Our presentation will begin shortly To access audio please dial 213 9 - PDF document

1 Our presentation will begin shortly. To
Our presentation will begin shortly. To access audio, please dial (213) 929 - 4232, and use the access code 480 - 178 - 977. PLANT BASED FOODS GROWTH OPPORTUNITIES IN RETAIL OUR PRESENTERS Jeff Crumpton Retail Development Manager SPINS Kora Lazarski Strategic Alliance Manager SPINS Michele Simon Executive Director Plant Based Foods Association SPINS TRACKING THE INDUSTRY Our missi

2 on is to increase the presence and acces
on is to increase the presence and accessibility of products that contribute to a healthier and more vibrant America. We carry out our mission by providing information, insight, and a common language for the industry with which to understand and analyze consumer, retail, and broad marketplace dynamics. SPINS MISSION SPINS is the leading provider of retail consumer insights, ana

3 lytics, and consulting for the Natural,
lytics, and consulting for the Natural, Organic, and Specialty products industries. We transform raw data into intelligent and actionable business solutions. • Retail Sales Data & Analytics • Business Intelligence (BI) Tools • Research & Advisory • Consulting Services • Consumer Insights • Digital and Mobile Applications • TrendWatch & Industry News WHO IS SPINS

4 ? SPINSscan Natural, Specialty Gourmet,
? SPINSscan Natural, Specialty Gourmet, Conventional, 52 weeks ending 4/17/16 versus Year Ago SPINS CROSS - CHANNEL REPORTING Only SPINS segments each retail channel by Natural, Health & Wellness, and Conventional products to isolate industry dynamics. We capture the natural & specialty stores where many health & wellness products originate alongside the traditional supermarkets

5 and mass retailers such as Walmart and T
and mass retailers such as Walmart and Target. NATURAL SPECIALTY GOURMET CHANNEL CONVENTIONAL MULTI OUTLET $7.8B Channel Sales Total Channel Sales +8% $8.3B Channel Sales $606.5B Channel Sales Natural Products (NPI) +8% Specialty/Wellness Products (HWI) +8% Total Channel Sales +4% Natural Products (NPI) +8% Specialty/Wellness Products (HWI) +8% Total Channel Sales +2% Natural Produ

6 cts (NPI) +12% Specialty/Wellness Produc
cts (NPI) +12% Specialty/Wellness Products (HWI) +8% HOW WE TRACK PRODUCTS – SCIENCE Retail data is segmented in our Product Library – a database of nearly 2 million UPCs. Every product with a barcode is hand - coded for an expansive list attributes, allowing for trillions of nuanced trend insights. 95 489 70+ Categories e.g. Energy Bars, Non Dairy Beverages, Meat Alternative

7 s, Homeopathy, Herbal Formulas Subcateg
s, Homeopathy, Herbal Formulas Subcategories e.g. Medicinal Teas, Cheese & Alternatives, Yogurt and Kefir, Functional drinks and Kombucha Attributes e.g. Functional Ingredient, Gluten Free, Vegan, Hormone Free, Allergy Free, Paleo, Sprouted Certifications e.g. Non GMO Project, NOP Organic, Fair Trade USA, B Corporation, Whole Green Council Health Focus e.g. Blood Sugar, Bone

8 , Joint, Cardiovascular, Immune, Digest
, Joint, Cardiovascular, Immune, Digestive, Prenatal, Prostate, Weight Ingredients e.g. Chia, Fish Oil, Fiber, Plant Sterols, Vitamin D, Probiotics, DHA Products, Protein, Glucosamine 7 24 640+ Copyright © 2016 SPINS, LLC. All Rights Reserved. SPINS STATE OF THE PLANT BASED FOODS INDUSTRY Copyright © 2016 SPINS, LLC. All Rights Reserved. 1 3 5 Cheese Alternatives Meat Alt

9 ernatives • Refrigerated + Frozen Meat
ernatives • Refrigerated + Frozen Meatless Jerky & Snacks Non - Dairy Beverages • Refrigerated + Shelf Stable Meat Alternative Dishes Other Dairy & Alternatives 7 Tofu Vegan Mayonnaise and more… 2 4 6 8 Categories Largely Replacing Meat & Dairy Products in the Diet State of the Industry PLANT BASED FOODS PRODUCT CATEGORIES Copyright © 2016 SPINS, LLC. All Rights Reserved.

10 ABSOLUTE DOLLAR GROWTH +$4.6B +$90M
ABSOLUTE DOLLAR GROWTH +$4.6B +$90M +$207M PERCENT GROWTH +3.4% +7.5% +10.7% MULO Specialty Natural INNOVATION CHANNELS Plant based food product sales topped $4.9B in 2016, growing 3.4% since prior year. THE INNOVATION CHANNELS ARE DRIVING THE GROWTH OF PLANT BASED FOODS Plant Based Foods Growth Drivers SPINSscan Natural, Specialty Gourmet, Conventional MULO, 52 weeks

11 ending 6/12/16 versus Year Ago Copyright
ending 6/12/16 versus Year Ago Copyright © 2016 SPINS, LLC. All Rights Reserved. +4.4% +6.6% +3.4% Growth Rate 67% 17% 10% 8% 2% 2% 6% 2% 3% 83% $160 M $4.9 B Dollar Sales Contribution to Growth SHELF STABLE NON - DAIRY BEVERAGES REFRIGERATED NON - DAIRY BEVERAGES REFRIGERATED MEAT ALTERNATIVE CHEESE ALTERNATIVES FROZEN MEAT ALTERNATIVES TOFU +2.7% +8% +11% - 1.0% The Refriger

12 ated Non - Dairy Beverages, Shelf Stable
ated Non - Dairy Beverages, Shelf Stable Non Dairy Beverages, and Frozen Meat Alternative categories are driving nearly all plant based food sales. - 5% 5% CONTRIBUTION TO SALES AND GROWTH Plant Based Foods Growth Drivers SPINSscan Natural, Specialty Gourmet, Conventional MULO, 52 weeks ending 6/12/16 versus Year Ago Copyright © 2016 SPINS, LLC. All Rights Reserved. Time Descr

13 iption Geography Dollars Dollar % Growth
iption Geography Dollars Dollar % Growth 13Quads End 2016 - Jun - 12 NON DAIRY BEVERAGES $4,197,623,092.92 2.91% REFRIGERATED NON - DAIRY BEVERAGES $3,278,479,981.37 4.37% Total US - MULO $3,149,094,847.31 4.18% Total US - Natural Channel $71,706,104.24 10.60% Total US - Spec Gourmet Channel $57,679,029.82 7.30% SHELF STABLE NON - DAIRY BEVERAGES $919,143,111.55 - 1.97% Total US

14 - MULO $872,475,211.94 - 2.00% Total U
- MULO $872,475,211.94 - 2.00% Total US - Natural Channel $38,488,564.81 - 1.68% Total US - Spec Gourmet Channel $8,179,334.80 - 0.41% Refrigerated milks dominate the category with no signs of slowing Shelf stable beverages see declines across all channels Soy and Rice Milks hardest hit in both RF and SS SPINSscan Natural, Specialty Gourmet, Conventional MULO, 52 weeks ending

15 6/12/16 versus Year Ago Category Insight
6/12/16 versus Year Ago Category Insights NON DAIRY BEVERAGES New Sources, Technologies, And Formats Of Milk And Dairy Replacements • Macadamia and Tigernut milks emerging • Omega - rich walnut milks and blends • Vegan + Paleo friendly • High Pressure Pasteurization (HPP) crossing over • Prebiotic content claims • Cold - pressed claims • Carrageenan free • Not jus

16 t for home cooking anymore – RTD size
t for home cooking anymore – RTD sizes popping up everywhere NON DAIRY BEVERAGE INNOVATIONS Copyright © 2016 SPINS, LLC. All Rights Reserved. SPINSscan Natural, Specialty Gourmet, Conventional MULO, 52 weeks ending 6/12/16 versus Year Ago Dollars Dollar % Growth FROZEN MEAT ALTERNATIVES $477,164,508.07 2.68% Total US - MULO $436,335,841.82 1.97% Total US - Natural Channel

17 $29,141,107.97 12.71% Total US - Spec
$29,141,107.97 12.71% Total US - Spec Gourmet Channel $11,687,558.28 6.88% Natural Channel Driving the Growth Categories inclusive of meat alternatives all saw positive growth in the last year Meat only category (meat, poultry, seafood in FR and SS) sales all dropped more than 3x the total combined category sales volume of all Frozen Meat Alternatives in the US! Meatless jerki

18 es growing 7x faster rate than animal -
es growing 7x faster rate than animal - based jerkies Frozen meatballs and refrigerated burger patties taking off Category Insights MEAT ALTERNATIVES Meat Alternative Snacks Making Over Every Store Aisle MEAT ALTERNATIVE INNOVATIONS • Beyond Meat sizzles in the meat locker • Mushroom - based meat alternatives promote meatless and animal - based meat blends • Abalone Mushr

19 ooms • Jackfruit continues to climb â€
ooms • Jackfruit continues to climb • Mock seafood CPGs continue to launch new fish and shellfish alternatives – even Kelp Caviar! • Tofu from hemp Copyright © 2016 SPINS, LLC. All Rights Reserved. Subcategory Insights SPINSscan Natural, Specialty Gourmet, Conventional MULO, 52 weeks ending 6/12/16 versus Year Ago Time Description Geography Dollars Dollar % Growth 13Qu

20 ads End 2016 - Jun - 12 CHEESE & CHEESE
ads End 2016 - Jun - 12 CHEESE & CHEESE ALTERNATIVES Grated & Shredded Cheese Alts. Packaged Cheese Alts. Sliced & Individual Cheese Alts. Spreadable Cheese Alts . $96,003,532.77 10.98% Total US - MULO $67,436,248.44 2.81% Total US - Natural Channel $24,714,643.51 30.11% Total US - Spec Gourmet Channel $3,852,640.82 27.18% • Natural Channel absolute and percent dollar growth

21 surging across other channels • Cheese
surging across other channels • Cheese Alternatives just burgeoning in Specialty Channel • Spreadable Cheeses are leading the pack • Cheese Alternative sales growth is all positive for alternatives and falling or stagnant for same category counterparts! CHEESE ALTERNATIVES A Small Category With Major Growth CHEESE ALTERNATIVE INNOVATIONS • Cheese alternative manufactur

22 ers expanding into pasta entrees • Co
ers expanding into pasta entrees • Cottage, Farmers, and Greek Cheeses begin to be explored • Major investments like General Mills in Kite Hill promise this category will see a lot of activity in the coming years PROJECT SPECIFICATIONS Supporting Data Parameters Plant Based Food Categories: • Frozen Meat Alternatives • Refrigerated Meat Alternatives • Refrigerated Non

23 - Dairy Beverages • Shelf Stable Non
- Dairy Beverages • Shelf Stable Non - Dairy Beverages • Tofu Plant Based Food Subcategories (Aggregated): • Grated & Shredded Cheese Alternatives • Packaged Cheese Alternatives • Sliced & Individual Cheese Alternatives • Spreadable Cheese Alternatives Positioning: • NPI (Natural Products) • Not broken out • Specialty • Not broken out • Conventional • Not b

24 roken out Geography: • Total U.S. Chan
roken out Geography: • Total U.S. Channels: • Natural Channel • Specialty Gourmet Channel • Conventional MULO MULO - Multi Outlet retailers spanning Food, Drug, Mass, Walmart, Club, Dollar, and Military store. Product Universe: • All Items (TPL) Timeframe: • Past 52 weeks as of 6/12/16 Deliverables: • PowerPoint presentation Copyright © 2016 SPINS, LLC. All Rights R

25 eserved. SPINS CATEGORY ANALYSIS MEAT
eserved. SPINS CATEGORY ANALYSIS MEAT ALTERNATIVES Copyright © 2016 SPINS, LLC. All Rights Reserved. THE CATEGORY REVIEW PROCESS RETAIL PERSPECTIVE Retailers use common measures to analyze performance of categories, subcategories, and brands. These measures are considered to be growth factors , or, indicators of overall performance. Dollars and Units • Indicators of toplin

26 e growth ARP – Average Retail Price â
e growth ARP – Average Retail Price • Rising ARP can suppress unit growth while growing topline dollar sales • Declining ARP can suppress dollar growth while growing topline unit sales TDP – Total Distribution Points • Measures the depth and breadth of distribution for a given level in the category hierarchy. This measure will go as low as item level in the data. Promo

27 tional Dollars • Dollars gained throug
tional Dollars • Dollars gained through promotion (trade spending) activities Copyright © 2016 SPINS, LLC. All Rights Reserved. INNOVATION INCUBATORS CROSS CHANNEL INSIGHTS As retailers think about plant based foods, we know that the vast majority of the innovation witnessed in the categories that we’ve noted today occur within natural focused retailers.  Brands with a h

28 igh concentration of ethically focused c
igh concentration of ethically focused consumers understand that these natural retailers are essential proving grounds for product innovation and growth.  These natural retailers are at the beginning of a product lifecycle which will migrate through various types of retailers and ultimately gain widespread acceptance by the majority of consumers.  Being able to identi

29 fy, segment, and analyze these various r
fy, segment, and analyze these various retailer formats are critical for emerging brands and items. Copyright © 2016 SPINS, LLC. All Rights Reserved. MEAT ALTERNATIVES CATEGORY LEVEL Frozen and Refrigerated sales in Natural are growing at an even rate Refrigerated is growing at a faster rate for Specialty and Conventional channels indicating that those products represent in

30 novation and interest from those consume
novation and interest from those consumers. Copyright © 2016 SPINS, LLC. All Rights Reserved. MEAT ALTERNATIVES SUBCATEGORY LEVEL Looking at the Natural Channel only, subcategories such as Refrigerated Meatless Nuggets, Strips & Cutlets has strong triple digit growth. Meatless grounds should also be highlighted with growth at 55% vs. YA . Copyright © 2016 SPINS, LLC. All

31 Rights Reserved. MEAT ALTERNATIVES PRO
Rights Reserved. MEAT ALTERNATIVES PRODUCT TYPE Coding for the product type attribute provides further clarity into the growth of the Refrigerated Meatless Nuggets, Strips & Cutlets Category. Copyright © 2016 SPINS, LLC. All Rights Reserved. MEAT ALTERNATIVES ANIMAL TYPE Product attribute coding also unlocks the perceived animal type of each product. Copyright © 2016 SPI

32 NS, LLC. All Rights Reserved. SPINS CA
NS, LLC. All Rights Reserved. SPINS CATEGORY ANALYSIS CHEESE ALTERNATIVE SUBCATEGORIES Copyright © 2016 SPINS, LLC. All Rights Reserved. CHEESE ALTERNATIVES SUBCATEGORY The Cheese Alternative category highlights the migration and innovation of products which start within Natural retailers and then move through other retail segments  Grated and shredded cheeses were in van

33 guard of product innovation within this
guard of product innovation within this category  Spreadable and Packaged Cheese alternatives are fairly consistent for all (3) channels  Sliced and Individual Cheese Alternatives show stronger growth for Natural retailers emphasize the point that innovation occu rs within this incubator channel for new product development. Copyright © 2016 SPINS, LLC. All Rights Reserved

34 . CHEESE ALTERNATIVES PRODUCT TYPE Nut
. CHEESE ALTERNATIVES PRODUCT TYPE Nut based cheese alternative products is growing the fastest for specialty retailers supported with a massive amount of trade spending. Pricing for these products all report double digit increases which drive up the topline numbers. Copyright © 2016 SPINS, LLC. All Rights Reserved. CHEESE ALTERNATIVES PRODUCT FORM What’s driving growth?

35 The expansion of products beyond the t
The expansion of products beyond the traditional Cheese Alternative product forms. Copyright © 2016 SPINS, LLC. All Rights Reserved. CHEESE ALTERNATIVES FLAVOR Beyond the standard cheese flavors, notable increases occurring across several flavors. Copyright © 2016 SPINS, LLC. All Rights Reserved. PLANT BASED FOODS CATEGORY REVIEW The category review process allows reta

36 ilers and brands critical insights into
ilers and brands critical insights into areas of growth, innovation, and decline to determine their strategy in growing the market for plant based foods across Departments Categories & Subcategories Product Types Flavors Forms RECAP A big new factor growing this industry: THE PLANT BASED FOODS ASSOCIATION Plant Based Foods Association CONSUMER TRENDS & INTEREST CONSUMER TRENDS IN

37 PLANT - BASED EATING 36% of Americans
PLANT - BASED EATING 36% of Americans eat at least one vegetarian meal per week SOURCE: Harris interactive poll, 2015 26% of consumers say they ate less animal meat in the last 12 months SOURCE: Nutrition Business Journal’s Food Tribes Report 1 in 10 millennials are vegetarian or vegan SOURCE: Nutrition Business Journal’s Food Tribes Report CONSUMER TRENDS IN PLANT - BASED E

38 ATING 36% of consumers buy plant - base
ATING 36% of consumers buy plant - based meats SOURCE: Mintel’s Meat Alternatives Report, June 2013 36% of consumers prefer plant - based milks SOURCE: Nutrition Business Journal’s Food Tribes Report 60% of millennials consume plant - based meats SOURCE: Survey conducted by 210 Analytics Copyright © 2016 SPINS, LLC. All Rights Reserved. 35% 23% 13% 12% 11% 8% Healthy/Healt

39 h Food Animal Welfare Cleaner Ingredient
h Food Animal Welfare Cleaner Ingredients Weight Loss Environmental Responsibility Social Responsibility SOURCE: Nutrition Business Journal; Special Diets, May 2015 DRIVERS OF CONSUMER INTEREST Copyright © 2016 SPINS, LLC. All Rights Reserved. SOURCE: Survey conducted by Califia Farms and BerryCart , January 2015 DRIVERS OF CONSUMER INTEREST 67% of consumers choose plant - ba

40 sed milks because they like the taste 65
sed milks because they like the taste 65% of consumers choose plant - based milks because it’s healthier than dairy Plant Based Foods Association GROWING THE INDUSTRY Why was PBFA formed? To provide a collective voice in policymaking and to promote a growing industry To ensure a fair and competitive marketplace for businesses selling plant - based foods intended to replace anim

41 al products such as meats, dairy, and eg
al products such as meats, dairy, and eggs, by promoting policies and practices that improve conditions in the plant - based foods industry, and educating consumers about the benefits of plant - based foods. What is PBFA’s mission? Copyright © 2016 SPINS, LLC. All Rights Reserved. FOUNDING BOARD MEMBERS STAFF Michele Simon, Executive Director Elizabeth Kucinich, Policy & Part

42 nerships Noelle Callahan, Member Relatio
nerships Noelle Callahan, Member Relations Offices in San Francisco and Washington, D.C. WHO LEADS PBFA? Copyright © 2016 SPINS, LLC. All Rights Reserved. 50 VOTING MEMBERS INCLUDING Packaged food companies Ingredient suppliers Restaurant chains Meal delivery services WHO ARE PBFA MEMBERS? Copyright © 2016 SPINS, LLC. All Rights Reserved. THREE PROGRAM AREAS Consumer Access :

43 increasing opportunities in retail and
increasing opportunities in retail and food service Policy : leveling the playing field, creating a conducive regulatory environment to meet the growing consumer demand Public Relations : media outreach to establish PBFA as the go - to experts and leading authority on the plant - based foods industry WHAT DOES PBFA DO? Copyright © 2016 SPINS, LLC. All Rights Reserved. Edu

44 cation : trends, opportunities, categor
cation : trends, opportunities, category dynamics, terminology Visibility : making it easier for consumers to locate within the store, e.g., better signage Certification : Enable retailers to leverage with consumers and drive differentiation CONSUMER ACCESS IN RETAIL Copyright © 2016 SPINS, LLC. All Rights Reserved. Problem : inconsistent words being use to describe products

45 • “non - dairy cheese”, “Americ
• “non - dairy cheese”, “American - style”, cheese alternative”, “ cheeze ” • California, “cultured nut product” (Miyoko’s Kitchen) Solution : Create common industry terms that consumers will understand Work with federal (and state) agencies to accept these terms and definitions PBFA POLICY PRIORITIES UPDATE LABELING REGULATIONS Copyright © 2016 SPINS,

46 LLC. All Rights Reserved. Problem :
LLC. All Rights Reserved. Problem : various federal policies favor animal agriculture over plant - based foods • Subsidies result in artificially low pricing of animal products compared to plant - based foods, creating a disadvantage in the marketplace for plant - based food companies • Federal “check - off programs” create large generic marketing campaigns for beef,

47 pork, eggs, milk and other dairy foods,
pork, eggs, milk and other dairy foods, creating marketing disadvantages Solution : Remove these unfair and anti - competitive advantages so that consumers have equal access to affordable, healthier, and more sustainable plant - based foods. PBFA POLICY PRIORITIES CREATE A LEVEL PLAYING FIELD Copyright © 2016 SPINS, LLC. All Rights Reserved. Dietary Guidelines for Americans â

48 €“ every 5 years – still emphasizes m
€“ every 5 years – still emphasizes meat & dairy POLICY PRIORITIES GIVING VOICE TO OUR INDUSTRY School meals – ensuring federal program allows for more plant - based options Ag - gag laws – Submitted “friend of court” brief in constitutional challenge Copyright © 2016 SPINS, LLC. All Rights Reserved. WHAT ARE OUR BIGGEST CHALLENGES? Representing a young industry st

49 ill learning and in flux Competing with
ill learning and in flux Competing with entrenched and politically powerful meat, egg, and dairy industries Consumer acceptance of unfamiliar foods CHALLENGES Copyright © 2016 SPINS, LLC. All Rights Reserved. WHAT ARE OUR BIGGEST OPPORTUNITIES? Momentum from growing consumer interest Start - up fever is driving next generation of companies to innovate Food movement as partner

50 s in “meat reduction” strategies OPP
s in “meat reduction” strategies OPPORTUNITIES Copyright © 2016 SPINS, LLC. All Rights Reserved. WHAT DOES THE FUTURE HOLD? Working with policymakers and industry partners to grow plant - based Maturity of industry plus consumer movement will drive political change More growth opportunities as consumer demand increases FUTURE Copyright © 2016 SPINS, LLC. All Rights Reser

51 ved. THE PLANT BASED FOOD REVOLUTION S
ved. THE PLANT BASED FOOD REVOLUTION SOWING SEEDS FOR CLIMATE FRIENDLY EATING Our presentation will be continued at Natural Products Expo East this year! Join us on: Thursday, September 22 nd 1:30 – 2:45pm ET FUTURE THANK YOU! Michele Simon, JD, MPH 510 - 465 - 0322 michele@plantbasedfoods.org @ growplantbased Kora Lazarski klazarski@spins.com Jeff Crumpton jcrumpton@spins.com