IRI's Weekly FMCG News Update - w/c 16th January 2017

IRI
Weekly News
update
Your window on the
latest trends in
Packaged Groceries
Stephen Hall
Friday 20th January

Copyright © 2015 Information Resources, Inc. (IRI). Confidential and
Proprietary.
2
• Record Christmas for Irish grocery market with
Supervalu regaining No.1 position and Tesco continuing
to improve
• Greggs announces strong Q4 results
• PEP&CO expands in Poundland stores
• Cold weather and fresh produce sales drive growth at
Waitrose
• Tesco introduces "slow lane" pilot
• Waitrose becomes latest retailer to trial FareShare
FoodCloud
• New membership scheme helps drive strong Q4 trading
at Co-op
• Pets at Home third quarter performance boosted by
strong growth from vet practices
• Iceland launches interactive Facebook Live campaign
• Tesco to deliver in an hour
• Sainsbury's goes 'food dancing' in new ad campaign
• Location key to store selection, study finds
• Aldi and Lidl top YouGov BrandIndex rankings
• Christmas shoppers keep station retailers on track
Weekly News Summary:
16th January 2017

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Record Christmas For Irish Grocery Market
With Supervalu Regaining No.1 Position And
Tesco Continuing To Improve
The latest supermarket share figures from Kantar Worldpanel in Ireland for the 12 weeks
ending 1 January 2017, reveal that shoppers spent an additional €92m this Christmas
period – 3.8% more than last year.
With Christmas Day falling on a Sunday this year, shoppers had two extra days to tick off
all the items on their Christmas shopping lists. Having the whole week to prepare meant
that the average household in Ireland spent €193 on the big day, €35 more than last year.
David Berry, director at Kantar Worldpanel, explained: “After a turbulent 2016, shoppers
really chose to treat themselves this Christmas. Always popular over the festive period,
biscuits and chocolates did even better than usual. Irish families spent 9% more on
seasonal confectionery than last year, making sure they had plenty of sweet treats to keep
them going over the festive period. More were in the mood for a Christmas tipple too, with
alcohol experiencing double-digit growth. This was partially down to more multi-buy
promotions in stores tempting shoppers to up their spend.
“As in previous years, 2016 was defined by fierce competition for the grocery market with
Ireland’s three biggest supermarkets vying for the top spot all year long. With shoppers
willing to fork out more over Christmas, it’s a vital time of year for grocers – an
opportunity to pull away from the competition. Whether that’s via a heart-warming
Christmas ad or the best premium own-label offers for the big day, we’ve seen retailers
going all out to persuade the Irish public to shop with them this festive season.”
Meanwhile, Supervalu regained the outright crown as Ireland’s leading grocer, after
Dunnes Stores had drawn level the previous month. Supervalu has held the no.1 position
for 10 out of the past 12 periods.
Despite a return to second place, Dunnes Stores continued to perform well. Sales for the
Christmas period were almost 5% higher than in 2015 and the average spend per trip
reached a new high of €41.60, significantly ahead of any other retailer.
Tesco continued to improve its performance, with sales growing by 1.3% over the final
quarter – up from the 1.2% growth the grocer saw in the 12 weeks to 4 December 2016.
Premium own label was a particular bright spot for the retailer, with its Tesco Finest range
experiencing strong growth over the festive period.
Elsewhere, Aldi posted the strongest growth of all Irish supermarkets with sales up by
5.3%. The retailer managed to attract 37,000 new shoppers this Christmas, boosting its
market share to 10.5%. Lidl also recorded positive results, with festive sales 2.3% higher
than in 2015.
Source: NamNews 16th January 2017

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Greggs announces strong Q4 results
A strong Christmas performance driven by food-on-the-go growth helped Greggs
deliver positive fourth quarter results.
Robust Q4 Trading
Like-for-like sales grew 6.4% in the final three months of 2016, marking the 13th
consecutive quarter of like-for-like sales growth for Greggs and an acceleration
from the 2.8% of Q3. Across the 52-weeks ending 31 December 2016, company-
managed shop like-for-like sales grew 4.2%, and total sales increased 7.0%.
Further progress in food-on-the-go and Balanced Choices range
Greggs outlined the growing strength of it's 'food-on-the-go' strategy as the main
driver of sales growth. Within this, its Balanced Choice range and new hot food
products proved notably popular, while seasonal favourites, including the Festive
Bake and mince pies, also performed well. Greggs will introduce Green Tea and
Vanilla Latte to the hot drinks menu in 2017, strengthening key potential growth
areas of breakfast, tea, and health in 'food-on-the-go'.
Estate expansion supporting food-on-the-go strength
In 2016, Greggs expanded its portfolio to 1,764 stores, opening 145 stores and
closing 79 in the year. As part of growing Greggs as a modern food-on-the-go
brand, 208 existing shops were converted to the new 'bakery food-on-the-go'
format. At the same time franchise is becoming more important: 56 franchised
units opened in the year, bringing the total to 157. This estate transformation is set
to continue, while early steps are being taken in the roll-out of the delivery service
in London, which currently operates in Cheapside and Eastcheap, for orders over
£20.
Cautious about 2017, but medium term confidence
Despite anticipating 2016 full year results to be slightly ahead of expectations,
Greggs has outlined apprehensions for 2017. Political turbulence, including the
impacts of Brexit, is expected to heighten uncertainty in the trading environment,
with increased pressure on real income growth. Stating that expected industry-wide
cost pressures in 2017 are likely to impact on margins in the short term, Greggs
expressed confidence in its medium term outlook.
Source: IGD 17th January 2017

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PEP&CO expands in Poundland stores
Growing discount clothing retailer PEP&CO has announced plans to expand within
Poundland.
50 new shop-in-shops
Following a trial last year, PEP&CO's owner Pepkor UK has decided to roll out more
PEP&CO shops within large Poundland stores. This move will see 50 Poundland
stores introduce the clothing concession within the next 100 days. This will almost
double PEP&CO's UK presence from its current c.60 stores.
Bringing the brand to new areas
PEP&CO has revealed that the majority of these 50 Poundland stores will be in
towns where the clothing brand is not currently present. The company has 28
locations confirmed, with UK regions including Northern Ireland, West Yorkshire,
North Wales, East Anglia and London. Speaking about the move, managing director
Adrian Mountford has said: 'By bringing Pep & Co to the largest Poundland stores
we’re giving people access to the brand much more rapidly than we could on our
own.‘
Steinhoff connection drives collaboration
It seems that the link with South African conglomerate Steinhoff has enabled this
in-store collaboration to happen, with both value retailers playing off each other to
create a stronger discount proposition that will create a point of difference within
the variety discount channel. No other player sells a complete clothing range,
however B&M and Poundstretcher have both branched out to become destinations
with garden centres and pet stores respectively.
With value clothing retailers such as Primark being so popular and the UK having
long sold clothing in supermarkets, this move by PEP&CO could have the potential
to drive footfall and sales to Poundland as the discounters continues to find its feet
following the 99p Stores takeover and Steinhoff acquisition.

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6
Cold Weather And Fresh Produce Sales Drive
Growth At Waitrose
Waitrose has revealed that its total sales rose by 2.7% to £122.5m in the weak to
14 January.
The chain said that cold weather had led to a spike demand from ranges such as
hot drinks, ready meals and soups, whilst consumer’s January health kicks boosted
demand for fresh produce.
Waitrose added that low alcohol and alcohol-free wines were proving popular as its
customer’s looked to minimise their alcohol intake at the start of the year. However,
wine sales still rose 5%, whilst gin sales climbed by 17%.
Overall, sales in the ambient category were up 3%, whilst sales in Chilled, Fruit,
Vegetables & Horticulture, and Bakery increased 2.4%. The Meat, Fish, Frozen &
Dairy category saw sales rise 2.3%, whilst Home & Leisure was down 1%.
At sister chain John Lewis, sales rose 3.7% in the final week of its clearance event.
The strongest performing department was electricals with a 6.9% uplift. Fashion
sales dipped 0.1%, whilst home sales rose 3.8%.

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Tesco introduces "slow lane" pilot
A Tesco store in Scotland has introduced a “relaxed lane” aimed at creating a less
stressful checkout line for less able customers.
In conjuction with Alzheimer Scotland, the initiative sees staff at the Forres site
trained to identify special needs customers and operate at a more suitable speed.
The pilot scheme currently operates on Tuesday and Wednesday mornings.
"We want them to be confident they can shop at their own pace,” Forres Tesco
employee Kerry Speed told the BBC.
"It was highlighted to me that people living with dementia can feel under pressure
when they reach the checkout, and it struck me that this could be true for others as
well.
"Early feedback from customers has been very positive. Although it's a simple
gesture, we hope this will make a difference."
Source: Retail Gazette 18th January 2017

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Waitrose Becomes Latest Retailer To Trial
FareShare FoodCloud
Waitrose is strengthening its commitment to reducing food waste by launching a
trial with FareShare FoodCloud this month.
Waitrose is the second retailer to sign up to the programme, which was developed
in collaboration with Tesco in 2015, and has proved highly successful in helping
distribute meals to people in need.
The FareShare FoodCloud programme enables branches of Tesco, and now
Waitrose, to inform local charities of surplus food which is available for collection.
Stores input details of available food into the FoodCloud app, and connected
charities receive a text alert to which they can reply, confirming that they are able
to collect the items mentioned.
Initially, there will be a trial in 25 Waitrose branches, and if successful, the scheme
will then be expanded over 12 months to all group’s stores throughout the UK
.
As well as working with the FareShare FoodCloud programme, Waitrose is
increasing its commitment to minimising surplus food, by providing training for all
its staff on food waste reduction.
Lindsay Boswell, FareShare UK CEO, said: “We are excited to be starting the year
with an expansion to our store-level programme that enables forward thinking
retailers like Waitrose to redistribute surplus food quickly to charities in their local
community. Waitrose is demonstrating real commitment to tackling surplus food
waste and I invite other retailers to follow their lead and find out how FareShare
FoodCloud programme could work to benefit their business and local communities.”

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New Membership Scheme Helps Drive Strong
Q4 Trading At Co-op
The Co-op continued on its recovery path during the fourth quarter of last year,
bolstered by the success of its new membership scheme.
In the period from 21 September to 31 December, like-for-like sales across its core
convenience estate increased by 4% year-on-year, with total food like-for-like sales
up 3.4%.
Earlier this month, the society revealed strong Christmas trading figures with
overall like-for-like sales up 3.5% during the three weeks to 31 December.
The Co-op hailed the positive impact of its new membership scheme which
launched last September and gives shoppers a 5% reward on purchases of own
brand Co-op products and services, with a further 1% directly benefiting local
causes.
The society had hoped the scheme would help it sign up 1m further members by
the end of 2018. However, the scheme’s success has already led to 400,000 new
members joining in the four months since launch, prompted the Co-op to accelerate
its recruitment plans. The target for 1m new members has now been brought
forward to the end of 2017. It currently has 4.1m active members.
Rufus Olins, Chief Membership Officer at the Co-op, said: “The Co-op is back and
our members and our communities are once again at the heart of all we do. In
looking to grow our membership significantly in 2017, we are in affect looking to
grow the Co-op economy, and the very positive impact it can have in communities
throughout the UK.”
As part of its recruitment drive this year, the Co-op has teamed up with British film
director Shane Meadows, best known for the Bafta award winning feature film and
TV series ‘This is England’. He has created a series of short films to be shown in
cinemas that illustrate the Co-op’s support for local causes.

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10
Pets at Home third quarter performance
boosted by strong growth from vet practices
In the 12 weeks to 5 January group like-for-like revenue growth was 0.1% as
continued growth in the veterinary services business was offset by more subdued
trading across its merchandise business. Merchandise revenues were flat at £177.4
million while services revenues climbed by 47.8% to £26.3 million. In a statement
the company said its profit outlook for the full year remains in line with market
expectations.
Ian Kellett, Pets at Home chief executive, said: "Vet services yet again performed
strongly this quarter, where our strategy of providing a quality service to clients
across both primary opinion and specialist referral centres is delivering results, and
is a platform for continuing strong growth.
“In merchandise, whilst overall sales were softer than anticipated, online grew
strongly, reflecting the momentum gained from our investments in seamless
shopping.
“We saw a good performance in our Christmas range, where customers are
responding to innovative products at great value for money, which we will reflect in
new range launches later this year. We will also focus on delivering best value,
starting with a very clear message to customers about the benefits of our high
quality, UK produced private label foods, where we will be leveraging our
competitive advantage.”
The company said its new store and services rollout is on track after it opened two
superstores, six vet practices and 11 grooming salons in the period. By the end of
the full year, Pets at Home aims to have opened 15-20 superstores, 45-
55 veterinary practices and 50-60 grooming salons.
The company said integration of its new veterinary specialist referral hospitals is
progressing well, with best practice and cost benefits already being realised across
the business.
Kellet added: “With a quarter to go, our profit outlook for the year remains in line
with expectations, reflecting both the continued investment in our customer offer
and ongoing efficiency initiatives. Our focus on becoming more specialist, and doing
the right thing for our customers, remains at the forefront of our strategy.”
Source: Retail Bulletin 19th January 2017

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Iceland launches interactive Facebook Live
campaign
Devised by independent media agency the7stars and social distribution company
Jungle Creations, the campaign also looks to highlight the UK's food waste problem.
The campaign was launched with a competition featuring an ice statue containing
£700 worth of notes being broadcast live via Viral Thread, Food Envy and Twisted
Facebook site. Viewers are asked to guess how long it would take the sculpture to
melt for a chance to win the hidden money.
Andy Thompson, social manager at Iceland, said: “We’re really excited about
getting the public involved in our new campaign. Our continued #PowerofFrozen
activity has always been about re-educating customers to the value and quality of
frozen food, and by involving them in the campaign we hope to reach existing
customers as well as new consumers who don’t currently shop frozen.”
As fish is one of the main foods that benefits from being sold as frozen, the
campaign also includes a host dressed as a fisherman being directed by the public
in real-time. Directions from viewers are projected onto the wall behind the host,
adding an interactive element to the campaign.
Isobel Mooney, digital account lead at the7stars, said: “We wanted to use an
entertaining set up to show the general public that by using frozen food over fresh
it’s not only better for the environment but also for your budgets. The campaign
drives a positive message through championing interactive advertising at its best.”

Proprietary.
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Tesco to deliver in an hour
Convibo, the online start up, will be delivering Tesco products within the hour to
customers in London.
Introducing Convibo
Convibo launched last March and offers same day delivery and deliveries within the
hour, with no minimum order size. Convibo currently works with Waitrose, Marks
and Spencer and Whole Foods delivering to Fulham, Kensington, Chelsea and most
of Paddington. Deliveries are available from Monday to Saturday from 9am - 11pm
and the delivery charge is £4.99. To further cover operational costs, Convibo's
product prices can vary to store but the markup is no higher than 15%.
Tesco and Convibo
The collaboration meets customers' increasing demands for same day and within
the hour deliveries and competes with Amazon Prime Now and Sainsbury's Chop
Chop. It potentially allows Tesco to understand the size of the opportunity whilst
not incurring significant costs. Whilst for Convibo, it has expanded its range of
products available and potentially broadened its customer base.

Proprietary.
13
Sainsbury's goes 'food dancing' in new ad
campaign
Sainsbury's has broken with precedent and launched an edgy new ad campaign, in
a bid to connect younger and urban shoppers with its Live Well for Less ethos.
First campaign from new agency
The campaign is the first output from newly selected ad agency Wieden+Kennedy
which has taken over the account from Sainsbury's long standing agency
BBDO. Over the years BBDO has created many ads that have successfully
communicated Sainsbury's focus on quality food to engage with its core middle
class family shoppers, including including its big budget Christmas animations,
Mog's Christmas Calamity and the Wallace & Gromit style "Greatest Gift". The new
ad is strikingly different. Fast paced and shot with hand held cameras it cuts
between real life food lovers dancing in their kitchens as they prepare dishes.
Fun in the kitchen
Commenting on the new ad Mark Given, director of marketing, planning and
propositions at Sainsbury's said “The excitement and energy created by our
#fooddancing film is the perfect antidote to how our customers tell us they feel in
January. Why should one month of the year have less opportunity to live well than
any other? Having fun in the kitchen is a big part of living well. Whether you are
whipping up your signature dish or just having a cheese sandwich, making
something to eat is a joy. So let’s celebrate it.”
Engaging with younger shoppers
The ad will appear on TV, but the background track "Food Dancing (Yum Yum Yum)"
will be available as a download and also has its own music video. The campaign
also aims to build customer engagement via social media by encouraging customers
to post their own videos on Twitter using the #fooddancing hashtag.
Fun in the kitchen
Commenting on the new ad Mark Given, director of marketing, planning and
propositions at Sainsbury's said “The excitement and energy created by our
#fooddancing film is the perfect antidote to how our customers tell us they feel in
January. Why should one month of the year have less opportunity to live well than
any other? Having fun in the kitchen is a big part of living well. Whether you are
whipping up your signature dish or just having a cheese sandwich, making
something to eat is a joy. So let’s celebrate it.”

Proprietary.
14
Location key to store selection, study finds
A new study by TCC Global has revealed that location, not price, is the key driver of
grocery store selection in the UK.
The study found that a store being either in close proximity to the shopper or
easy to get to was the main driver for around half (48%) of the shoppers polled,
compared to 34% who based their choice on low everyday prices.
Low everyday prices ranked behind proximity, selection and habit as a key
driver
The study found that only 3% of all shopping trips involved getting to a
supermarket less conveniently situated than another, although the discounters
fared slightly better, with 4% of Lidl shoppers going out of their way to shop there
and 5% of Aldi shoppers forsaking convenience in exchange for low prices.
Bryan Roberts, TCC global insights director, said: “Simply put, it is generally difficult
to convince a shopper to travel past one retailer to get to another.
“For this to happen, the nearest store needs to be sufficiently bad, or the
alternative store needs to be sufficiently compelling (usually in terms of quality,
experience or price), for the shopper to sacrifice their time and forsake geographic
convenience.”
Commenting on the report, Theo Theodorou, of xAd EMEA said: “In the competition
for shoppers, many supermarkets are offering aggressive price-cutting deals.
However, as we have seen from the latest report from TCC, price is not a deal-
breaker here – it’s location that consumers attribute as higher the indicator of their
purchase intent.
“In order to stand out and drive footfall, grocery stores need to wake up to the
power of location marketing.
“By utilising location, every brand experience is contextual and consistent. After all
– why would I want an ad for one supermarket miles away if there is one offering
similar products around the corner?”
Source: Talking Retail 19th January 2017

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15
Aldi and Lidl top YouGov BrandIndex
rankings
Aldi and Lidl have taken the top two positions on YouGov BrandIndex’s list of the
UK’s top brands for the third year running.
The BrandIndex Buzz score measures whether consumers have heard anything
positive or negative about the brand, with annual rankings compiled using Buzz
scores from across all 52 weeks of last year.
Aldi took the top spot with an average Buzz score of 16.8, with Lidl following closely
behind on 13.4.
Marks and Spencer also made the top ten with a Buzz score of 9.8, while Tesco
topped the list of ‘most improved brands’, after its Buzz score jumped 12.2 points
on the previous year. Morrisons also made the list in fourth position, with a 5.7
points improvement.
Commenting on the findings, YouGov’s Michael Stacey said: “It no longer seems
valid to label Aldi and Lidl as ‘budget supermarkets’. With so many competitors
following their lead in various ways and they themselves pushing higher-end goods,
both are now firmly part of the mainstream.
“The slight decline in both brands’ Buzz scores is indicative of this – being a
challenger often makes it easier to grab people’s attention in a way it is harder to
do once you are firmly established. However, the fact they are still way out in front
of the rankings suggests that their messages are still making waves among the
masses.”
YouGov said Tesco’s improvement highlighted a “return to form” for the retail giant
after a testing few years, adding that supermarket brands were reacting well to the
discounter challenges after a period of having their market share threatened.
Source: Talking Retail 19th January 2017

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Christmas shoppers keep station retailers on
track
Its figures show that from 19 November to 24 December, the number of people
visiting Network Rail's stations grew by just under 10% to 106 million.
Almost one in three station visitors entered a retail outlet and the increase in
station retail purchases equated to total sales of over £83 million during the period.
Food and drink outlets performed particularly well, with the top five outlets in
stations recording an average of 50% sales growth.
Retail outlets, driven by gift purchases, also put in a strong performance with
growth of 24%. Station supermarket sales remained buoyant, rising by 4% over
the festive period.
Christmas sales increased most at Edinburgh Waverley station with an uplift of
41%. This was followed by Birmingham New Street and Leeds.
The top performing stations in London were Paddington, King's Cross and Euston.
The festive sales surge was also boosted by store openings by The Bookshop by WH
Smith and HEMA at Euston, as well as Urban Decay at King’s Cross and James
Martin Kitchen at Manchester Piccadilly.
David Biggs, Network Rail’s managing director of property, said: “The quality and
diversity of gifts, food and beverage options now available to station users is a
direct result of station investment.
"Our major retail developments and strategy to bring in new and exciting retailers
is helping us achieve our long term goal of improving the station experience for our
customers, while crucially generating vital funds to reinvest back into the railway.”

IRI's Weekly FMCG News Update - w/c 16th January 2017

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