Market Overview

IRI Consumer Connect Survey Finds CPG Industry Not Feeling Boost from Healthy U.S. Economy

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Consumers are focused on saving money; non-edible sales struggled
more than CPG industry as a whole in Q2 2018

The consumer packaged goods industry is not reaping the benefits of a
fairly robust economy, according to the latest IRI® Consumer
Connect survey results released today. Even though 55 percent of
households say their financial health is good, CPG unit sales growth is
anemic and the non-food sector is struggling even more. To examine how
consumers' shopping behaviors and attitudes are affecting non-edibles,
IRI also released a new report: "Where's
the Non-Food Growth?"

The Consumer Connect Index, which monitors consumers' financial health
and CPG behaviors for factors such as brand loyalty, attitudes toward
organic/natural food and beverages, perception of national compared to
store brands and frequency of using retailers' and manufacturers'
coupons, came in at 98.7 for Q2 2018. This is virtually identical to Q2
2017 (98.6) and only slightly less than Q1 2018 (99.5). With a benchmark
score of 100, a Consumer Connect Index score of more than 100 reflects
consumers who are less price-driven, more loyal to favorite brands and
better equipped to maintain their desired lifestyles without changes.

"Our quarterly index indicates that consumers do not feel like they are
on the economic roller coaster as they did in the past," said Susan
Viamari, vice president of Thought Leadership for IRI. "People are
opening their wallets more and spending, but they are still very
selective about what they will spend their money on. Obviously, people
need to eat, so they are spending more freely on food and beverages.
However, they are looking to stretch their dollars a bit more in the
non-food aisles."

Doing more with less

Results from the Q2 2018 Consumer Connect survey reveal that select
consumer sectors are still struggling despite the healthy economy:

 

Total

 

HH w/Kids

 

Income <$35K

 

Hispanics

Amount in savings has declined during
past 6 months 61% 63% 80% 64%
 
Household financial health is strained 45% 52% 73% 56%
 
Having difficulty affording groceries 27% 34% 52% 37%

As a result, consumers are embracing a variety of money-saving
strategies and making trade-offs to save money:

 

Total

 

HH w/Kids

 

Income <$35K

 

Hispanics

Buy bulk for lower price per serving/usage 61% 69% 62% 62%
 
Generally purchase the lowest-price option
when I buy groceries

59%

66%

73%

61%

 

 

 

 

Buy OTC brands that are not my preferred
brand because they're on sale

53%

61%

59%

58%

 

 

 

 

Buy beauty/personal care brands that are not
my preferred brand because have coupon 36% 45% 42%

37%

 

Buy smaller packages to get lower price
point 34% 34% 45% 36%

In addition to these money-saving strategies, consumers are simply
buying less to spend less. This is having a clear negative impact on
non-food unit sales trends:

 

Unit Sales Change vs. Same Period Year Ago

April

 

May

 

June

Total Non-Edible 0.0% +0.4% (0.1%)
Beauty +0.8% +0.8% +0.7%
General Merchandise (1.5%) (0.8%) (0.9%)
Health Care +1.0% +0.6% +0.5%
Home Care +1.2% (0.2%) (0.8%)
Tobacco 0.0% +1.8% +0.9%

However, all is not doom and gloom for the CPG industry — there is
reason for optimism. The economy appears to be on a positive trend, and
many consumers expect that their financial position will improve
throughout the remainder of the year. Even among groups that are
struggling, consumers expect their household's ability to save money
will improve: 58% (total), 64% (households with kids), 54% (households
with income less than $35,000) and 43% (Hispanics). In addition, these
groups are showing a willingness to invest more in premium-tiered CPG
solutions during the next six months: 30% (total), 28% (households with
kids), 31% (households with income less than $35,000), 22% (Hispanics).

CPG brands and manufacturers also have opportunities to entice consumers
to spend more to trade up to higher-end products and/or to get select
benefits:

 

Total

 

HH w/Kids

 

Income <$35K

 

Hispanics

Will pay more for OTC medications
that treat multiple symptoms 48% 53% 46% 42%
 
Will pay more for household cleaners with
environmentally friendly ingredients 35% 38% 34% 29%
 
Will pay more for anti-aging beauty care 24% 24% 24% 13%

"CPG brands and retailers need to continue to think creatively and
strategically in order to bring consumers what they want: excitement,
convenience and value," added Viamari. "Consumers are smart and they
have choices. They know that they can shop around and they know that
their choices are virtually unlimited. Brands and retailers that can
stand out with a strong value proposition are the ones that will satisfy
today's choosy shoppers and be rewarded with growth and loyalty."

To download the press release, video highlights and "Where's the
Non-Foods Growth?" report as well as Consumer Connect survey findings
dating back to Q1 2016, click
here
.

About the IRI Consumer Connect Survey

IRI provides new survey results at the end of each calendar quarter
covering shoppers' behaviors and attitudes as they directly relate to
their strategies for learning about, purchasing and utilizing CPG and
health care products, as well as information regarding perceptions of
economic conditions and their ability to provide for their families. For
more information about customizing the research for a particular
category or industry, please contact IRIMarketing@IRIworldwide.com.

About the IRI Partner Ecosystem

IRI fundamentally believes that delivering differentiated growth for
clients requires deep, highly integrated partnering with a variety of
best-of-breed companies. As such, IRI works closely with a broad range
of industry leaders across multiple industries and sectors to create
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its clients more effectively collaborate and compete in their various
markets, and exceed their growth objectives. IRI is committed to its
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Mastercard Advisors, MaxPoint, Omnicom, Oracle, Pinterest, Research Now,
Simulmedia, SPINS, Survey Sampling International, Univision, Viant,
Yieldbot
and others.

About IRI

IRI is a leading provider of big data, predictive analytics and
forward-looking insights that help CPG, OTC health care organizations,
retailers, financial services and media companies grow their businesses.
A confluence of major external events — a change in consumer buying
habits, big data coming into its own, advanced analytics and
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drivers of success in all industries. With the largest repository of
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visit www.iriworldwide.com.

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