AN INNOVATIVE YEAR FOR BISCUITS 2017

Transcription

1 AN INNOVATIVE YEAR FOR BISCUITS 2017

2 EXECUTIVE SUMMARY HIGHLIGHTS 3 MACRO TRENDS 4 SHOPPER TRENDS 5 SNACKING TRENDS 6 CORE SNACK FOODS 8 TOTAL BISCUITS 10 RETAIL - BISCUITS PERFORMANCE 12 SWEET BISCUITS 14 SAVOURY BISCUITS 16 EVERYDAY BISCUITS 18 EVERYDAY TREATS 20 SPECIAL TREATS 22 NOVELTY BISCUITS 24 CHOCOLATE BISCUIT BARS 26 HEALTHIER BISCUITS 28 CHRISTMAS BISCUITS 30 OWN LABEL BISCUITS 32 INNOVATION 33 THE FUTURE 34 SOURCES & CONTACTS 36 THE WORLD OF PLADIS pladis is one of the world's leading snacking companies and home to many loved brands including McVitie s, Ulker and Godiva. pladis delights consumers with products across the Snacking category including sweet and savoury biscuits, wafers, cakes, chocolate, gum and candy. Formed in 2016, pladis is the proud steward of over 300 years of family baking and confectionery experience. The expertise of its 26,000 strong global workforce spans 34 factories in 13 countries, and is founded on collaboration, agility and resilience. pladis is one of the fastest growing companies in the sector with annual revenues of 2.2 billion. As a responsible business, delivering the highest quality products and exceptional service, pladis products reach more than 4 billion people across the world. pladis people are passionate about collaboration and creation, using consumer insights and trends to fulfil its promise; to bring happiness to the world with every bite. This, combined with rapid speed to market enables the company to bring its products from idea to on-shelf quickly, so they are available for consumers all over the world. THE PURPOSE OF THIS REVIEW This review has been produced by pladis from independently generated data and as far as possible, is a true and impartial view of the segments, manufacturers, brands and trends shaping the Biscuits category in the year ending December We invite you to publish or share this information as you wish, with credit to pladis. Hayes End Road, Hayes UB4 8EE

3 EXECUTIVE SUMMARY After a turbulent year in 2016, biscuits returned to growth in 2017, buoyed by some outstanding new product launches. The continued engagement and love that the UK has for biscuits was backed up by the fact that the category grew across all channels in 2017, translating into growth of over 60m, with retail sales now worth 2.5bn. Biscuits are purchased by virtually all households in the UK and represent nearly a quarter of sales within core snack foods, with the average household buying the category nearly once a week. Innovation has played a key role within traditional snacking categories for a long time and last year was no different for biscuits, with McVitie s Digestives Thins and Oreo Thins two of the top 10 new launches within FMCG. The Thins launches were not only exceptional for their uniqueness but also McVitie s Digestives Thins claimed the title of biggest Sweet Biscuits launch in a decade with sales of 15m in 2017, a worthy successor to McVitie s Digestives Nibbles who took top spot in Other notable innovation came with Nutella B-ready and Cadbury Roundie and from Own Label brands, particularly within Special Treats. Nearly all segments within Sweet Biscuits grew last year, with total Treats growing the most rapidly. Collectively, Everyday Treats and Special Treats made up nearly a third of Sweet Biscuits sales as consumers turned to biscuits for both indulgence and taste. pladis remained the number one supplier within Sweet and Savoury Biscuits with a combined value of 550m also saw the first full year Mondelez resumed ownership of the Cadbury brand, cementing their place as the number two manufacturer. With innovative manufacturers and strong brands, the outlook for the Biscuits category is extremely positive and growth is projected to increase again in Innovation will continue to drive engagement with the biscuits category and continue to excite shoppers, with the core of the category set to remain stable. James Thomas Customer Marketing Director pladis UK & Ireland 1

4 2017 HIGHLIGHTS Date January Activity McVities's Digestives Thins launched January McVitie s Hobnobs Nibbles landed in stores January New McVitie s Digestives Nibbles TV commercial January Penguin Mini Biscuits revealed January Oreo Thins unveiled and supported with TV ad campaign March Richard Osman's World Cup of Biscuits in aid of Comic Relief April Bahlsen Pick Up! Biscuits TV campaign May McVitie's Ultimate Dunk-Off Live to celebrate National Biscuit Day May Cadbury Roundie hit the shelves June Jacob's Garlic and Herb Flatbreads hit the shelves June Reveal of McVitie's Digestives Caramel range in flavours Banoffee Caramel and Coffee Caramel June Ferrero unveiled Nutella B-ready June Jacob's opened the world's first pop-up Cracker Restaurant for 2 days in Covent Garden, London June McVitie's Digestives 125 Years Anniversary celebration Biscuits Review

5 2017 HIGHLIGHTS June go ahead! launched Goodness Bars with only 7 ingredients June go ahead! introduced Crunchy Dippers June Maryland Thins landed in stores July McVitie's unveiled Digestives Nibbles Orange July go ahead! Goodness Bar TV campaign August Little Mix's Jade, Jordan Banjo and Paddy McGuiness welcomed as new McVitie's Biscuit Club members August Mondelez launched Cadbury Crunchy Melts Cookie Range August McVitie s Chocolate Digestives featured on the BBC s Inside the Factory programme September go ahead! announced new Pretzel Bites September Mars introduced a new cookie range - Galaxy Chocolate Chunk, Bounty Soft Baked and M&Ms September Nutella unveiled 2.8m marketing investment for B-ready Biscuits October TUC unveiled a new range of flavours and a Minis range December pladis supported McVitie s and Jacob s seasonal ranges with Merry Biscuits campaign 3

6 MACRO TRENDS It's a tough environment for retailers, one in which they must adapt to grow. There are a number of global mega trends that have started to influence snacking. Brexit Uncertainty % Channel Shift Reducing Cost HELP ME BE MY BEST There is a shift from do-no-harm choices such as low sugar, low carbs, natural and no additives, to nourishing alternatives. Free-from has become mainstream and a large part of the population is on a diet or trying to cut back. Shopping Simplicity Inflation Growth YOUR BRAND Own Label Digital Development Discounter Growth Premiumisation INNOVATIVE EXPERIENCES New experimental and challenging flavours such as sweet & salty popcorn and wasabi & caramel mousse are popular. Eating experiences that involve all the senses using new production and cooking techniques, as well as new developments in molecular gastronomy that push the boundaries of flavour, texture, smell, look and feel. SOCIALLY RESPONSIBLE Trusted, natural and eco-friendly options such as Fairtrade, organic and sustainable packaging and products are gaining popularity and shelf space. They are widely available in all retail formats, becoming more affordable and moving from niche to mainstream. CHANGING LIFESTYLES Brands are adapting and evolving their products to satisfy our demand for more on-the-go & on-demand solutions that are fresh and nutritious. This includes new ingredients and offers wider choices to suit our needs Biscuits Review

7 SHOPPER TRENDS UK Shoppers are: Shopping more frequently Shopping across fewer missions Buying fewer items but are spending more per trip Using a greater mix of channels Supermarkets & Hypermarkets Large format retailers have the biggest share and will continue to do so for some time yet. The top 3 growth channels in the UK Online Online grocery retail is forecast to be the fastest growing segment of all UK grocery channels. 42% of UK grocery shoppers go online as part of their grocery shops every month. Shoppers want: Convenience To be inspired and entertained To save money To be educated Help deciding what to buy % Convenience 57% choose to shop in convenience stores because they are quicker to get around. Discounters People are doing more main shops in Discounters. Big movements continue into Online and Discounters from Supermarkets Channel switching Online Main Shop Aldi shoppers vs Lidl shoppers Shoppers are more likely to conduct main shops at Aldi and top up shops at Lidl Main Shop 260m 236m Main Shop Discounters Supermarkets Top Up 109m 127m 104m Top Up High Street Main Shop 49% Top Up Shop 42% Main Shop 37% Top Up Shop 51% Convenience 5

8 SNACKING TRENDS THE BLURRING OF BOUNDARIES WITHIN CORE SNACK FOODS CONTINUES SNACKING IS BIG BUSINESS 94% of adults snack daily 15% snack 4+ times per day Consumers are snacking more frequently throughout the day and are including more foods in their snacking repertoire. The snacking universe has grown to the extent that almost anything goes, from soup to sandwiches, toast to tuna and cheese to cereal. Sweet and Savoury Biscuits and Confectionery Savoury Crackers and Crisps Cereals and Biscuits Fruit and Biscuits year olds are the heaviest consumers of core snack foods. Health is not the biggest driver of choice but is increasing in importance. Manufacturers are producing more healthier snacking products with more nutritional claims e.g. protein Biscuits Review

9 SNACKING TRENDS FACTORS MOTIVATING A SNACK SNACKING MOTIVATIONS Treat myself 50% Give myself a break during the day 37% Eat on-the-go 27% Eat healthier 26% Relieve stress 24% Refuel when exercising 21% Avoid overindulging at meals 19% Control my weight 17% Socialise with friends or family 14% Get through late nights 14% Replace traditional meals 12% Save money compared to a full meal 8% 50% 37% SNACKING OCCASIONS In the morning 73% In the afternoon 94% In the evening 88% Between meals 84% In place of meals 63% 27% 26% SHARING Sharing occasions are the No.1 growing snacking occasion with 5+ people present. ON-THE-GO Snacking on-the-go is the No.2 growing occasion as we are leading increasingly busy lifestyles. TREATING Treating myself is the main motivation for snacking. HEALTHY Healthy snacking occasions are on the increase. RELAXATION Relaxing snacks help relieve daily stress levels by taking time for a break. SNACKING MOTIVATIONS BY OCCASION MORNING SNACKS Top 3 over indexes Can eat on the move 176 Tide me over to mealtime 158 Get a portion of fruit/veg 135 AFTERNOON SNACKS Top 3 over indexes Tide me over to mealtime 160 Can eat on the move 129 Low in fat/salt/sugar 113 EVENING SNACKS Top 3 over indexes Just fancied it 128 Treat / Reward 124 Makes the meal complete

10 KEY FACTS All core snack food categories increased value sales last year Biscuits posted strong performance Aldi and Lidl were in double digit Snack Food growth Chocolate Confectionery, Nuts and Popcorn led growth The options for consumers have never been greater. Whether it s as a wholesome snack, an indulgent treat or a mood-enhancer. The boundary between meals and snacks is blurring. Most people understand a meal to be influenced by cultural traditions around timing, setting and specific food groups. Snacks, on the other hand, are highly personalised and variable mini meals. With their high levels of social media usage, millennials continue to wield a lot of influence over the UK snacking industry. They make much quicker purchases and buy fewer groceries online than you might think. We know new, younger shoppers are a more visual generation than their parents. They need to be tempted by a particular type of packaging or instantly register how a product fits into their busy lifestyle. Colette Noé Senior Director for Consumer and Market Insights pladis CORE SNACK FOODS Core Snack Foods 10,596m 3.6% Categories Chocolate Confectionery 2, Biscuits 2, Cakes & Pastries 2, Crisps & Snacks 1, Sugar Confectionery Nuts Popcorn Top Manufacturers Mondelez 1, Pepsico pladis Mars Nestlé KP Snacks Premier Foods Kellogg's Own Label Tesco Aldi Marks & Spencer Sainsbury's Lidl Asda Morrisons Co-op Waitrose Food Occasions 2017 Core Snacking is bigger than Cereals or Bread Biscuits Review Core Snacking 12.8 Bn Cereals 11.2 Bn Bread 10.9 Bn

11 ALL SNACKING CORE SNACKING Huge variety is driving shoppers to spend more on Snacking every year. Snacking needs split between Health & Practicality in the morning & afternoon and Treating & Relaxing in the evening. Health is a key driver of snacking occasions, up 9% since Carried out snacks and on-the-go snacking occasions are also in strong growth. Sweet biscuits is the second largest food sector in all snack occasions. 68% 57% 49% 7.4% 40% 59% of evening snack occasions feature a core snack food product. of afternoon snack occasions feature a core snack food product. of core snack foods are consumed as part of a meal and this is growing. increase in carried out snacking. of relaxing occasions feature a core snack food product. of consumers mainly choose a core snack food when they fancy something sweet or savoury. Snacking at a Glance Consumers have a wide range of categories to choose from when it comes to snacking, from core snack foods such as biscuits and crisps to fruit and dairy products. 9

12 10 KEY FACTS Sweet & Savoury Biscuits were both in growth pladis continued to be the biggest Biscuits manufacturer, up 2.4% at 550m McVitie's was the only major brand in growth Own Label posted double digit growth Tesco, Aldi and Lidl were the top Own Label performers M C VITIE'S CHOCOLATE DIGESTIVES Chocolate Digestives were first produced by McVitie s in 1925 as the Chocolate Homewheat Digestive. They have since grown to become one of the nation s favourite biscuits, selling 58 million packs per year. Over 13m of these biscuits are produced each day at the largest biscuit factory in Europe, the McVitie s factory in Harlesden, London Biscuits Review TOTAL BISCUITS Total Biscuits 2,498m 2.6% Sweet 2,043m 2.9% Savoury 456m 1.1% Top Manufacturers pladis Mondelez Nestlé Fox's Burton's Kellogg's Top Brands McVitie's Cadbury Fox's Belvita Kit Kat Kellogg's Jacob's Ryvita go ahead! Nature Valley Top Products Kit Kat McVitie's Choc Digestives McVitie's Jaffa Cakes Belvita Breakfast Biscuits Cadbury Brunch Bars Cadbury Fingers McVitie's Digestives McVitie's Club Alpen Light Cereal Bars Tunnock's Caramel Wafer Own label Tesco Aldi Marks & Spencer Lidl Sainsbury's

13 TOTAL BISCUITS % Innovation was a key driver of growth in the category, with biscuit brands making up two of the Top 10 new FMCG launches in Biscuits was a highly innovative category in 2017 with 3% of value coming from NPD. Biscuits showed growth across all retail channels, with Discounters and Online leading the way. Biscuits Penetration % All Biscuits 99 Sweet 98 Savoury 89 Everyday Treats 89 Everyday Biscuits 85 Chocolate Biscuit Bars 72 Healthier Biscuits 72 Special Treats 67 Seasonal Biscuits 56 Novelty Biscuits 27 Biscuits Frequency of Purchase Per year per household All Biscuits 44 Sweet 38 Savoury 13 Everyday Treats 14 Everyday Biscuits 14 Healthier Biscuits 13 Chocolate Biscuit Bars 11 Special Treats 6 Seasonal Biscuits 3 Novelty Biscuits 2 7kg 99% The UK had a huge per capita consumption of Biscuits over 7kg per person a year. At 99% it also has more penetration in the UK than any other impulse category. Accompaniments % of Biscuit occasions featuring Tea 33 Coffee 21 Cheese 14 Fruit 13 Vegetables 9 Sandwiches

14 KEY FACTS Tesco boosted Biscuits sales, up 3.0% at 619m Aldi and Lidl in double digit growth Online sales continue to grow as more and more consumers shop online How important is snacking to your business? Snacking is of great importance and Biscuits is the most incremental category ahead of Crisps, Chocolate & Sweets. Traditionally, snacking has been the realm of impulse retailers but as shoppers demand more, the convenience channel is the destination of choice for many shoppers. How do you think Biscuits are evolving to suit consumers demands? With meal times becoming less rigid and the increase in ever demanding lifestyles, it is important for Biscuit manufacturers to develop NPD to attract new and younger consumers into the category. There were some great steps forward in 2017 and I fully expect this to continue in The majority of our sales growth in 2017 in Biscuits & Snacking was driven by activity from the major brands. What is your favourite Biscuit? It has to be Cadbury Crunchy Melts, a great biscuit and just the sort of NPD boost the Biscuits category needed in RETAIL - BISCUITS PERFORMANCE Value Volume Retailers Top growth retailers in 2017 for Biscuits Sweet Multiples 1, Convenience * 11.3 Euro Discounters UK Discounters Online KGm %Change %Share Multiples Convenience * 10.8 Euro Discounters UK Discounters Online Tesco Sainsbury's Asda Morrisons Aldi Co-op Waitrose Marks & Spencer Lidl Iceland Source: * IRI, Total Convenience, 52 w/e 31 December 2017 Savoury Nick Hartwell Biscuits Buyer at Bestway Biscuits Review

15 RETAIL - BISCUITS PERFORMANCE Multiples Biscuits performance +0.5% at 1.49bn -1.6% at 322m kgs The largest channel in the category with almost 60% share. Increased frequency of purchase and price drove the growth in the Biscuits category. Greatest growth areas came from online and grocery managed convenience. Discounters Biscuits performance +8.8% at 450.6m +7.8% at 134.8m kgs Own Label Biscuits share up 2.3% at 53.4%. Chocolate Biscuit Bars were the largest segment with 18% share versus 14% in the total market and is in growth year on year. Convenience Biscuits performance +2.4%* at 283m -1.9%* at 63m kgs Everyday Treats were the largest segment with 32% share versus 18% in the total market. The Biscuits Shopper in the Convenience channel purchased Biscuits 1.6 times per week. Source: * IRI, Total Convenience, 52 w/e 31 December 2017 Grow your biscuit sales by up to 22% Better Biscuits provides category-leading ranging and merchandising advice to the convenience channel. It is based on industry leading data and insight on the best selling biscuits in the UK market. Visit us at Convenience stores can expect to see an average 22% uplift in sales by following the Better Biscuits category advice. The initiative has gained industrywide recognition, winning two major awards in

16 KEY FACTS Up 2.6% at 432m, pladis were the only leading manufacturer in growth Everyday Treats and Everyday Biscuits drove growth Novelty Biscuits was the only segment in decline Tesco, Aldi and Lidl Own Label performed well SWEET BISCUITS Sweet Biscuits 2,043m 2.9% Top Sectors Healthier Biscuits Everyday Treats Chocolate Biscuit Bars Everyday Biscuits Special Treats Christmas Biscuits Novelty Biscuits Biscuits Review How do you see McVitie's as a brand in the category? McVitie s is a very special brand with 125 years of making great tasting biscuits and is a range consumers love, from the original Digestives in 1892 to new innovative products such as Nibbles and Thins. How important is McVitie's in the category? As the number one brand in the category we need to ensure that biscuits remain relevant to today s ever changing consumers, using our power brands such as McVitie s Digestives, Hobnobs and Jaffa Cakes to drive innovation. What are the highlights in 2017 for McVitie's? The biggest highlight for McVitie s was the launch of McVitie s Digestives Thins, a truly innovative product and McVitie s Hobnobs Nibbles. McVitie s Chocolate Digestives won the World Cup of Biscuits and the Nation s Favourite Biscuit on TV Channel 5. Viewers were also given a glimpse into our Harlesden factory with BBC2 s Inside the Factory. What is your favourite biscuit? McVitie s Dark Chocolate Digestives. If a packet of these is opened near me then I cannot resist. Kerry Owens Marketing Director Sweet Biscuits pladis UK & Ireland Top Manufacturers Own Label pladis Mondelez Nestlé Fox's Burton's Kellogg's General Mills Tunnock's Weetabix Mars Top Brands McVitie's Cadbury Fox's Belvita Kit Kat Kellogg's Burton's go ahead! Nature Valley Tunnock's Tesco Aldi M&S Lidl Sainsbury's

17 SWEET BISCUITS Sweet biscuits saw both volume growth from higher consumption and value growth from consumers choosing more premium options. The more traditional segments of Everyday Biscuits and Everyday Treats drove growth. Top Products Kit Kat McVitie's Choc Digestives McVitie's Jaffa Cakes Belvita Breakfast Biscuits Cadbury Brunch Bars Cadbury Fingers McVitie's Digestives McVitie's Club Alpen Light Cereal Bars Tunnock's Caramel Wafer Accompaniments % of Biscuit occasions featuring Tea 35 Coffee 23 Fruit 11 Sandwiches 9 Bread 9 Fruit Squash 7 58% of Sweet Biscuits are enjoyed with a drink. 25% of Sweet Biscuits are eaten as a morning snack. 15

18 KEY FACTS Growth was driven by Rice Cakes and Cream Crackers pladis up 1.5% at 118m with 26% value share Jacob's Cream Crackers, Kallo Rice Cakes and Nairns Oat Cakes were the key products driving growth SAVOURY BISCUITS Savoury Biscuits 456m 1.1% Sectors Crispbreads Rice Cakes Cream Crackers Plain Assortments Savoury Crackers How important is Jacob's to the category? Jacob s is the brand leader in Crackers and Crispbreads and a prominent challenger in Crisps and Snacks. Jacob's is a brand that offers snacks of real food substance and enjoyment. We are the top brand in Savoury Biscuits, bought by 75% of households and we are one of the fastest growing brands in Crisps and Snacks, bringing a different approach to snacking and some of the most successful NPD. What's Jacob's recipe for success? Jacob s never compromises on quality and this is one of the key reasons for the loyalty and affection of our consumers and for the success of our NPD. What are the highlights in 2017 for Jacob's? The launch of Mini Cheddars Crispy Thins and Cracker Crisps was highly successful, with double digit growth in the second half of the year. Also, Jacob s Ciabatta has been best performing NPD in the category throughout the year. What is your favourite biscuit? I love to munch on a Jacob s Flatbread dipped in a bowl of tomato and basil soup. Steve Monk Marketing Director Savoury pladis UK & Ireland Top Manufacturers pladis The Jordans & Ryvita Co Nairns Kallo Foods Mondelez Quaker Oats Ltd Top Brands Jacob's Ryvita Tuc Nairns Kallo Ritz Quaker Carrs Own label Tesco Aldi Sainsbury's Lidl Morrisons Asda M&S Biscuits Review

19 SAVOURY BISCUITS Savoury Biscuits growth was driven by toppable products such as Rice Cakes and Cream Crackers. In Savoury, shoppers spent more on snacking products such as breadsticks. Taste was the main driver of choice for 2/3 of Savoury Biscuits occasions. Taste also increased in importance vs. other factors such as health and portability. Top Products Ryvita Crispbread Jacob's Cream Crackers Kallo Rice Cakes Nairns Oatcakes Jacob's Cheddars Quaker Snack a Jacks Jumbo Ritz Crackers Jacob's Biscuits For Cheese Ryvita Crackerbread Tuc Sandwich Accompaniments % of Biscuit occasions featuring Cheese 49 Tea 25 Fruit 21 Vegetables 17 Butter 15 Coffee 14 Crackers and Crispbreads are the sector most likely to be chosen for health reasons. Only 8% of savoury biscuits are eaten completely on their own; without a drink or a topping. 17

20 KEY FACTS Everyday Biscuits were up 3.3% at 305m pladis were segment leaders with a 29% share Burton's up 16% with a 6% share Maryland Cookies and McVitie s Ginger Nuts drove sales Tesco and Aldi were in strong growth Sweet EVERYDAY BISCUITS Everyday Biscuits 305m 3.3% Top Manufacturers pladis Burton's Lotus Bakeries Hill Biscuits Fox's M C VITIE'S DIGESTIVES Top Brands McVitie's Maryland Lotus Bakeries Crawfords Hills Sir Alexander Grant devised and produced the first and original Digestives biscuit in 1892, the secret recipe of which is still used today. The biscuit's name originally came from the inclusion of a high quantity of baking soda which was believed to aid digestion at that time. The McVitie s bakery in Harlesden, London, is home to Digestives and the late Queen Mother, Prince Charles and Margaret Thatcher have all taken tours. Top Products McVitie's Digestives McVitie's Rich Tea Maryland Cookies McVitie's Ginger Nuts McVitie's Hobnobs Fox's Crinkles McVitie's Fruit Shortcake Everyday Biscuits Uncoated biscuits that are considered traditional such as plain Digestives and Rich Tea. They are strongly linked to tea and coffee breaks Biscuits Review

21 Sweet EVERYDAY BISCUITS 22% Cookies have been a strong contributor to growth in the Everday Biscuit segment. 22% of Own Label Biscuits sold in the UK were Everyday Biscuits. McVitie's Digestives and Rich Tea were the Nation's favourite Everyday Biscuits. Own Label Tesco Sainsbury's Aldi Asda Lidl Morrisons Accompaniments % of Biscuit occasions featuring Tea 43 Coffee 25 Other Hot Drinks 7 Fruit 7 Dairy Drinks 6 Fruit Squash 5 Everyday Biscuits are the biscuit type most likely to be eaten as a snack between meals. Most Everyday Biscuits are eaten by adults. The average age of a consumer is 51. The Independent View Kay Patel Best One, Stratford and Wanstead The Biscuits category is very important to our stores. It provides a lot of footfall, especially due to NPD. It s constantly evolving, it helps us increase basket spend and it s a day to day purchase for our customers. 19

22 KEY FACTS Everyday Treats were up 8.3 % at 417m pladis & McVitie s up 4.3 % at 160m Significant growth for M&S and Aldi Tea was by far the favourite accompaniment Launched January Marketing Campaign 4.6m Sales in first year 15m 4th biggest FMCG launch in 2017 The moments we take for ourselves are becoming increasingly pressured in today s always-on environment. We know our consumers look for those opportunities to take five with a little reward to treat themselves. McVitie s Digestives Thins provide just that and we re confident that this new range will delight consumers. Kerry Owens Marketing Director Sweet Biscuits pladis UK & Ireland M C VITIE'S DIGESTIVES THINS Sweet EVERYDAY TREATS Everyday Treats 417m 8.3% Top Manufacturers pladis Mondelez Fox's Tunnock's Burton's Top Brands McVitie's Oreo Fox's Tunnock's Maryland Paterson's Cadbury Top Products McVitie's Chocolate Digestives McVitie's Jaffa Cakes Oreo McVitie's Chocolate Digestives Thins 15 NEW 3.7 Tunnock's Teacakes McVitie's Chocolate Hobnobs Fox's Crunch Creams Oreo Thins 8 NEW 2.0 McVitie's Chocolate Digestives Nibbles Paterson's Shortbread Everyday Treats Semi-premium, mostly half-coated with chocolate, cream or mallow filling. They are considered more of a treat Biscuits Review

23 Sweet EVERYDAY TREATS Everyday Treats was the best performing segment in 2017, driven by exciting NPD launches. The most successful biscuit launches came from pladis with McVitie's Digestives Thins and Mondelez with Oreo Thins. Increased penetration and shoppers buying more frequently have both contributed to the growth in Everyday Treats. Own Label Tesco Lidl Aldi Marks & Spencer Sainsbury's Asda Accompaniments % of Biscuit occasions featuring Tea 37 Coffee 25 Hot Drinks 7 Dairy Drinks 7 Fruit 6 Vegetables 6 A third of Everyday Treats are eaten as an evening snack. UK Consumers eat Everyday Treats three times each week on average. 21

24 KEY FACTS Leading brand Fox's up over 30% Bahlsen and Thorntons enjoyed significant growth Morrisons almost doubled in value Tesco and Co-op also performed well How important are Biscuits to your business? They are playing an increasingly important role through innovation as more and more NPD comes through that seeks to expand the category and create a varied and interesting mix of traditional and new style biscuits. Do you feel Biscuits are evolving to suit consumers demands? Yes, through the likes of Health Bars and Breakfast Biscuits, more and more snacking occasions are being covered by Biscuits. How important are the big brands? Big brands still have an important role to play in the Biscuit market with many customers still loyal to their preferred brands. However, shoppers are becoming increasingly price aware and the smaller brands can capitalise on this by offering a point of difference. What is your favourite Biscuit and why? I always enjoy Cadbury Festive Friends, they remind me of Christmas and I could polish off a full box without noticing! Jack Whiston Asda Biscuits Buyer Sweet SPECIAL TREATS Special Treats 183m 0.4% Top Manufacturers Fox's Mondelez Bahlsen Border pladis Top Brands Fox's Cadbury Bahlsen Border McVitie's Thorntons Top Products Cadbury Fingers Bahlsen Choco Leibniz Fox's Chunkie Cookies Fox's Viennese Melts Cadbury Roundie Wafer 6 NEW 3.0 Fox's Chocolatey Biscuits Border Choc Ginger Special Treats Consumed on special occasions. They are luxurious, indulgent and often fully coated in chocolate Biscuits Review

25 Sweet SPECIAL TREATS OWN LABEL Retailers used Own Label Special Treats to differentiate and bring innovation to their ranges. Premium Cookies and Assortments saw strong growth in this segment. Shoppers were most likely to buy Special Treats as a reward, with the average UK household buying them six times per year. Own Label Marks & Spencer Aldi Tesco Sainsbury's Lidl Co-op Morrisons Accompaniments % of Biscuit occasions featuring Tea 44 Coffee 22 Fruit 8 Bread 8 Vegetables 6 Fruit Squash 6 Special Treats are most likely to be eaten in front of the TV. Special Treats are most likely to be consumed with tea or premium coffee. 23

26 KEY FACTS Novelty Biscuits were down 2.9% at 107m The top four leading brands held more than 50% of the segment Barny, Maryland Mini Cookies and McVitie's Iced Gems drove growth Lidl drove Own Label growth Sweet NOVELTY BISCUITS Novelty Biscuits 107m 2.9% Top Manufacturers Burton's Mondelez pladis Fox's McVitie s Iced Gems Top Brands Burton's McVitie's Barny Cadbury Maryland Fox's Caxton Created in the 1850 s in Reading, Berkshire by Huntly and Palmers. McVitie s Iced Gems are the fortunate result of a biscuit making accident back in the 1850 s. The biscuits shrank during the cooking process and the mini biscuits were called Gems. It wasn t until 1910 the icing was added to these mini biscuits to create the product we know and love today. Top Products Barny Burton's Jammie Dodgers Maryland Mini Cookies Cadbury Mini Animals Cadbury Mini Fingers Fox's Party Rings McVitie's Iced Gems Burton's Mini Jammie Dodgers Fox's Mini Party Rings McVitie's Mini Jaffa Cakes Novelty Biscuits Often bite-sized and packed in individual bags. They are frequently novelty or character shaped and either coated or filled Biscuits Review

27 Sweet NOVELTY BISCUITS Penetration losses and shoppers buying less contributed to the decline in Novelty Biscuits. Bite sized products and small packs were popular in kids' lunchboxes. 40% of Novelty Biscuits sales came from mini versions of larger variants such as Cadbury Fingers and Maryland Cookies. Own Label Lidl Aldi Tesco Accompaniments % of Biscuit occasions featuring Tea 18 Fruit Squash 18 Sandwiches 17 Bread 14 Fruit 13 Vegetables 13 More than half of Novelty Biscuits are eaten by adults. Novelty Biscuits are usually eaten on a sharing occasion when more than three people are present. 25

28 KEY FACTS pladis, Burton's and Tunnock's were in growth McVitie's and Burton's brands were the best performers Leading maufacturer Nestlé down 4.7% due to Kit Kat performance Tesco, Aldi and Lidl led strong Own Label performance Sweet CHOCOLATE BISCUIT BARS Chocolate Biscuit Bars 351m 0.0% Top Manufacturers Nestlé pladis Tunnock's Fox's Burton's Kit Kat First manufactured as a four-finger wafer in 1935 and sold as "Rowntrees Chocolate Crisp" The two finger multi-pack hit supermarket shelves in the 1960s Top Brands Kit Kat McVitie's Tunnock's Burton's Twix Blue Riband Fox's The Kit Kat name originates from the late 17th century in London, when a literary club met at a pie shop owned by pastry chef Christopher Catling. The group was called the Kit Kat club and took its name from an abbreviated version of the owner's name. Top Products Kit Kat McVitie's Club Tunnock's Caramel Wafer McVitie's Penguin Twix Blue Riband Wagon Wheels Rocky Gold Bar Breakaway Chocolate Coated Biscuit Bars Individually wrapped, mainly wafer or shortcake bars that are often bought in multi-packs. Though not necessarily bar shaped, they include popular options such as Kit Kat and McVitie s Club Biscuits Review

29 Sweet CHOCOLATE BISCUIT BARS TOP TEN Sales of Chocolate Biscuit Bars stabilised after being impacted in recent years by school lunchbox guidelines. This segment saw less innovation than other biscuit segments, with the Top 10 products still made up of long-standing favourites. Growth in Chocolate Biscuit Bars had been held back as shoppers put less volume in their baskets. Own Label Aldi Tesco Lidl Sainsbury's Asda Morrisons Accompaniments % of Biscuit occasions featuring Tea 29 Sandwiches 24 Coffee 21 Bread 20 Fruit 18 Vegetables Chocolate Biscuit Bars are most likely to be eaten with a sandwich. The average age of a Chocolate Biscuit Bar consumer is 45. The Independent View Raaj Chandarana Londis, High Wycombe Biscuits is a category that's always been there and is really important to increasing average basket spend. People actually come to the store to pick up their biscuits. 27

30 KEY FACTS The largest Sweet Biscuits segment with a 25% share go ahead! and Nature Valley brands were in double digit growth as Belvita & Kellogg's struggle Nature Valley Crunchy Granola and Nakd Bars performed well Tesco, Aldi and Lidl performed well in Own Label go ahead! go ahead! launched in 1996 as an altogether healthier approach to traditional biscuits is now one of the UK s leading healthier biscuit brands. In 2017, go ahead! had over 450,000 new shoppers buy into the brand, with a range of successful innovation. We recognise the meaning of Healthy has changed considerably to the consumer over the years, which is why we re committed to modernising the range and providing our customers with snacks which suit their needs and, most importantly, taste great. Kerry Owens Marketing Director Sweet Biscuits pladis UK & Ireland Sweet HEALTHIER BISCUITS Healthier Biscuits 511m 0.9% Top Manufacturers Mondelez Kellogg's pladis General Mills Weetabix Top Brands Belvita Kellogg's go ahead! Nature Valley Alpen Cadbury Brunch Nakd Eat Natural Top Products Belvita Breakfast Biscuits Cadbury Brunch Bars Alpen Light Cereal Bars Belvita Breakfast Soft Bakes go ahead! Crispy Slices Nakd Bars Nature Valley Crunchy Granola Bars Kellogg's Rice Krispies Squares go ahead! Yogurt Breaks Nature Valley Protein Healthier Biscuits Carrying an obvious health message such as fulfilling a dietary need, aiding weight loss or low in fat or sugar Biscuits Review

31 Sweet HEALTHIER BISCUITS HEALTH NOVELTY The average age of the Healthier Biscuit consumer was 39, only Novelty Biscuits have a younger profile. 62% of Healthier Biscuits consumption happened before lunch as Breakfast Biscuits make up a significant portion of the range. Healthier Biscuits growth came from new buyers and existing buyers purchasing more frequently. Own Label Tesco Aldi Lidl Sainsbury's Asda Marks & Spencer Morrisons Accompaniments % of Biscuit occasions featuring Tea 25 Coffee 21 Fruit 17 Sandwiches 9 Bread 9 Mineral Water 7 Healthier Biscuits are most likely to be eaten on the move. Healthier Biscuits consumption occasions are planned more than any other Sweet Biscuit. 29

32 KEY FACTS Christmas Biscuits were up 5.9% at 174m pladis had the highest value at 32m up almost 3% McVitie's added 1m to the segment McVitie's Family Circle McVitie's Victoria Assortment Combined value of 28m McVitie's Family Circle up 5% McVitie's Victoria Assortment is the Nation's favourite biscuit selection at Christmas Christmas Biscuits were in strong growth driven by shortbread and Own Label. 80% of Seasonal Biscuits sales go through in the two months before Christmas. Other Seasonal Biscuits such as Easter and Halloween are gaining in popularity. Sweet CHRISTMAS BISCUITS Christmas Biscuits 174m +5.9% Top Manufacturers Top Brands pladis Fox's Mondelez Paterson Arran Border Walkers McVitie's Fox's Cadbury Paterson's Border Walkers Top Products McVitie's Victoria Assortment % McVitie's Family Circle % Fox's Fabulously Assortment % Cadbury Choc Assortment % Fox's Chocolatey Assortment % Cadbury Fingers % Paterson's Shortbread % McVitie's Jaffa Cakes Pole % Border Assortment % Christmas Biscuits Mainly sold during Christmas and other celebrations. These biscuits are packaged in assortments and sold in large tins, tubs or cartons. They can be sweet or savoury and popular examples include McVitie s Victoria Assortment and McVitie s Family Circle Biscuits Review

33 Sweet CHRISTMAS BISCUITS Christmas Biscuits was an important segment for Own Label, as Shortbread and Belgian Assortments performed well. Christmas Biscuits accounted for nearly 15% of total Category sales in the four weeks leading up to Christmas. Highly loyal shoppers move in all directions at Christmas time; M&S gain from Big 4 and Waitrose Shoppers, and loyal Discounter shoppers move to the supermarkets. Own Label Marks and Spencer % 30.0% Tesco % 8.6% Sainsbury's 8-5.4% 4.4% Aldi % 4.2% Lidl % 3.4% Seasonal Biscuits are usually eaten with friends. Seasonal Biscuits is the most popular choice for a treat. The Independent View Atul Sodha Londis, Harefield We know most of our customers and Biscuits are important in my business as everyone loves them. When a customer comes into my store, I've got to have the right products on the shelf at the right time. 31

34 KEY FACTS Own Label value up by over 8% in 2017 Own Label was in growth and a major contributor to the overall growth of Biscuits The majority of Own Label sales was Sweet Biscuits Everyday Biscuits & Everyday Treats had the greatest share with 25% What is the role of Own Label in the Biscuits category? Own Label Biscuits has an important role to play as it offers both value and quality and increasingly brings variety, innovation and premiumisation to the category. There is huge diversity in Own Label from Value Basics in Discounters, to luxurious and innovative products that push category boundaries in M&S. How do you see Own Label and brands working together? The Own Label offering can complement the brand agenda, offering differentiated products that capitalise on market trends and provide alternatives to shoppers. Own Label also offers choice where there are few brands in the market such as Teacakes and Shortbread. What is the future for Own Label? There is a real opportunity for Own Label to deliver increasing amounts of innovation and continue to premiumise. What is your favourite biscuit? My favourite biscuit is a Boaster - indulgent by nature I guess! Rachel Dixon Head of Retailer Brands pladis UK & Ireland OWN LABEL BISCUITS Own Label performance by segment Total Biscuits Christmas Biscuits Total Sweet Biscuits Novelty Biscuits Chocolate Biscuit Bars Everyday Biscuits Everyday Treats Healthier Biscuits Special Treats Total Savoury 8m 56m 131m 163m 129m 80m 64m 173m 608m Key Actual Spend Retailers use Own Label to differentiate themselves, stand out and provide a different offering to branded biscuits. Retailers are using Own Label to appeal to a wide range of life stages as well as a change in shopping habits. A decade ago Own Label was simply a generic budget option - Own Label products now play a key role in premiumisation. 781m Biscuits Review

35 INNOVATION Top Biscuits Innovation in m 15m RSV Since Launch Oreo Thins RSV Since Launch McVitie s Digestives Thins 6m RSV Since Launch Nutella B-ready 6m Top Take Home brand launches of 2017 Category m L'Or Instant Coffee 48 Whiskas Casserole Pets 21 Vanish Platinum Detergent 16 McVities Chocolate Digestive Thins Biscuits 15 Warburtons Toastie Pockets Bakery 13 Haagen Dazs Sticks Ice Cream 11 Purina Dentalife Pets 9 Oreo Thins Biscuits 8 Weetabix Additions Cereals 8 Muller Light Kremas Dairy 7 RSV Since Launch Cadbury Roundie 33

36 THE FUTURE OF RETAIL THE FUTURE OF SNACKING Bricks and mortar outlets will have to redefine themselves 57% of UK consumers feel they will soon be ready to embrace automatic purchasing via connected devices By 2027 up to 80% of grocery purchasing will be automated Manufacturers will have to pursue new, efficient and experiential ways to engage with consumers Snackers will demand added functional benefits, new textures and sumptuous flavours Nutritional Value Popularised by fitness, dieting and the rise of snackable protein, Snack foods already account for the largest proportion of high protein food and drink. Brands will develop more sophisticated ways of encapsulating nutritional elements and offering self-optimising credentials. Speciality and convenience will merge Brexit will impact retailers and consumers, although uncertainty will remain until negotiations are completed. Consumers will shop cashlessly and virtually Innovation Biscuits will evolve to remain relevant and exciting. Science and technology will lead snacks and biscuits into a multi-sensory experience. On-the-go and re-sealable packs will become increasingly appealing to snacking consumers Biscuits Review

37 THE FUTURE OF SNACKING Digital lifestyle Consumers are now driving flavour development by engaging with manufacturers through digital platforms. Enjoyment, criticism and endorsement is delivered via social media. Customised snacks will fit health and lifestyle needs. Ordered online and delivered direct within hours. Adventure Curious consumers with adventurous palates are attracted to new flavours. This will lead to the development of more unusual and challenging ingredients such as natural seaweeds. However, nostalgia will continue to drive the sales of old favourites. Health 42% of consumers say health concerns have limited the amount of snacks bought compared to 12 months ago. Biscuits are included in the nine food and drink categories tasked with reducing sugarcontent by 20% by Sugar-free biscuits will continue to proliferate with cane sugar replaced with natural sweeteners such as fruit purée or honey. Indulgence Consumers will continue to turn to Biscuits, Cakes, Chocolate and Sweets as indulgent treats. 33% of Biscuits consumers want added indulgence and it will remain an important motivator for Biscuits purchase and the key to exciting and recruiting younger consumers. Savoury Savoury Biscuits are perceived to be a healthier snacking alternative to Crisps and Sweet Snacks. They are seeing global growth and will become more important as we look for low sugar alternatives. Savoury flavours and superfood ingredients provide greater scope for adding health without sacrificing taste or indulgence. Taste 50% of consumers state that taste is more important than health - so taste will continue to trump health across all snack markets. Flavours and textures will continue to develop, becoming more exotic and creating excitement. Unusual combinations will challenge the norm and brands will develop snacks that focus on specific taste senses such as bitter, sour and umami. 35

38 SOURCES P Highlights Source: Kantar Worldpanel Purchase, 52 w/e 31 December 17 P4 Macro Trends It is a tough environment for retailers, one in which they must adapt to grow Source: Shopper Trends - IGD, UK Country presentation, Retail Analysis, 2017 There are a number of global mega trends that have started to influence snacking Source: Mintel, Snacking Motivations & Attitudes P5 Shopper Trends UK Shoppers are shopping more frequently, buying less items but are spending more per trip Source: Kantar Worldpanel Purchase, 52 w/e 31 December 2017 As shoppers are shopping more frequently, they are on less missions per trip Source: IGD: Missions in focus: British shoppers snapshot - November December 2017 Shoppers want Source: IGD: Shopper insight from the Leading Edge Annual Conference 21 September 2017 Big movements continue into Online and Discounters from Supermarkets Source: Kantar Worldpanel Purchase, 52 w/e 08 October 2017 Supermarkets & Hypermarkets Source: IGD, UK grocery shoppers check out online potential 10 October 2017 The top 3 growth channels in the UK: Online Source: IGD, UK grocery shoppers check out online potential 10 October 2017 The top 3 growth channels in the UK: Convenience Source: IGD: UK shoppers dashing for convenience 06 June 2017 The top 3 growth channels in the UK: Discounters and Aldi shoppers vs Lidl shoppers Source: IGD: British shoppers snapshot - August September 2017 P6 Snacking Trends Source: Kantar Worldpanel Usage, 52 w/e August 2017 P7 Snacking Trends Factors Motivating A Snack and Snacking Motivations Source: Lightspeed/Mintel - 1,887 internet users aged 18+ who snack, Snacking Occasions Source: Kantar Worldpanel Usage, 52 w/e August 2017 Occasions Sharing etc. Source: Kantar Worldpanel Usage, 52 w/e August 2017 Occasions Snacking Motivations By Occasion Source: Kantar Worldpanel Usage: Total Foods at Snack Occasions: 52 w/e June 2017: Index vs. all snack occasions (% servings) P8 Core Snack Foods Source: Kantar Worldpanel Purchase, 52 w/e 31 December 2017 Source: Kantar Worldpanel Usage, 52 w/e 08 October 2017 P9 All Snacking Source: Kantar Worldpanel Usage, 52 w/e August 2017 P9 Core Snacking Source: Kantar Worldpanel Usage, 52 w/e 08 October 2017 Snacking at a Glance Source: pladis P10-11 Total Biscuits Source: Kantar Worldpanel Purchase, 52 w/e 31 December 2017 Source: Kantar Worldpanel Usage, 52 w/e 08 October 2017 P12-13 Retail Biscuits Performance Retail Performance Source: Kantar Worldpanel Purchase, 52 w/e 31 December 2017 Convenience data Source: *IRI, Total Convenience, 52 w/e 31 December 2017 Better Biscuits Best Sellers Source: pladis, Better Biscuits Best Sellers store trials 2017 P14-27 Sweet Biscuits, Savoury Biscuits, Everyday Biscuits, Everyday Treats, Special Treats, Novelty Biscuits P28-29 Healthier Biscuits Source: Kantar Worldpanel Purchase, 52 w/e 31 December 2017 Source: Kantar Worldpanel Usage, 52 w/e 08 October 2017 The History of Kit Kat Source: P30-31 Christmas Biscuits Christmas data Source: Kantar Worldpanel Purchase, 24 w/e 31 December 2017 Source: Kantar Worldpanel Usage, 52 w/e 08 October 2017 P32 Own Label Own Label performance by sector Source: Kantar Worldpanel Purchase, 52 w/e 31 December 2017 P33 Innovation Top Biscuits Launches Source: Kantar Worldpanel Purchase, 52 w/e 31 December 2017 Top Take Home Brand Launches 2017 Source: Kantar Worldpanel Purchase, 52 w/e 31 December 2017 P34-35 The Future of Retail Source: SCB Partners, Future of Retail 2027 The Future of Snacking Source: Mintel Snacking Motivations & Attitudes Mintel, Biscuits, Cookies and Crackers Global Annual Review, January 2018 Mintel, Managing your Health US, January 2018 Mintel, Chocolate, Sugar and Gum Confectionery, January Biscuits Review