Consumer Goods Strategies & Trends 2017 Report (CAGNY)

1. Consumer Goods Strategies and Trends CAGNY* Roundup, March 2017 * Consumer Analyst Group New York SCHIEBER RESEARCH

2. Consumer Goods Strategies and Trends | Apr. 2017 2 CAGNY 2017 The Consumer Analyst Group New York (CAGNY) conference is where marketing and other executives of the leading food, beverage, household/ personal products and tobacco companies come together to discuss major consumer and market trends, and describe how their companies intend to address them. The 47th CAGNY conference took place in February 14-20, 2017 in Boca Raton, Florida. There’s hardly a better place to gain an insight into how consumer goods giants view strategy and trends in innovation and marketing. We are proud to have covered the CAGNY conferences since 2014. You can find our previous reports here: 2014, 2015, 2016. Food & Beverage: Non Food: Among the companies included in the report:

4. Consumer Goods Strategies and Trends | Apr. 2017 4 01 | Macro Trends Changing retail landscape + Changing demographics: the rise of the digital generation, the aging society + Digital on the rise + Growing income gaps among consumers

5. Consumer Goods Strategies and Trends | Apr. 2017 5 Market Polarization Companies adjust strategy to benefit from market bifurcation into Premium and Basic. The super-premium one-cup category has come to dominate Smucker’s coffee activity. Share of “mainstream” in Nestlé’s organic growth shrunk from 71% to 67% between 2014 and 2016. Source: Smucker’s Internal Multi-Outlet Share Report 52 weeks ending January 1, 2012 and December 25, 2016 Average OG over the period 2014-2016 *PPP = Popularly Positioned Products 2011 2016 $7.0B $9.5B Premium Mainstream Affordability (PPP*) 2014 2016 71% 67% 16% 19% 13% 14% 4% 11% 29% 46% 1% 41% 7% 24% 27% 10% other One Cup Instant Premium Mainstream R&G Mondelez has targeted discounters such as Aldi and Lidl in Europe, but convenience stores in the US with new formats such as Oreo Chocolate, BelVita Protein and Ritz Crisp & Thins. 01 | Macro Trends Channel polarization helps companies refine geographical strategies

6. Consumer Goods Strategies and Trends | Apr. 2017 6 Channel Development Companies pay a special attention to Away From Home (AFH), where contracts with vendors are typically long-term, and which is ideal for sampling and experimentation. The AFH channel proves to be both an innovation lab and a source of consumer data. PepsiCo presented formats and solutions for AFH including hospitals and clinics, the workplace, and universities. L’Oréal has a strategy for every channel L’Oréal highlighted that every channel deserves a special strategy: hair and beauty salons, branded retail, e-commerce, travel retail, mass market, pharmacies and department stores’ perfumeries. In the company’s words: “All channels, all categories, all prices,” “Across all distribution channels.” Unilever’s channel development focuses on digital Unilever discussed channel development for continued growth. Digital channels include Amazon, and China’s Taobao.com, where several brands have reported success in 2016. The company seems set on benefitting from the acquisition of Dollar Shave Club for insights into and data on direct-to-consumer sales. Unilever's channel development strategy Out of Home Direct to consumer Beauty E-commerce 01 | Macro Trends

7. Consumer Goods Strategies and Trends | Apr. 2017 7 Digital Digital featured in every presentation, usually in a positive light - an opportunity, not a threat, that will continue to shape marketing, advertising, and sales. Digital’s share in advertising spend continues to rise. Companies develop e-commerce both direct-to-consumer and through retailers. Companies become more sophisticated in the use of mobile apps and the Internet of Things to support marketing but, e-commerce aside, not yet as a new source of revenue. Several companies highlighted e-commerce growth in China. Amazon Echo (Alexa) starred in many presentations. E-commerce growth at Nestle E-commerce is ever more important for Nestlé, constituting 4.9% of sales in 2016, up from 2.9% in 2012. Last year growth in e-commerce sales was 18% (34%, excluding Nespresso). E-commerce is up at L’Oréal L’Oréal reported a 33% increase in e-commerce sales (brand sites + retailers’ sites) to €1.7bn, equivalent to #4 country position. L’Oréal is the brand leader in e-commerce in China. The company, the world’s third biggest advertiser, directs 32% of advertising budget to digital. 01 | Macro Trends Kellogg’s e-commerce is strong on China Another company with an e-commerce focus On China is Kellogg’s, which reported that 30% of its sales there go through e-commerce. The company boosts its e-commerce presence with Click & Collect and home deliveries.

8. Consumer Goods Strategies and Trends | Apr. 2017 8 Clorox is turning to e-commerce for revenue growth Clorox is focusing on Amazon’s Dash buttons and Echo (Alexa). The company expects e-commerce to be up 30% in 2017 compared with last year, and plans yet again to increase digital’s share in media spend, to 45%. Platform will offer gifting, large packs and subscription (e.g., Amazon’s Subscribe and Save feature). E-commerce strategy includes improved assortment, pricing, content, search and traffic, and operational aspects focus on talent, data analytics, supply chain and digital capabilities. E-commerce net revenue was up 35% in 2016. 01 | Macro Trends | Digital Mondelez is building a $1bn e-commerce snacking platform FY14 FY15 FY16 FY17 Proj 45% Clorox now spends 45% of $ ads on digital.

9. Consumer Goods Strategies and Trends | Apr. 2017 9 Hill's, Colgate’s pet food brand, grew loyalty through subscription and delivery. It improved search and mobile optimization, and partnered up with Amazon. Global e-commerce was up 200% since 2013 and U.S. subscription, over 50%. Natural Balance, Smucker’s pet food brand, expects e-commerce to be up 60% in 2017, to 15% of brand’s total sales. Loyalty is high; repeat-purchase is common; consumers prefer to buy in bulk (cheaper), but could use help in delivering the heavy packages. Among the brands which responded successfully: 01 | Macro Trends | Digital Pet Food is ripe for e-commerce

10. Consumer Goods Strategies and Trends | Apr. 2017 10 * White spaces: unmet needs, in terms of products, consumption occasions, or demographics 02 | Growing the Core Building awareness and trial + Extending or creating new uses for existing products + Creating or improving products to meet unmet consumption occasions or new demographics (white spaces) + Channel expansion (notably e-commerce) + Stretching brands into new categories Almost every company recognized that its core brands and products were the most effective engine of growth. Several strategies for continuing to grow the core were prominent:

11. Consumer Goods Strategies and Trends | Apr. 2017 11 Companies continue to refocus their businesses on mega brands and platforms. Mega brands Core brands grow Nestlé Nestlé allocates 80% of marketing spend to billion-dollar brands, which generated 77% of company’s revenues and 83% of profit, and grew 5.2% between 2012 and 2016 (compared with 1.9% for the rest of the group). Nestlé’s highest growth category is portioned coffee, which registered 13.2% CAGR in 2013 – 2016. The company ranks first or second in many of the fastest growing food and beverages categories. Among the company’s successful innovations are L’Atelier chocolate, Nescafe Gold Barista, Nespresso VertuoLine (targeting the U.S. market) and Coffee Mate Natural Bliss. The company said that 30% of sales come from products innovated or renovated in the past 3 years. Les Recettes de l'Atelier Nescafe Gold Barista Nespresso Vertuoline Coffee-mate Natural Biss 02 | Growing the Core

12. Consumer Goods Strategies and Trends | Apr. 2017 12 Core brands generate about 70% of Mondelez’s net revenues, and grow twice as fast as the company, with superior margins. Mondelez launched Ritz Crisp & Thins in Europe, positioning Ritz as a better-for-you single-serve salty snack aimed at the convenience channel. The brand will next expand into the U.S. market. Mondelez will also extend Barni platform, which has been a success in Eastern Europe, into the U.S., highlighting wellbeing claims (whole grains, no HFCS) and expanding into soft cakes. Expansion, digital and marketing grow Mondelez core brands Oreo Dunk Challenge is a global omni-channel campaign comprising events, a mobile app, influencers and ads that helps in building awareness and trial. e-commerce and digital marketing;promoting various packaging options suitable for a variety of consumers and occasions (pantry, immediate use). Targeting new demographics. Adult consumers, familiar with the brand but interested in BFY snacks, are offered Oreo Thins. In fact, Thins became a successful platform which includes other snacks by Mondelez. A case study for “growing the core”, Oreo, the $ 2bn Mondelez brand, generates further growth by: 02 | Growing the Core | Mega Brands

13. Consumer Goods Strategies and Trends | Apr. 2017 13 Kellogg’s: Cheez-It is playbook for core brands Kellogg’s presented Cheez-It as the “playbook” to be implemented by its other brands. Digital marketing, social and mobile media contributed to brand building and growth. The brand’s U.S. net sales were $1bn, up 8.6%, in 2016, with growth in consumption, gross margin, and share, and a 6% 4-year CAGR. Kellogg’s continued to invest in key brands: expanding occasions and formats, launching more indulgent versions, and more spending on social and mobile activation. Net sales growth of Rice Krispies Treats in the U.S. was 9% CAGR between 2012 and 2016. Invest to Grow Expand Occasions / Formats Platform Innovation 02 | Growing the Core | Mega Brands

14. Consumer Goods Strategies and Trends | Apr. 2017 14 02 | Growing the Core | Mega Brands Innovation Expand Occasions / Formats

15. Consumer Goods Strategies and Trends | Apr. 2017 15 P&G uses sampling to draw new consumers About 80% of American men aged 18 received samples of grooming products (Gillette) for their birthday. About 70% of new American mothers received sample of baby care products (Pampers). 02 | Growing the Core | Mega Brands Clorox focuses on experience and function to grow home care brands. The Scentiva platform integrates experience (scent) and function Kickstart, with 60% less sugar and a functional claim of energy, expands Mountain Dew into “better for you” positioning. Retail revenues have passed the $500m mark. Crafted Mountain Dew and Spiked lemonade expands the brand into craft & premium PepsiCo’s Mountain Dew succeeds through functional & craft positioning

16. Consumer Goods Strategies and Trends | Apr. 2017 16 03 | health & wellness Back to Nature Simple, Real, No artificial ingredients “certified”: organic, non-GMO + Better Ingredients (More) vegetable protein, Whole grain/ Fiber, Veggies, fruit, nuts & seeds, Less sugar, Functional (energy) + Gut Health* Allergen-free, probiotics * Companies increasingly pay attention to the gut and mind connection. We expect fermented and microbiome-related products to appear soon.

17. Consumer Goods Strategies and Trends | Apr. 2017 17 Better For All In 2014 we noticed that consumers tend to merge sustainability and wellness considerations, which we dubbed: Better For All (BFA). Vegan,vegetarian,gluten-free,Non-GMO andotherclaimsbutalsoenvironmentally friendliness and fair-trade are perceived as healthier. We see now that BFA emerges as a legit positioning in new sustainable and vegan products. According to Danone’s presentation, plant-based food and beverage grew 9% CAGR 2013 – 2016 in the US (with a 33% household penetration for plant-based beverages), and in the 17% CAGR in the EU (20% penetration). 03 | Health & Wellness As part of its high-growth “sustainable nutrition” platform, Unilever launched a vegan version of Hellmann’s mayonnaise. Knorr Meal-Makers Hellmann's Vegan Pure Leaf hot tea Danone is developing the organic and dairy alternatives categories The company builds on the acquisition of WhiteWave through new products in its Horizon Organic and Wallaby brands (Wallaby registered 9% CAGR for 2013 – 2016 in the US), in addition to expanding dairy alternatives in So, Silk and Alpro. And in organic, WhiteWave’s Earthbound Farm salads brand is growing as well (growth was 10%).

18. Consumer Goods Strategies and Trends | Apr. 2017 18 Locality is an effective “better-for-all” message. It empowers the consumer with a sense of control over food production or processing, thus establishing the better-for-all connection between personal health and community. Campbell’s says it embraces smaller, more regional farming and food production, to “foster new narratives around quality, community, origin and place”. Product innovation expands the organic food and beverage market Campbell's embraces local positioning Strong performance at Annie's, the organic food brand that General Mills acquired in 2014. Retail sales in 2016 were up 40%, and U.S. household penetration grew by 57%. The company plans to extend distribution in the U.S. and Canada, and to enter new categories, such as popcorn and frozen bakery (similar to the company's Pillsbury line).

19. Consumer Goods Strategies and Trends | Apr. 2017 19 PepsiCo improves premium and BFY beverages through core brand and M&A strategies The cold pressed Naked Pressed juice has premium positioning with “botanical ingredients”. The company responds to the gut health trend with Tropicana Essentials’ Probiotics, and strategically through the acquisition of KeVita last November. 03 | Health & Wellness | Better for all Clorox launched a Burt’s Bees plant-based protein drink (Daily Protein, Protein + Gut Health, and Protein + Healthy Radiance), stretching the brand’s naturalness and nourishment qualities into Food & Beverage. Besides being rich in protein, products are non-GMO, gluten-free, soy-free, dairy-free and made without artificial sweeteners or flavors. Clorox launched a plant-based protein drink

20. Consumer Goods Strategies and Trends | Apr. 2017 20 Many Companies engage emerging brands in what appears to be a common strategy, in which they first take a minority stake in smaller, newish and usually private companies whose brands could add a strategic value to their portfolio. The major companies then experiment with those brands, applying their greater marketing and distribution resources, to evaluate potential and added value before making greater commitments. Brands on Coca-Cola’s Venturing and Emerging Brands (VEB) platform include Honest Tea, Zico coconut water, Fairlife milk and other BFY brands. It will expand globally, starting in Asia. Smucker’s acquired a minority stake in the tea brand Numi and will launch a fair-trade, organic tea in Spring 2017. Experimentation with emerging brands 03 | Health & Wellness

21. Consumer Goods Strategies and Trends | Apr. 2017 21 Simple/Real Natural positioning takes many forms, often marked with “simple” or “simply.” PepsiCo’s Frito-Lay Simply snacks are non-GMO, organic and clean-label. The company reports the line grows rapidly. Clorox Hidden Valley’s Simply Ranch Smucker’s Flogers’ Simply Gourmet is a new premium product with “all natural flavors.” PepsiCo’s Frito Lay’s Sun Chips Veggie Harvest is positioned as “real veggie.” “Simply” (or “Simple”) and “Real” mark natural positioning 03 | Health & Wellness Mondelez aims at “simple nutrition” with its successful Good Thins, which it launched last year: “real ingredients”, contemporary flavors, “real good taste” and gluten-free options. The brand registered $70m in sales and was the #1 new US snacking brand in 2016. Mondelez also launched Véa, a new culinary brand of “real ingredients” in “bold regional flavors” that offers portability, indulgence and wellness.

22. Consumer Goods Strategies and Trends | Apr. 2017 22 03 | Health & Wellness | Simple / Real Kellogg’s is overhauling some of its BFY brands, given their underperformance. Note the bites format which delivers both indulgence and function. Church & Dwight, owner of Vitafusion, plans Everyday Energy, using green tea-derived caffeine, as a response to the finding that 80% of consumers “need more energy”. Campbell’s “Real Food” initiative is a product development strategy which includes: adding more vegetables, whole grains and protein; convert to chicken with no antibiotics; investing in non-BPA can liners; removing artificial colors, flavors and preservatives.

23. Consumer Goods Strategies and Trends | Apr. 2017 23 * White spaces: unmet needs, in terms of products, consumption occasions, or demographics 04 | Convenience Portable products, On-the-go consumption + Faster action or preparation + New Consumption Opportunities + Direct-to-Consumer, e-commerce + Availability on Amazon Echo (Alexa) Convenience is an especially potent consumer motivation which can manifest itself in a demand for:

24. Consumer Goods Strategies and Trends | Apr. 2017 24 Snacks and Snackification Companies recognize the importance of the expanding snack market (snackification: any category may be turned into a snack). • 90% of consumers snack multiple times a day • 50% of all U.S. eating occasions are snacks • nearly half of U.S. consumers replace meals with snacks. (data from the Campbell’s presentation) 04 | Convenience Mondelez, which derives 85% of its revenues from snacks, says this $1.2 trillion global market has higher margins. The company plans to focus on core snacks categories, make bolt-on acquisitions, and further streamline portfolio with selected divestitures. Tyson developed a snacking platform under Hillshire, and in 2017 will focus on a more premium experience in snacking (e.g., “small plates”). Jif Snack Bars sales rose 32% over the latest 12 weeks period (ending Jan. 22, 2017), benefitting from new flavors and marketing. Brand messages include: “Great taste, no mess,” and, “Made with real almonds/ hazelnuts” as well as protein claims. Jif’s To Go’s sales were up +5% for the 52 weeks ending Jan. 22, 2017. Smucker’s is planning to expand Folgers Perfect Mondelez is focusing on snacks Snack premiumization for Tyson Smucker’s Jif innovates successfully Measures (a convenient pre-measured roast & ground coffee) nationally in 2019. The company expects Uncrustables frozen sandwiches sales to reach $220m in 2017.

25. Consumer Goods Strategies and Trends | Apr. 2017 25 Campbell’s offers several snacking platforms and focuses innovation on the market.

26. Consumer Goods Strategies and Trends | Apr. 2017 26 04 | Convenience Convenience is shaping the hair care category Church & Dwight sees a growth opportunity in dry shampoo that saves time washing hair. (“66% of American women over 18 don’t wash hair daily”.) The category is the fastest growing haircare segment, expanding from 1% of shampoo market, or $32m, in 2012, to 4% or $115m in 2016. Tyson offers Tastemakers, a ready-to- cook, meal kit on Amazon Fresh, and plans a version for brick and mortar. It also offers slow cooked brisket under Hillshire Farm Ready-to-cook products and meal kits gaining popularity Packaged food offer ready-to-cook products and meal kits partly in response to takeout and other options that convey convenience. Consumers are interested in culinary experimentation but also prefer minimal shopping and preparation. Tyson: Premium convenience

27. Consumer Goods Strategies and Trends | Apr. 2017 27 Convenience is Changing Breakfast Companies appear to seize on the breakfast category. Consumers, pressed for time in the morning, want portable and fast-prepared products, but consumers still want healthier choices: low sugar, high protein, high fiber, and promoting energy. According to Tyson, the Breakfast segment is only 0.3% of the growing $6.5bn refrigerated meals segment, despite breakfast & AM snacks constituting 33% of all eating occasions. The company therefore seeks to develop the breakfast category in the refrigerated segment. Mondelez is building on BelVita’s wellbeing reputation to expand into Breakfast. The $600m brand has a 50% repeat rate. PepsiCo’s Quaker intends to launch Overnight Oats in summer 2017. An Amazon Echo (Alexa) skill enables users to ask the digital assistant for Quaker recipes. 04 | Convenience

28. Consumer Goods Strategies and Trends | Apr. 2017 28 * White spaces: unmet needs, in terms of products, consumption occasions, or demographics 05 | Personalization Identify increasingly specific segments and niches + Use Big Data and IoT to customize the consumer’s experience and offering + Use human interaction (consultants) for individual approach and customization + Use digital commerce and mobile apps to replace physical consultants Companies approach the ever-important personalization as they:

29. Consumer Goods Strategies and Trends | Apr. 2017 29 Johnson and Johnson’s Neutrogena launched Neutrogena Shade app, which “enhances shopper experience” on the brand’s and retailers’ websites. The brand revenue doubled “by helping women find the right product for their skin tone”. J&J offers Bedtime, a free mobile-health app to monitor sleep. It will also launch on Amazon Echo. L’Oréal highlighted consumers’ expectations of personal relationship with brands, customized advice and new services, and an immersive shopping experience. Kiehl’s Apothecary Preparations, that L’Oréal launched in 2016, offers, in selected stores, personal consultations. Shoppers buy customized ampoules of skincare complexes with which they will make a serum at home. L’Oréal’s Connected Brush is a hairbrush with an IoT sensor that analyzes hair type and moisture. It sends the personal data to a mobile app that provides haircare tips and recommendations of L'Oreal's Kérastase products. J&J uses apps for personalization Human attention and IoT drive personalization at L’Oréal Personalization

30. Consumer Goods Strategies and Trends | Apr. 2017 30 Colgate experiments with personalization in Australia A sophisticated segmentation is also a take on personalization Colgate’s Perfect Match, launched in Australia, advised shoppers on which toothbrush to choose based on questionnaires they fill-in at various stores. Colgate's market share grew 1.5 percentage points as a result. Coca-Cola presented Category Clustering, its new product segmentation model which is based on new consumer motivations. 05 | Personalization Campbell’s sees Personalized Nutrition as the next step in Health & Wellness. Technology boosts this trend. The idea is to “reconfigure diets according to an individual’s specific physiology, lifestyle and health goals”. The company said consumers want food to provide functional benefits: endurance; mood enhancement; cognitive function; and energy management.

31. Consumer Goods Strategies and Trends | Apr. 2017 31 General Mills, leveraging the acquisition of Annie’s, plans a dairy offering for every consumer motivation 05 | Personalization Annie’s yogurt tubes: organic, whole milk, fruit, “mom-approved” Yoplait Dippers: snacking, convenience Yoplait Custard: Whole Milk, Back to Nature Yoplait beverages: convenience, extending a strong core brand into the snacking category Liberte: indulgent, organic, adults —a premium offering Mountain high: affordable and simple Annie’s Dippers Liberte Mountain High

32. Consumer Goods Strategies and Trends | Apr. 2017 32 * White spaces: unmet needs, in terms of products, consumption occasions, or demographics 06 | Indulgence Premium + Ethnic and local flavors + Differentiation between indulgence for children and for adults + Portion control (contributes to a better-for-you positioning Companies presented various strategies for indulgence

33. Consumer Goods Strategies and Trends | Apr. 2017 33 Mondelez co-branded some of its well- known indulgent brands (e.g., Milka & Cadbury, Milka & Oreo). The company is also experimenting with categories, choco-bakery being a strong and growing platform. Indulgence is too basic to be considered a trend. It’s more a prerequisite for other developments and innovations in food: many trends represent attempts to accommodate the ever-present demand for indulgence while satisfying other needs. Indeed, today the main challenge food companies face is to offer better- for-you products that do not compromise consumers’ enjoyment and taste. Smucker’s acquired Sahale Snacks in 2014, which offers indulgent, better-for-you, portable snacks. The company plans to increase investment in marketing and innovation, and expand distribution for the brand. PepsiCo recently launched two new flavors of its craft positioned brand Pepsi 1893. This cola is sweetened with real sugar (natural indulgence). General Mills’ Larabar is positioned as “real food”, but is also firmly based on indulgent flavors and formats, including the “truffle” bites snack. The brand saw a 47% increase in the 12 months ending Jan. 28, 2017. The company plans to grow the super-premium ice-cream Haagen-Dazs, building on new products, brand retail, geographical expansion and impulse consumption occasions. 06 | Indulgence Indulgence

34. Consumer Goods Strategies and Trends | Apr. 2017 34 * White spaces: unmet needs, in terms of products, consumption occasions, or demographics Summary

35. Consumer Goods Strategies and Trends | Apr. 2017 35 The CAGNY conference, which brings together marketing executives from the world’s leading consumption goods giants, is a rare opportunity to learn about consumer trends and business response. Among the dozens of companies presenting you’ll find Mondelez, PepsiCo, Coca- Cola, General Mills, Unilever, Nestlé, Tyson Foods, L’Oréal, Colgate-Palmolive, Johnson & Johnson and many other international household names. We have covered the CAGNY conferences since 2014. The 2017 conference took place last February in Florida. We’ve watched and listened to the presentations, and read the reports. Now we would like to share the insights we gleaned. In virtually every presentation “digital” has received ample attention. If there’s one takeaway, it is that companies which only a few years ago have been relatively removed from the digital revolution are now feeling its heat. Surprisingly perhaps (and maybe to save face), companies present digital not as a threat but as an opportunity — for revenue, innovation and marketing. Digital shapes every aspect of business: • Across the board companies shift more dollar ads to digital. There’s no campaign without a social media component. • Companies spend on e-commerce (both direct-to-consumer and through retails). The trend is international (for American and European companies, e-commerce in China is especially critical for reaching out to consumers). • Companies use proprietary mobile apps to complement products and for marketing and sales. • IoT is not yet a game changer. Companies experiment with the Internet of Things but are yet to find compelling ways of reimagining products or marketing on a large scale. • But Amazon Echo (Alexa), staring in many presentations, may be a first-step for many into the world of IoT. Summary

36. Consumer Goods Strategies and Trends | Apr. 2017 36 Probably the most interesting market to emerge from the presentations is snacking (estimated at $1.2bn a year globally), on the intersection of two important consumer motivations — Convenience and better-for-you indulgence. • Snackification, or the introduction of a snack format in a food category, continues. The Breakfast segment, especially, seems to be heating up. • Snacks are key in companies’ premiumization strategies. Companies believe consumers want better-for-you products. Better-for-you can take many forms, including vegan, all-natural, allergen-free, non-GMO and so on. • Better-For-All is our appellation for the merging effect between Sustainability (environmentally friendly but also fair-trade and social responsibility) and various Health & Wellness considerations. BFA seems to be an engine of product innovation. • Gut health is on the rise. Companies already pay attention to the gut-mind connection (the effect of digestion and gut bacteria on every aspect of mental and physical performance) and are starting to incorporate the concept in their marketing and in product development, as well as through M&A. • Companies use the nuances in BFY perception to innovate: a premium cola (Pepsi 1893) doesn’t contain artificial sweeteners and the sugar is presented as natural.

37. Consumer Goods Strategies and Trends | Apr. 2017 37 Strategic Pillars Discussed on CAGNY 2017 Enablers & Macro-Trends Discussed Consumer Trends Strategy & Innovation • Changing retail landscape -Emerging channels • Emerging Demographics – aging vs digital generations • Digital penetration • Income Gaps • Health & Wellness • Convenience & Snacking • Indulgence & Premiumization • Personalization • Grow the Core and drive trial • Optimize channel strategy, focus on direct to consumer • Stretch brands and expand platforms • Bolt-On acquisitions, focus

38. Consumer Goods Strategies and Trends | Apr. 2017 38 How can we help? Schieber Research is a market research and competitive intelligence firm that helps companies recognize new opportunities, innovate, and grow. Founded in 2009, and with offices in New York and Tel Aviv, Schieber Research has served hundreds of companies worldwide, from startups to private equity firms to major consumer goods manufacturers. We provide tailor-made research, ongoing competitive intelligence and reports on industry and consumer trends. We developed a special methodology to monitor, analyze and facilitate market trends, and our worldwide network of field analysts monitors developments in retail and consumer goods on site. Wehaveworkedwithclientsfromdiverseindustries,including:foodandbeverages,automotive, finance, pharma, retail, beauty and personal care, hospitality, home appliances and digital. Founder and CEO Hamutal Schieber is an expert on consumer goods and innovation, and frequently writes for major business publications and lectures at business schools. She is a graduate of the Hebrew University Faculty of Law and has over 16 years of experience in market research. CEO Hamutal Schieber founded the company in 2009. Our offices are in New York and Tel Aviv. Visit us at www.researchci.com

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