Innovation in Consumer Goods

Accenture Research
Intelligence. Insight. Impact.
CPG Innovation Consumer Pulse Survey: Global October 2014

Copyright © 2014 Accenture All rights reserved.
2
Contents
Executive Summary
Detailed Findings

3
Industry trends drive both company innovation and consumer perception
Food & Non- alcoholic Beverages
Home & Personal Care
Consumer Health
Fashion & Luxury
Alcoholic Beverages
•Commoditizing categories and tight margins
•High fragmentation and local tastes/ flavors
•Desire for health & wellness
•Small, frequent purchases Imperative to catch consumer at point of desire
•Functional, “pro-quality” benefits
•Innovation to keep brands fresh
•Prominent “green” and all-natural brands
•Small, frequent purchases Imperative to catch consumer at point of desire
Consumers scored Food & Non-alcobev and Home & Personal Care companies highest on all elements, reflecting a higher degree of continuous, incremental innovation
•Increase in consumers treating at home
•Consumers seeking “trusted brands”
•Regulatory constraints
•Schizophrenic consumer mixing fast fashion and luxury brands
•Increasing non-traditional competition
•Complex supply chain and channels
•Achieving identity status and top-of-mind destination critical
•Drink choice is part of personal brand, and extremely occasion-based
•Desire for old-fashioned brands and quality
•Complicated route to market (e.g., distributors, on and off-trade)
•Heavy regulation
Lowest perceived innovation, with companies likely hampered by consumer desire for “heritage” brands, as well as regulatory constraints
Traditionally longer development – and purchase – cycle drives lower levels of perceived innovation
Despite strong HPC link, CH behaves more like highly branded Fashion & Luxury – perhaps because companies focus on brand quality and trust vs. excitement
Survey Insights
Industry Trends

4
Consumers across the globe are typically in sync when ranking performance of various CG&S industries
•Across most markets, Home & Personal Care and Food & Beverages are seen as delivering the most radically new products that meet consumer needs.
•The Alcoholic Beverage industry lags behind other industries across the globe on most innovation metrics, with Japan as a bright spot.
•Fashion & Luxury and Consumer Healthcare take the middle slots in innovation performance, although Fashion & Luxury leads in Sweden.

5
Regional consumer trends and economic conditions also impact innovation
•Rapid middle class growth and youthful population
•Increased marketing for World Cup and Olympics
•Sound macroeconomic fundamentals
•Expanding incomes and large population drive massive growth
•Recent crackdown on conspicuous consumption
•Bifurcated population (kings and paupers)
•Slow recovery from the recession, with only pockets of recovery
•Cautious consumer
•Significant private label business
•Declining CPG market values
•Sophisticated tastes
•Negative population growth
•Stagnant to declining CPG markets
•Strong local players, seeking growth outside home market
•Return to moderate growth; consumer confidence growing
•Permanent reset to value and desire for trusted quality
•Sophisticated and profitable market
Emerging markets see the highest innovation levels. Are they reacting to a flood of new offerings as companies enter and grow – and invest to develop products for local tastes?
Are Japanese consumers more demanding? Only in alcobev – where competition is fierce – do they see innovation higher than others
W. European consumers are wary – and also comfortable advocates of sophisticated private label offerings in this concentrated retail market. As companies struggle to preserve margin, are they cutting back on innovation?
Is innovation higher in the large, diverse – and competitive – US market? Retail trade is more fragmented than in W. Europe – and unusual new products frequently launch in smaller store formats (e.g., C-store).
UNITED STATES
BRAZIL
EUROPEAN UNION
JAPAN
CHINA

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•Brazil & China lead the way in perception of innovation
•Emerging markets prefer to engage with social media, with developed markets have a relatively heavier focus on traditional channels (mail, phone, company websites)
•Emerging markets perceive more digital engagement options
•Brazil and China, joined by the US and Japan, are most likely to identify new innovations in the “green” space
Mobile interactions much more important in emerging markets than in mature ones; however, digital interaction imperative in even in developed markets. Accenture’s Global Consumer Pulse Research finds 25% of consumers report they are more likely to do business with a company that they can interact with in a social media environment.
Are CPG companies providing more/better digital options in emerging markets? Or are expectations and digital engagement causing the divide?
Are CPG companies launching more green/eco/social products in these countries? Or are consumers in these markets more likely to seek out these types of innovations?
Emerging markets, Brazil and China, often surpassed developed markets in innovation perception and digital engagement
Is this new product innovation or new category introduction (porting from developed markets)? Or are company marketing/ education efforts driving awareness?

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Young consumers see most CPG innovation and are more engaged in social media
•Younger consumers worldwide see more innovation, are more likely to engage using social media and are more satisfied with digital options
•Female consumers in Europe and Brazil often see more innovation
•Higher income and employed consumers tend to see more CPG innovation, except in France
•In most countries, highest income consumers are least likely to feel ignored by CPGs, while in some countries, such as Sweden, it is the middle class who fares best
•Consumers disagree on whether “green” products are new or improved
•Married consumers and families see more innovation – except for Sweden
Are there any cultural differences in interpretations of ‘new’ vs. ‘improved’?
Is there a notable difference in % of males vs. females who are the primary household shoppers across countries?
At the same time, CPG companies must figure out how to engage older generations, with 65+ consumers outnumbering under-15 by 2030 (PEW Research)
Have companies focused innovation on premium products?
Is this awareness or companies targeting married/ families with new product innovation?

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HPC has the highest R&D spend– and innovation – but, Alcobev still leads in organic revenue growth, despite low innovation.
*See notes for companies included in average
Food & Non- Alcobev
4.9%
1.3%
Organic Revenue
Growth
R&D Expense
% of Revenue
4.7%
2.3%
Organic Revenue Growth
R&D Expense % of Revenue
Alcoholic Beverages
5.2%
0.3%
Organic Revenue
Growth
R&D Expense % of Revenue
Fashion & Luxury
n/a
0.3%
Organic Revenue
Growth
R&D Expense
% of Revenue
Sample of Global Companies: 3 Year Average Growth and R&D Investment
Higher R&D spend seems to drive highest perceived innovation in Home & Personal Care, as well as Food & Non- alcobev
Higher innovation has not driven higher organic revenue growth
Premiumization, vs. new products, may be driving alcobev growth
R&D spend is relatively low in Alcobev and Fashion & Luxury, likely due to business model and consumers valuing heritage brand over the “excitement” of continual new products
Switching to private label during the recession may depress organic revenues in Food and HPC

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•While consumers perceive significant pockets of “real” innovation, this is not translating to significant revenue growth
‒In developed markets, innovation may simply be driving complexity, cost and a jaded and overwhelmed consumer
‒Vibrant emerging markets are seeing the most innovation
•Consumers feel online channels are best for feedback; however, a number still do not feel companies are listening anywhere
•Digital engagement correlates with higher sales – but options lag the opportunity
•Whether considered new or improved, “green” is important – especially in countries where consumers value sustainability, even to the point of paying more for these products
•Strong regional variations drive the need for different innovation strategies
Conclusions

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•In our sample, Food & Non-Alcobev and Home & Personal Care companies invest the most R&D as a % of revenue (1.3 and 2.3%, respectively – compared to 0.3% in Alcobev)
•This seems to be boosting innovation perception, as Food and HPC also have the highest perceived “true” innovation of all segments; ~50% of consumers are always/often seeing “radically new products” (compared to 31% in Alcobev)
•However, organic revenue growth remains sluggish – and Food and HPC are outpaced by Alcobev (4.9% and 4.7% vs. 5.2% on average, last 3 years)
Conclusions: Heavy investment in innovation ≠ heavy pay-off in revenue growth

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CPG manufacturers are answering the call for innovation but most products don´t capture $10mn or more in year-one sales
In the US, Innovation is increasing mainly with brands extensions…
…But a majority of new products fail to capture $10mn or more in year-one sales
New Product Pacesetters are the Top 100 new banners (food and beverage and non-food) based on year-one sales across multi-outlet geography
86% of new products are brand extensions, 14% are new brands (cross industry)
*
Source: IRI 2013 New Product Pacesetters

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The number of new products that surpass $100 million in their first year is low but increasing due to a broader coverage of channels
MULO: ( Multi-Outlet) grocery, drug, mass, dollar, club and convenience channels, plus Walmart, including Sam‟s & BJ's Club Stores, and military commissaries
FDM: Food, drugs and mass channels
Bud Light, Allegra & Dannon Oikos presented the highest sales in the US
Source: IRI 2013 New Product Pacesetters

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In Western Europe, most innovations fail in scale and longevity
According to Nielsen, only 24% of all innovations achieve 52 weeks of sales…
…Of 12000 new introductions in 2011-13, only 7 sold more than €10mn in the first year
Distinctiviness: Deliver a new value proposition to market
Relevance: Generate a minimum of £/€10 mn in year one sales
Endurance: Achieve at least 85% of year one sales in year 2*
Source: Nielsen Breakthrough Innovation Report – European Edition 2014

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In innovation, quality (not quantity) drives revenue
There are big differences in innovation activity levels across categories and the evidence shows that quantity alone can not drive category growth
% of total category sales from new introductions (2013)
Value % growth of category 2013 vs. prior year
Focus need to shift toward “bigger” (quality) as a means to improve success rates and category growth
Different innovation level across categories
Index of revenue of BEST SKU vs. category average revenue per SKU (UK 2013)
Source: Nielsen Breakthrough Innovation Report – European Edition 2014

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Too many choices:
•Almost 80% of the 2,818 subscribers said they’d found an especially wide range of choices and 36% of those said they were overwhelmed by the information they had to process to make a buying decision. On the other side, considering at a local Stop & Shop: If one consumer eyeballed 53 varieties of a product, he missed 21 others.
Choice is attractive to consumers, but does not yield sales
More and More:
•Between 1975 and 2008, the number of products in the average supermarket swelled from an average of 8,948 to almost 47,000, according to the Food Marketing Institute, a trade group. (In the past few years, that number has fallen slightly, in part because of a growth spurt among smaller stores.)
Less variety may be less attractive for consumers but may generate higher sales:
•An experiment was conducted at an up-scale grocery store's jam/jelly selection. They had 348 different kinds of jam. A tasting booth was setup at different times, one with 6 different flavors of jam, and another with 24 different flavors.
•More people stopped and sampled with 24 samples of jam, however, only 3% of the users actually purchased a jar of jam.
•With the 6 flavor option, less people stopped by, but 30% of those people purchased a jar of jam
New launches are not noticed, not a good return for investment
•There were 1,330 new fragrances launched onto the market last year. When Edwards first began monitoring launches in 1984, there were just 38.
•According to Datamonitor, only 1 in 10 consumers notice products launches in-store
According to Michael Edwards’ compendium, Fragrances of the World 2013,
Source: Factiva International 2014

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Companies are shifting to different types of innovation such as technology, new business models and collaboration
More and more consumers goods companies are increasing focus on technology by creating dedicated innovation labs in startup hubs such as Silicon Valley, New York, and London and investing in startup accelerator programs to establish direct access to innovation from entrepreneurs…
Other companies such as P&G, combines a novel business model with a tried-and-true brand to promote the creation of fresh and profitable services and solutions…
•P&G’s incubator, FutureWorks, launched Multi-functional team leading the scaling of Tide Dry Cleaners and Mr Clean Carwashes
•This team works with franchisees to find sites, build and open stores, and drive a best in class retail stores
Open innovation— collaboration by internal company members with external partners…
•In February, Coca-Cola purchased a 10% stake in Green Mountain for $1.25B
•In May, announced it would increase stake to 16%
•Partnership is to co-invest in cold-drink dispensing

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Unilever puts greater focus on innovation to drive up prices
•In developed markets, most consumers are not seeing a pick-up in the economy and they are increasingly value conscious while competition is increasingly high.
•Unilever is taking balanced decisions on pricing, always with a watchful eye on consumer affordability
•Unilever is putting a greater emphasis on innovation to drive up prices in European markets as sales for the 2nd quarter has declined by 0.8%.
•Unilever is not increasing marketing spend in Europe to boost sales, however, pouring more marketing money into emerging markets.
Unilever says innovations such as its compressed deodorant cans are helping boost sales

Copyright © 2014 Accenture All rights reserved. 18
Innovation is also not driving gross margin; HPC and Food have
the highest innovation rates and stagnant/ declining margin
45
50
55
60
2008 2009 2010 2011 2012 2013
Alcobev
Fashion
HPC
Food & Non-Alcobev
% Gross Margin Evolution by Industry:
Sample Companies
• Fashion presents the
highest % of gross margin
across the 4 industries
• Alcobev showed resilience
in recession, but with
recent dip
• Home & Personal care
margin has been stagnant
• Recession hit Food & Non-
Alcobev hard – with only
minor recovery

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•The large and important Western European market sees relatively low innovation, with average industry scores ranging from 25 to 44% (and Sweden much lower)
•By contrast, a significant number of Brazilians see radically new products, ranging as high as 71% in HPC
•Chinese consumers perceive the second highest truly new innovation (vs. product improvements)
Conclusions: Vibrant emerging markets are seeing the most innovation

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Companies are investing heavily in emerging market innovation
•PepsiCo opens food and beverage innovation center in DuBiotech to drive growth across the Middle East
•The new facility is equipped with an advanced culinary center and test laboratories focused on developing and tailoring PepsiCo brands for distinct, locally relevant taste preferences throughout the region.
•P&G opens $250 million Innovation Centre in Singapore to generate new product formulations, advanced packaging and prototypes – uniquely designed to deliver value for consumers in Asia and the rest of the world
•General Mills opened the company's first innovation, technology and quality center in China, which is $15 million facility
•It will focus on developing high-quality products for Chinese consumers including snacks, convenient meals, yogurt and super-premium ice cream.
•Unilever’s global Enterprise Support and IT Innovation centre in Bengaluru inaugurated
•Largest operating centre for Unilever will support HUL as well as the global Unilever business
•The centre currently houses 1400 people including Unilever employees & co- located IT vendor partners

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Unilever takes HUL strategies like small packs, cheaper variants to developed markets. “If we had that in the US, there is no reason why we would be hit in a recession. We have seen that we tend to do well in markets that have a wide portfolio of brands in a category. So, we are trying to do the same in other markets," Polman had said
Successful innovations are flowing from emerging markets to a global audience
•Grameen Danone produces a yogurt known as Shokti, which is fortified to meet 30% of children’s daily requirements of vitamin A, iron, zinc and iodine. The goal was to increase consumption of these yogurts by children in poor, rural areas of Bangladesh
•When fresh milk prices doubled in Bangladesh in 2008, Grameen Danone was forced to raise the price of Shokti, and sales plummeted. Danone experimented with selling nutritious foods to very poor people but struggled both to earn a profit and to deliver nutrition. It responded to low sales by beginning to sell yogurts to wealthier urban consumers, alongside in rural areas
•Urban sales grew quickly and they made up 80% of Grameen Danone sales. While re-orienting sales had kept the company afloat, it had diverted it from its original purpose of providing nutrition to the rural poor
•In Brazil, babies often sleep with their parents, and many families were poor. What consumers really care about is keeping the baby dry all night.
•P&G launched an affordable, ultra water-tight nappy, without fussy details. It developed a lower-priced diaper line to make it attractive for parents who couldn't afford its more expensive diapers.
•The basic tier of products now exists around the world under different brand names, such as Simply Dry in Western Europe.

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•Depending on segment, 25 to 32% of consumers don’t feel like companies are incorporating their feedback in product development
‒Emerging markets are the exception, especially Brazil, where an overwhelming majority feel listened to, and most channels are rated positively
‒Japanese consumers feel most ignored, with ~60% feeling companies are not incorporating feedback
•There is no consensus on the most effective channel; only 20 to 30% of consumers picked each channel
•~Half of consumers feel company websites and/or social media are the most effective channel(s); this is especially true in emerging markets
•However, CG&S lags other industries in extent of investment in social media, despite open innovation being the 2nd rated reason for social media initiatives; CG&S also ranks last in using social media to monitor trends for product development*
Conclusions: Consumers feel online channels are best for feedback; however, a number still do not feel companies are listening anywhere
Sources: Accenture Consumer Innovation Pulse Survey, 2014; Accenture Business Agility Study

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•50%+ of consumer feel company websites and social media are the most effective channels for providing feedback
•Only between 30 and 40% of consumers feel companies perform well at providing digital options
‒This is especially low in Western Europe
‒Even in emerging markets, ratings barely exceed 50% at most
Conclusions: Digital engagement options seem to lag the opportunity

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European countries present the highest Digital TV and internet penetration rates
Digital TV household penetration in selected countries worldwide in 2012
Top 50 countries with the highest internet penetration rate

25
But China and India are the next frontiers for digital and social media marketing of consumer goods and services
•Over the next decade, China is expected to reach 70-80% penetration and the penetration rate in India is also expected to increase.
•The opportunities are endless for companies that are willing to embrace the next wave of marketing and embrace digital and social media marketing
Large base of internet users (618 mn users in China & 164.81mn users in India with low penetration rates 45.8% & 11.4% respectively)
Due to the relatively low rates of PC usage, both countries have a strong mobile penetration, (number of Internet subscribers in India is 164.81, with 7 out of 8 accessing the Internet from their mobile phones. In China, over 618 mn Internet users, 80% of which access the Web via their smartphones)
Many users in both China and India are active social media users (India has c91mn social media users or 55% market penetration. The penetration rate in China is 91%)
Both economies have large and growing middle classes whose increasing consumption of everything from smartphones to degrees from overseas universities will play a large role in driving domestic and international aggregate demand.
China and India have many similarities and differences within the digital and social media landscape

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Accenture research showed direct correlation between CPG brand website usage and in-store purchase behavior
Online brand presence matters – as does fresh and engaging content
Brand visitors spend more
•CPG brand website visitors buy 37% more in store and spend 53% more on the entire category
•Consumers on the best evaluated websites spent over 200% more on the brand than non-visitors
•Price paid per unit in brand at the best of the ten CPG brand websites was 2% higher than for non-visitors in brand
Successful brand sites…
•Provide compelling reason to buy (not just coupons)
•Update content at least weekly, e.g., pulse surveys, user generated reviews, status on weight loss plans
•Engage visitors, e.g., demos, live chat, apps and games
Sources: Accenture/ dunnhumbyUSA, comScore research, 2011

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•May differentiate in a crowded market (Japan, alcobev)
•Significant number of consumers still perceive no green products
•55% of global respondents say they are willing to pay extra for products and services from companies committed to CSR (an increase of 1000 basis points in the past two years) *
•“Green” is particularly important in emerging markets, with about two-thirds of consumers in APAC, LATAM and MEA saying they would pay more – and this figure is increasing
•Willingness to pay extra is lower in North America and Europe (42% and 40%, respectively), but this number is also increasing
•Products with sustainability claims or otherwise linked to sustainability programs grew sales between 2 and 5% from last year (vs. 1% for products without claims)
Conclusions: While “green”/ sustainable products are more seen as improved vs. new, this is becoming a required investment
Sources: Accenture Consumer Innovation Pulse Survey, 2014; “Doing Well By Doing Good’ – Nielsen, June 2014

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Contents
Executive Summary
Detailed Findings

Consumers feel fast-moving Food & Beverages and Home &
Personal Care lead in innovation, while Alcoholic Beverages lags
Q1. How often does each of the following types of companies address your needs by developing radically ‘new’
products versus making product improvements?
?
Top 2 : Always / Often
Base: All respondents (n=11360)
Alcoholic Beverages
Fashion and Luxury
Consumer Healthcare
Food and Beverages
31%
40%
40%
51%
48%
Global
• Highly competitive and
commoditizing Food &
Beverages and Home &
Personal Care experience
highest innovation
• Brand dependent industries are
less likely to develop radically
new products
• Alcoholic beverages’ focus on
heritage brands results in few
truly “new” products

39%
26%
20% 31%
24%
28%
26%
Fashion and Luxury
39% 46%
36%
56%
32%
41%
36%
Consumer Healthcare
44%
32%
28% 55% 36%
39%
32%
Home and Personal Care
59%
47%
33%
71%
52%
49%
39%
Food and Beverages
53%
38%
Alcoholic Beverages
58%
42%
51%
41%
35%
40%
33%
36%
27%
36%
UK US France Brazil Sweden Germany China Japan
Q1. How often does each of the following types of companies address your needs by developing radically ‘new’
products versus making product improvements?
?
Emerging markets perceive higher innovation than developed –
though US consumers also see more “new” products
• Emerging markets Brazil
and China see more “new”
products
• Of developed markets, US
consumers see the most
“new” products
• Brazilians perceive the
highest innovation, while
Swedes feel there are few
truly “new” products

31
Fashion and Luxury
Consumer Healthcare
Food and Beverages
Alcoholic Beverages
Q1. How often does each of the following types of companies address your needs by developing radically ‘new’ products versus making product improvements?
?
There seem to be clear regional biases in how consumers perceive existing innovation
Top 2 : Always / Often
39%
44%
32%
36%
25%
51%
49%
41%
39%
28%
58%
71%
55%
56%
31%
50%
53%
42%
41%
38%
W Europe
US
Brazil
APAC
43%
44%
35%
35%
27%
55%
62%
47%
48%
37%
Developed
Emerging

Consumers find online feedback most effective; a significant
number do not feel companies are listening
Q2. Which method(s) do you feel is the most effective way that companies incorporate your suggestions and
feedback when they develop and/or enhance products?
?
None, companies
are not incorporating
my suggestions
Phone
Mail
In person
Social media
Company website
23%
24%
25%
11%
29%
26%
22%
25%
24%
11%
25%
30%
23%
23%
21%
11%
28%
28%
22%
23%
24%
10%
29%
29%
20%
32%
27%
10%
20%
22%
Food and
Beverages
Home and
Personal Care
Consumer
Healthcare
Alcoholic
Beverages
Fashion
and Luxury
Global
• Company websites are
still the top target for
feedback
• Social media is a strong
second choice
• Consumers feel phone
is the least useful
• Over a quarter of
consumers don’t feel
like companies are
listening; this is
strongest in Alcobev –
where innovation is also
lowest

Brazilians feel company websites are most effective, by a wide
margin
?
25%
23%
24%
Fashion and Luxury
26% 33%
24% 42%
26%
26%
Consumer Healthcare
29%
28% 42% 25%
28%
25%
28% 34%
27% 42%
29%
27%
Food and Beverages
30%
28% 40% 27%
27%
27%
25%
Alcoholic Beverages
31%
23%
29%
29%
25%
32%
20%
22%
22%
30%
38%
30%
Company Website
• Brazilians are
significantly more likely
to find Company
Websites an effective
feedback venue
• Germans and Chinese
also support this
channel
• Japanese are least
supportive – though
they feel Company
Websites are
significantly more
effective than other
channels

In Social Media, there appears to be an emerging market bias,
with Brazil and China both peaking
?
27%
28%
25%
29%
30%
Alcoholic Beverages
19%
17%
35%
15%
21%
21%
Fashion and Luxury
20%
20%
42%
17%
23%
22%
Consumer Healthcare
17%
16%
16% 36%
21%
18%
19%
20%
18% 39%
22%
21%
Food and Beverages
20%
21%
40%
18%
25%
22%
10%
11%
9%
9%
11%
Social Media
• Brazilians lead again in
finding Social Media
effective
• The UK and US have
the next highest levels
of support
• Japanese consumers
are significantly less like
to find Social Media a
good feedback tool

Again, Brazil leads in believing In Person feedback most
effective; in most categories, the US and France also agree
?
10%
8%
22%
7%
22%
8%
24%
8%
21%
22%
27%
20%
28%
18%
24%
18%
Food and Beverages 36%
22%
Alcoholic Beverages
18%
18% 32% 22%
21%
18%
Fashion and Luxury
19%
16% 34%
24%
24%
18%
Consumer Healthcare
21%
19% 37%
26%
25%
20%
19%
16% 37%
28%
In person
• In Person remains a
relatively strong channel
for feedback
• Once again, Brazilians
lead in finding this
channel effective
• The US and France also
support this channel
• Similarly, Japanese do
not feel In Person
feedback works

French consumers find Mail to be an effective feedback channel,
with Brazilians and Chinese also supporting
?
Alcoholic Beverages
22%
10%
27%
14% 32%
15%
Fashion and Luxury
24%
15%
33%
35%
18%
17%
Consumer Healthcare
23%
15%
33%
36%
19%
17%
25%
15%
33%
40%
21%
17%
Food and Beverages
23%
17%
33%
37%
20%
19%
9%
28%
7%
29%
27%
8%
7%
26%
27%
8%
Mail
• Mail is the channel
French consumers find
to be most effective for
feedback
• This is seconded by
Brazilians, Chinese and
to a lesser degree,
Germans
• The UK, US and
Sweden all do not
support Mail
• Again, Japanese
consumers are unlikely
to think Mail is effective

Phone is not widely favored as a feedback tool, with the Chinese
standing out in their moderate support
?
20%
3%
3%
3%
3%
2%
21%
20%
18%
19%
7%
2%
4%
Alcoholic Beverages 10%
7%
6%
Fashion and Luxury
5%
3%
12%
7%
8%
5%
Consumer Healthcare
6%
4%
15%
9%
10%
7%
5%
3%
11%
8% 10%
7%
Food and Beverages
5%
3%
12%
8%
8%
5%
Phone
• Almost all countries find
Phone the least
effective feedback
channel
• China supports Phone
almost as strongly as In
Person feedback
• Brazil’s support is
relatively low, though
higher than almost all

On average, over a quarter of consumers don’t feel companies
incorporate feedback, with the Japanese significantly more negative
?
20%
61%
27%
21%
17%
59%
61%
18%
60%
63%
Alcoholic Beverages
34%
42%
15%
30%
37%
40%
Fashion and Luxury
31%
39%
7%
27%
29%
37%
Consumer Healthcare
32%
36%
7%
24%
27%
37%
28%
35%
5%
20%
25%
35%
Food and Beverages
30%
34%
6%
23%
24%
33%
None, companies are not incorporating my suggestions
• Japanese consumers do
not feel companies are
listening to feedback in
new product
development
• Emerging markets are
the most positive, with
most consumers feeling
that companies
incorporate feedback
• Consumers feel alcobev
companies listen least
to their feedback

Overall, digital options are surprisingly rare – given the ubiquity of
digitization and the growth of mobility
Q3. How well do each of the following types of companies develop products that provide you a “digital option”
when using the product?
?
Fashion and Luxury 37%
Consumer Healthcare 33%
Home and Personal Care 39%
Top 2 : Very well / Well Global
• Consumers feel there are the
fewest options to engage
digitally with alcobev products,
perhaps due to regulatory
constraints
• Consumer health also lags,
somewhat – again, this may be
regulation-driven; however, it
seems a missed opportunity
given consumer focus on health
& wellness – and the desire for
product information

40
Fashion and Luxury
Consumer Healthcare
Food and Beverages
Alcoholic Beverages
Q3. How well do each of the following types of companies develop products that provide you a “digital option” when using the product?
?
Once again, consumers see digital options varying by region – with emerging market consumers perceiving significantly more
31%
30%
27%
28%
24%
41%
37%
35%
34%
27%
51%
53%
50%
52%
36%
40%
43%
34%
40%
34%
W Europe
US
Brazil
APAC
32%
31%
28%
28%
24%
47%
51%
42%
49%
37%
Developed
Emerging
Top 2 : Very well / Well

Alcoholic Beverages
29%
13%
25% 36%
27%
22%
Fashion and Luxury
33%
15%
30% 52%
34%
27%
Consumer Healthcare
35%
14%
50%
35%
24%
37%
29%
16%
21%
22%
17%
22%
15%
35% 53%
37%
26%
Food and Beverages
36%
17%
51%
32%
41%
31%
45%
39%
37%
48%
50%
Q3. How well do each of the following types of companies develop products that provide you a “digital option”
when using the product?
?
Brazil leads, with China also more satisfied with digital options
Top 2 : Very well / Well
• Brazilian consumers
lead in finding “digital
options”, closely
followed by China
• US and German
consumers also
perceive a relatively
high number of “digital
options”
• In Sweden, consumers
see a significant lack of
“digital options”;
Japanese perception
also lags

Fashion and Luxury 25%
Consumer Healthcare 24%
Home and Personal Care 26%
Q4. When each of the following types of companies develop green/eco-friendly/socially conscious products do
you feel these are new products or product improvements?
?
Consumers more likely think “green” products are improved vs. new;
“green” products seem less common in highly “branded” categories
New Products Products Improvement
47%
44%
50%
54%
53%
Global
Companies Not Developing
Green Products
33%
30%
26%
20%
23%
Most perceived “green”
products in Food & HPC;
high incidence in HPC may
be driven by the many
“green” home care
products
Alcobev lags in perceived
“green” development, with
fewer category
opportunities and a
stronger emphasis on
heritage brands

43
Fashion and Luxury
Consumer Healthcare
Food and Beverages
Alcoholic Beverages
Q4. When each of the following types of companies develop green/eco-friendly/socially conscious products do you feel these are new products or product improvements?
?
Consumers in Western Europe see the least “green” innovation, in sharp contrast to those in APAC
18%
20%
19%
19%
15%
28%
31%
27%
25%
18%
26%
31%
29%
30%
19%
28%
29%
26%
30%
24%
W Europe
US
Brazil
APAC
53%
55%
49%
44%
46%
50%
51%
46%
39%
38%
51%
51%
49%
45%
42%
54%
55%
54%
47%
54%
W Europe
US
Brazil
APAC
29%
25%
32%
37%
40%
21%
18%
27%
35%
44%
23%
18%
22%
26%
39%
18%
16%
20%
24%
22%
W Europe
US
Brazil
APAC
New Products
Products Improvement
Companies Not Developing Green Products

44
Fashion and Luxury
Consumer Healthcare
Food and Beverages
Alcoholic Beverages
Q4. When each of the following types of companies develop green/eco-friendly/socially conscious products do you feel these are new products or product improvements?
?
Both emerging and developed markets are more likely to see “green” products as “improvements” vs. “new”; emerging markets perceive that more companies are developing green products
50%
52%
47%
42%
43%
56%
57%
55%
48%
54%
Developed
Emerging
New Products
Products Improvement
26%
23%
30%
36%
39%
17%
14%
18%
21%
24%
Developed
Emerging
Companies Not Developing Green Products
23%
24%
23%
22%
18%
27%
30%
27%
30%
21%
Developed
Emerging

14%
18%
16%
Fashion and Luxury
18%
20%
30%
18%
25%
19%
Consumer Healthcare
16%
17%
29%
20%
27%
22%
16%
17%
31%
23%
31%
23%
Food and Beverages
14%
19%
26%
18%
28%
20%
Alcoholic Beverages
13%
17%
19%
27%
29%
26%
31%
27%
26%
31%
22%
26%
30%
?
European countries are least likely to feel “green” products are
“new”
New Products
• Japan, the US, Brazil
and China all are more
likely to believe
green/eco-friendly/social
conscious products are
“new” vs. product
improvements
• Japan especially stands
out in seeing “green”
alcobev products as
“new”
• As a whole, the UK,
France, Sweden and
Germany don’t perceive
“green” products as
“new”

43% 56%
42%
48%
38%
36%
Fashion and Luxury
41% 53%
45%
39% 43%
38%
Consumer Healthcare
48% 59%
49%
49%
46%
40%
53% 61%
51% 57%
47% 51%
Food and Beverages
52% 61%
51%
52%
50%
47%
Alcoholic Beverages
58%
43%
57%
49%
46%
57%
58%
38%
41%
44%
?
Across the board, consumers are more likely to see “green”
products as “improved” vs. “new”
Products Improvements
• Germany and China are
significantly more likely
to perceive “green”
products as “improved”
• The UK and Japan are
the least likely to view
“green” products as
“improved”

27%
17%
27%
18%
31%
40%
39%
39%
44%
48%
Fashion and Luxury
30%
39%
26% 39%
35%
42%
Consumer Healthcare
25%
35%
22%
31%
27% 37%
23%
30%
18%
20%
18% 30%
Food and Beverages
25%
29%
23%
30%
21%
33%
21%
21%
29%
20% 30%
36%
Alcoholic Beverages
?
Given the importance of CSR, there is still a relatively strong
perception that companies are not supporting this desire
I do not feel companies are developing green/eco-friendly/socially
conscious products
• The UK leads in feeling
that companies are not
developing “green”
products
• The Chinese and
sometimes Brazilians
and US consumers are
least likely to feel
companies are not
developing “green”
products
• Countries generally see
Alcobev companies as
developing the fewest
“green” products

48
Appendix

49
Conclusions - IRI

51
•Unilever’s Magnum brand generated year-one sales of $95mn & 2nd year, $136mn
•Kraft Foods' MiO generated cumulative #1 & #2 year sales of $268mn. New 30% of buyers to the category
•Milo’s Kitchen Year-one sales exceeded $75 million and year-two sales grew past $100mn
•Hershey’s Reese’s Minis generated over $100mn in year one sales

52
•Winning in the Digital Channel: The E-Commerce Opportunity in Consumer Goods: http://www.accenture.com/us-en/Pages/insight-winning-digital-channel- consumer-goods-ecommerce.aspx
•Redrawing the Frontiers: http://consumergoods.edgl.com/column/Redrawing-the-Frontiers92925
•Data Transformation: Winning and Retaining the Digital Consumer: http://www.accenture.com/us-en/Pages/insight-winning-digital-channel-consumergoods-ecommerce.aspx
•The Future Of Consumer Goods: Moving From Analog To Digital: http://www.slideshare.net/xavianaya/accenture- cpgdigitalrevolutionmovingfromanalogtodigitaloperatingmodel
•Innovation in Consumer Products How to achieve high performance through new product innovation: http://www.accenture.com/sitecollectiondocuments/pdf/consumerproductsgrouppov_103008_fnl.pdf
•Research Shows Digital IT Transformation Boosts CPG Profits: http://www.accenture.com/us-en/Pages/insight-digital-it-transformation-for-consumer- packaged-goods.aspx
•Lacoste partners with Accenture to establish online presence in China: http://www.retailinasia.com/article/sectors/fashion/2013/08/lacoste-partners- accenture-establish-online-presence-china
•Company will invest $200 million in its plan to upgrade fulfillment, mobile, and analytics capabilities: http://www.retailsolutionsonline.com/doc/belk-chooses- accenture-to-aid-in-omni-channel-transformation-0001
•Digital Delivery: How CPG Companies Can Entice E-Consumers: http://consumergoods.edgl.com/column/Digital-Delivery--How-CPG-Companies-Can- Entice-E-Consumers94784
Accenture PoV for reference

Innovation in Consumer Goods

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