YTD, Q3 2016)
(482,000 fewer) (106,000 more)
x
for
£Y
£
% Volume sales from
Multibuys
%
*Total Exc. Alcohol
52 w/e 8 Oct, 16
16
%11
SOURCE: IRI Promotrend; IRI InfoScan Major Multiples

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Branded Promotions are becoming less frequent but with deeper discounts
while base prices continue to fall
Number of Trade Promotions
% Depth of Discount
Base Price
% Volume Sold on Deal
% Multibuys
BRANDS OWN LABEL
%-1.9 %-2.1
pt0.2pt0.6
SOURCE: IRI InfoScan Major Multiples

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This means branded promotions are more vital to the non-discounter
retailers
Own label share is beginning to grow slowly again but OL
promos are less available and less attractive
Branded Promotions are moving from multibuy to price-off
making it harder to drive volumes
Promotional planning is now key, as deals are less frequent but
deeper than ever, so more expensive
Uplifts are vital to driving trial and sales, and generating ROI

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Retailers are stocking fewer Food & Drink items and fewer items overall
SOURCE: IRI InfoScan Major Multiples

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7,000
8,000
9,000
10,000
11,000
12,000
13,000
Feb,
15
Mar,
15
Apr,
15
May,
15
Jun,
15
Jul,
15
Aug,
15
Sep,
15
Oct,
15
Nov,
15
Dec,
15
Jan,
16
Jan,
16
Feb,
16
Mar,
16
Apr,
16
May,
16
Jun,
16
Jul,
16
Aug,
16
Sep,
16
Oct,
16
Asda
Morrisons
Sainsburys
Tesco
Waitrose
-12.9
-0.7
-2.3
-10.2
-3.9
Retailers cut range: almost 1300 items lost per average store in one year; an
average 8% drop in range. This is just Food & Drink.
Weighted sum of items per store across food & drink categories
(exc. confectionery) by Retailer
Latest 4 weeks
YoY % change
SOURCE: IRI InfoScan by Retailer

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What is the outlook?
Commodity oil prices
have risen in 2016
which will increase
costs
Brexit will bring
short term
uncertainty and
hit growth
Price competition will
continue even though
costs of labour and
imports have gone up
Demand for most
FMCG products
continues whatever
the economic
situation
Guaranteed
disruption and
increased competition
for existing retailers

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Remember this:
Prices
• are set to rise as the value of the £ has fallen
Promotions
• Less effective at driving volume – focus on profit
Ranging
• Each physical outlet is stocking less items
Category Trends
• A growth in healthy categories & snacking
Outlook for 2016-7
• Prospects continue to be difficult for growth

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Do you need to know how any of these changes will affect you?
Martin Wood & Tim Eales
Martin.Wood@IRIworldwide.com
Tim.Eales@IRIworldwide.com
www.iriworldwide.com/en-GB/
For more information
and insight