Nielsen Review of US Consumer Market

Confidential & Proprietary • Copyright © 2009 The Nielsen Company

Winning the Confectionery Consumer

March 5, 2009

Todd Hale

SVP Consumer & Shopper Insights

James Russo

Vice President Marketing

Confidential & ProprietaryCopyright © 2009 The Nielsen Company

April 10, 2023

• Economic Update

• How Are Consumers Reacting?

• What Are Consumers Doing Differently?

• Manufacturer & Retailer Actions

• What to Watch

• The Outlook

• What to Do Now

Agenda


April 10, 2023

Executive Summary:Implications & Opportunities

• Global economies mired in a consumer spending driven recession

• Since 1948, nine U.S. recessions averaging 11 months

• Each recession has been followed by economic expansions averaging four years

• The system is ridding itself of excesses & we are on the verge of a potential fundamental shift in how consumers shop & buy

• Consumers fulfilling basic over discretionary needs

• Pervasive trading down

• Companies best positioned for growth will deliver value in the short term & innovation in the long term

• The ability to understand consumers, categories, channel, media in increasingly granular levels will deliver insights & reveal opportunities to drive success


April 10, 2023

Overheard Across the Globe…

I now go to Aldi’s. It’s so cheap my girlfriends have also changed, so it’s not

just me… Also I buy the cheapest in everything except foods & shampoo

Down trading on stores & brands

We eat out less & cook more… still buy chocolate & wine thoughThe Netherlands

Struggling for a sense of normality

We watch more movies at home, more board games – I

bake a lot more. It’s really hard to eat healthy though, when you

are trying to save money

More cocooning in home

Controlling usage- Back to basic, familiar

brands

I try not to stock up. Just buy what I need

for the month… Across countries

I buy more frozen foods… I can control how much I use & I don’t

waste anything UK

I used to have 2 cups of coffee at Starbucks everyday. I’ve stopped

that as well as my weekly manicure.

The Latte Effect

I make inventories of what’s in the kitchen & try to use

everything I have before buying more. I wait for the sales & stock

up.

Depleting Inventories

Lateral shifts in categories

I don’t experiment with new items… which I used to

before. I just buy something familiar..

Across countriesSource: Nielsen DeltaQual: Qualitative Feedback from around the globe, 4Q2008


April 10, 2023

Forces at Work…Consumer Wallet Pressures

Lower Spending Power

•Home/stock portfolios losing value

•Tighter credit

•Existing job income flat

•Unemployment rising

Rising Costs

•Personal debt servicing•Home energy•Transportation•Household expenditure•Medical•Education


April 10, 2023

Weakening Labor Market:Over 3.5 Million Job Losses Since Dec 2007

41,000

-72,000

-144,000-122,000-160,000

-137,000-161,000

-128,000-175,000

-321,000

-380,000

-597,000-577,000

-598,000-650,000

-550,000

-450,000

-350,000

-250,000

-150,000

-50,000

50,000

Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09

U.S. Total Non Farm Employment(Seasonally Adjusted Change from Previous Mos)

U.S. Total Non Farm Employment(Seasonally Adjusted Change from Previous Mos)

Unemployment surges to 7.6%; highest monthly loss since 1974


April 10, 2023

How Are Consumers Reacting?


April 10, 2023

20

40

60

80

100

120

140

Apr-0

1Ju

l-01

Oct-

01

Jan-

02

Apr-0

2Ju

l-02

Oct-

02

Jan-

03

Apr-0

3Ju

l-03

Oct-

03

Jan-

04

Apr-0

4Ju

l-04

Oct-

04

Jan-

05

Apr-0

5Ju

l-05

Oct-

05

Jan-

06

Apr-0

6Ju

l-06

Oct-

06

Jan-

07

Apr-0

7Ju

l-07

Oct-

07

Jan-

08

Apr-0

8Ju

l-08

Oct-

08

Jan-

09

Source: The Conference Board – Nine census regions, 5,000 US households

20012001 20022002 20032003 20042004 20052005 20062006 20072007 20082008

Recession,9/11 Corp

Scandals

War

War War ReboundRebound

Spike In Gas prices

Huge job gains

Fall in gas prices Housing,

Energy,Credit,

Economy

Katrina

Declining Consumer Confidence: Current Expectations at Record Lows: Feb Plummets


April 10, 2023

More At-Home Meal Preferences

20

24

24

32

23

28

37

16

20

22

26

20

24

31

Choose a Less Expensive RestaurantMuch More Often

Bring Prepared Meal or Home DeliveryMuch Less Often

Eat Fast Food Much Less Often

Eat Dinner at Restaurant Much Less Often

Bring Lunch to Work/Pack Lunch MuchMore Often

Eat Breakfast at Home Much More Often

Eat Dinner at Home Much More often

% U.S. Households Claiming

Oct '08 Apr '08

Source: Homescan®, a service of The Nielsen Company – Panel Views Survey


April 10, 2023

Retail Sales Stalled in 4th Quarter of 2008

8.2%

2.7%3.8%

5.5%

8.9%8.3%

7.3%

4.6%

3.0%

-5%

-3%

-1%

1%

3%

5%

7%

9%

Source: Dept of Commerce: % Chg vs. previous year

% change in retail sales (ex-auto)% change in retail sales (ex-auto)

200820072006200520042003200220011999

-1.2%

-3.1%-2.0%-2.7%

-5%

-3%

-1%

1%

Sep

vs prior monthvs prior month

Oct Nov Dec

Jan

+1.0%


April 10, 2023

Same Store Sales Reflect Consumer Actions

-20 -15 -10 -5 0 5 10 15

BJ's

Costco

Sams

Kroger

Safeway

Dollar General

Family Dollar

Dollar Tree

Walmart

CVS

Rite Aid

Walgreens

TargetTarget

NordstromNordstrom

JCPenneyJCPenney

Home DepotHome Depot

KohlsKohls

Stock Up & SaveStock Up & Save

Discretionary SpendingDiscretionary Spending

Value & ConvenienceValue & Convenience

Source; Jan ‘09 results (excl fuel) for all but Kroger, Safeway, SuperValu, Dollar General, Family Dollar, Dollar Tree, CVS, Whole Foods, Home Depot – latest report

Same Store Sales GrowthSame Store Sales Growth

Latest Reported Quarter

Carrefour +3.2%

Metro C&C +3.2%

Delhaize U.S. + 2.5%

Delhaize Belgium + 2.2%

Loblaws + 3.0%

Latest Reported Quarter

Carrefour +3.2%

Metro C&C +3.2%

Delhaize U.S. + 2.5%

Delhaize Belgium + 2.2%

Loblaws + 3.0%

SuperValuSuperValu

MacysMacys

Whole FoodsWhole Foods


April 10, 2023 Page 12

What Are Consumers Doing Differently?

TH


April 10, 2023

Behavioral Shifts are Gradual & Immediate

Trips to value channels growing

since 2001

Coupon Usage

increasing

PL unit sales outpacing Branded

Source: Nielsen Homescan and RMS, Label Trends, Nielsen Online through Sept. Nielsen Entertainment through Sept, PL 11/1/08

H&W slowing, but still strong

TV viewing up; movie going flat

Consumers increasingly using

internet to find ways to save


April 10, 2023

Dramatic Declines in Discretionary Trips

2008 versus 2007Percent Change

Trip GeneratorsTrip Generators Trip AvoidersTrip AvoidersSource: Homescan®, a service of The Nielsen Company Excludes gas only trips

-8

-6

-4

-2

0

2

4

6

8O

n-Li

ne

Dol

lar

Sup

ercn

trs

Clu

b

Dru

g

Pet

Sto

res

Gro

cery

Liqu

or

Ttl

Out

lets

Ele

ctro

nic

App

arel

Con

v/G

as

DIY

Off

ice

Sup

Toy

Mas

s

Dep

t

Shopping Trips

Basket Ring Per Trip


April 10, 2023

-25

-20

-15

-10

-5

0

5

10O

n-Li

ne

Dol

lar

Sup

ercn

trs

Clu

b

Dru

g

Pet

Sto

res

Gro

cery

Liqu

or

Ttl

Out

lets

Ele

ctro

nic

App

arel

Con

v/G

as

DIY

Off

ice

Sup

Toy

Mas

s

Dep

t

< $30k$30 - $69.9K$70k +

Low Income Taking More Drastic Trip Cuts, More Affluent Driving Trips to Value Channels

Source: Homescan®, a service of The Nielsen Company Excludes gas only trips

Shopping Trips by Household Income

2008 versus 2007Percent Change


April 10, 2023

Good Start to 2009, but 1st Period in ’09 Includes Two Additional Days Before New Years Eve

Trip GeneratorsTrip Generators Trip AvoidersTrip AvoidersSource: Homescan®, a service of The Nielsen Company Excludes gas only trips

% Change in Shopping Trips

-20

-15

-10

-5

0

5

10

15

20D

olla

r

Sup

ercn

trs

On-

Line

Gro

cery

Clu

b

Dru

g

Ttl

Out

lets

Pet

Sto

res

Liqu

or

Off

ice

Sup

Con

v/G

as

DIY

App

arel

Mas

s

Dep

t

Ele

ctro

nic

Toy

4th Qtr '08Last 4-weeks '081st 4-weeks '09


April 10, 2023

Edible Departments Driving Dollar Growth

Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year)

% Dollar Growth (FDM w/WM)

3.6

8.9

6.2 6.2 5.95.3 5.3 5

3.9 3.8

2.52

1.3

-4.5


April 10, 2023

% Unit Growth (FDM w/WM)

-1.5

4.6

2.5 2.2

0.5 0.4

-0.2-0.9

-1.3-2.2

-2.9

-3.9-4.6

-6.9

Unit Sales Off 1.5% Across the Store – Largest Declines from Non-Edibles, Candy & Gum

Inflation & weakening economy driving

consumers to make trade-offs or buy less

Inflation & weakening economy driving

consumers to make trade-offs or buy less



April 10, 2023

% Dollar Growth (FDM w/WM)

-10

-5

0

5

10

15

52 wk 13 wk 4 wk

Worsening Sales in Recent Quarter & 4-week Period as Inflationary Pricing Eased

LatestLatestUnit prices for fresh eggs & milk down 12% & 8% in

latest period



April 10, 2023

Sales Within Non-Edibles, Candy & Gum Leading Unit Decline

LatestLatest

TotalTotal DairyDairy

FreshMeatFreshMeat

DeliDeli

FreshProduce

FreshProduce

AlcoBevAlcoBev

DryGrocery

DryGroceryFrozenFrozen

PkgdMeatPkgdMeat

HBAHBANonFoodNonFood

GeneralMerch

GeneralMerch


GumGum CandyCandy

% Unit Growth (FDM w/WM)

-10

-8

-6

-4

-2

0

2

4

6

8

52 wk 13 wk 4 wk


April 10, 2023

Boom vs. Bust:Consumers Actions Tell the Story

2005 vs. 2004% Chg Unit Sales Leaders

Desserts - Dairy 18%Mens Toiletries 14%Tea 13%Yogurt 11%Bottled Water 10%Dressings / Salad 9%Seasonal Merchandise 9%Cough & Cold 8%Wine 7%Grooming Aids 6%Personal Bath Needs 6%Frozen Prepared Foods 5%Breakfast Foods 5%Frozen Vegetables 5%Skin Care 5%

Canning & Freezing Supp 11%Wine 7%Vitamins 5%Fresh Meat 5%Dry Vegetables & Grains 5%Dry mix Prepared Foods 4%Flour 3%Ref Juice & Drinks 3%Salads, Prep Foods & Deli 3%Frozen Novelties 3%Frozen Vegetables 3%Yogurt 2%Jams & Jellies 2%Liquor 2%Cough & Cold 2%

2008 vs. 2007% Chg Unit Sales Leaders

Source: Scantrack, a service of The Nielsen Company


April 10, 2023

Consumers Increasingly Turning to Store Brands as Economy Weakens

Total Store Brand Items

Avg Unit Sales Growth: 4.5%

Driver of growth: Consumables

Departments: Fresh Produce, Bev-AL, Fresh Meat, Frozen Foods, Deli, Dairy, Dry Grocery

Total Store Brand Items

Avg Unit Sales Growth: 4.5%

Driver of growth: Consumables

Departments: Fresh Produce, Bev-AL, Fresh Meat, Frozen Foods, Deli, Dairy, Dry Grocery

3.2

4.2

4.75.0 5.0 4.9

-3.2 -3.2

-4.0

-2.7

-3.8

-4.7

Store BrandsStore

Brands

BrandedBrandedTotal Branded Items

Avg Unit Sales Declines: -3.6%

Driver of decline: Discretionary

Departments: General Merchandise, Non-Food, HBA & Many Food Departments

Total Branded Items

Avg Unit Sales Declines: -3.6%

Driver of decline: Discretionary

Departments: General Merchandise, Non-Food, HBA & Many Food Departments

% Unit Sales Growth for last 6 (4wk) periods




Retailers & Manufacturers Facing Significant Decisions

JR


April 10, 2023

Forces at Work: CPG Pressures

• Slowing sales• Consumer Trends• Growth of value retailers

• Long term private label trends• Deflationary Trends

Retail PricesRetail Prices

Marketplace factorsMarketplace factors

Margin Pressures on bothCPG Manufacturers & Retailers!

• Trading Out & Trading Out• Transportation costs• Sustainability trends –renewable energy• Commodity prices• Media Shifts


April 10, 2023

“most valuable card in your wallet” - buy 1 get 1; 10 for $10; Good ‘til; Winn-Dixie brands; locked in low price this month

“have a restaurant-quality meal at home once a month and save $425 a year”

Retailers: Extending Discounts & Delivering Value

“Ways to $ave with Walgreens” via on-line ads, rebates & coupons

Customers who sign-up for $40 annual membership get $10 gift card

“Save $3,000 with Meijer brand” on-line link to Today Show video on how to save w/store brands

“The Whole Deal value guide … over $30 in coupons, 13 budget recipes, money saving tips and more!”

Offering ways to feed a family of four for $8 or less. Similar programs: HEB, Food Lion, Kroger

Fuel Your Family Meal Solutions – on-line contest for shoppers to enter & win year’s worth of groceries

Source: Company Websites


April 10, 2023

Manufacturers: Pitching “Value” & Increasing Ad Spending

Search-engine optimization when consumers type "cereal" plus "deals" or "value", Kellogg's Web site will pop up

The original dollar menu campaign. 10 cans soup for $10

Jointly promoting with Kraft: soup & grilled-cheese sandwiches

Local word-of-mouth campaign "So good for so little“

First time in more than a decade, advertising Banquet frozen dinners

15-second TV commercial for Kool-Aid showing how four pitchers of Kool-Aid cost same as a two-liter bottle of soda

Planning increase in ad spending & expanding number of brands it advertises, including Dinty Moore stews

Announced plans to increase consumer marketing 8% to 12% in its new fiscal year as part of a two-year growth plan

Advertising expected to top $1.55 billion it spent last year

"DiGiornonomics”

Multimillion dollar campaign

Using online & targeting individuals to a narrower focus of consumers

Source: Company Websites



Impact onAdvertising



Media Shifting:Decline in Ad Spending Widening

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008). - Internet advertising expenditures account for CPM-based, image-based advertising.Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008). - Internet advertising expenditures account for CPM-based, image-based advertising.

Cable TV

Cable TV

Syn. TVSyn. TV Hisp

CableTV

HispCable

TV

FSIFSI

LocalMag

LocalMag

SpotRadioSpot

Radio

NatMagNatMag

Total Ad SpendingTotal Ad Spending

NatNewspr

NatNewspr

HispTV

HispTV

In-ternet

In-ternet

Net-work radio

Net-work radio

NatSun Supp

NatSun Supp

SpotTV

SpotTV

Out-doorOut-door

B2BB2BLocal

NewsprLocal

NewsprLocalSun Supp

LocalSun Supp

Jan – Sept 2008 vs. YAGO

Next >< Back Main Menu

19%Of Tlt

19%Of Tlt

2%2% 1%1%

.2%.2% 4%4% 17%17%.4%.4% .3%.3% 2%2% 3%3% 1%1% 14%14% 6%6% 1%1% 3%3% .4%.4% .07%.07%


April 10, 2023

Top 10 US Categories

Product Category % ChangeAutomotive (Factory & Dealer Assoc) -8%

Pharmaceutical -4%

Auto Dealerships – Local -3%

Quick Service Restaurants 11%

Motion Picture 1%

Wireless Telephone Services 0%

Department Store 8%

Direct Response Product 27%

Restaurant 9%

Furniture Stores 0%

Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008)Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008)


April 10, 2023

Top 10 US Companies

Product Category % ChangeProcter & Gamble -7%

General Motors -4%

AT&T -2%

Verizon Communications 10%

Toyota Motor -4%

Ford Motor -23%

Johnson & Johnson 5%

Time Warner -11%

General Electric 19%

PepsiCo -3%

Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008)Source: Nielsen Monitor-Plus (Jan.-Sept 2007 and Jan.-Sept 2008)


April 10, 2023

Which Levers Do You Pull?

Analytics & InsightsAnalytics & Insights

Packaging Packaging Pricing Pricing Private Label Private Label Promotion Promotion

AdvertisingAdvertising In-Store In-Store AssortmentAssortment Innovation Innovation

TH


April 10, 2023

Most Preferred Response

4

7

8

3

7

7

7

11

18

46

8

9

17

47

Produce slightly lower quality products, but keep pricethe same

Offer the same number of sales, but at less of asavings

Offer fewer sales

Raise prices of existing items proportionately

Modestly reduce packaging size of products (alsocalled downsizing), but keep price the same

Introduce new, smaller pack sizes at lower prices

Offer larger economy sizes with lower price perusage/serving

If Raw Material Costs Rose Substantially, Would You Prefer Manufacturers:

Oct '08 Apr '08

Consumers Generally Prefer Larger Sizes with Lower Price per Serving

Source: Homescan®, a service of The Nielsen Company – Panel Views Survey


April 10, 2023

% of $ Sales (FDM w/WM)

1% 0%

40%

25%

20%

15% 15% 15% 14% 13%

4%

8%

13%

Da

iry

De

li

Fro

zen

Fre

sh

Me

at

Dry

Gro

ce

ry

Fre

sh

Pro

du

ce

No

n-F

oo

d

HB

A

Pa

ck

ag

ed

Me

at

Ge

n M

erc

h

Ca

nd

y

Alc

oh

oli

cB

ev

era

ge

s

Gu

m

Retailer Brand $ Share Varies by Department

16.6% AVG ( + 1.0 pts)

> Development in food & beverage; share growth in all dept’s but Bev/Al

(+1.1 +1.0 +1.2 +0.5 +0.9 +1.7 +0.7 +0.9 +0.2 +0.2 -0.1)


+0.2 0.0


April 10, 2023

% of Unit Sales (FDM w/WM)

1% 1%

40%

21% 21%19%

18% 16%15% 14%

5%

13%14%

Da

iry

Fro

zen

No

n-F

oo

d

Dry

Gro

ce

ry

De

li

HB

A

Fre

sh

Me

at

Ge

n M

erc

h

Fre

sh

Pro

du

ce

Pa

ck

ag

ed

Me

at

Ca

nd

y

Alc

oh

oli

cB

ev

era

ge

s

Gu

m

Retailer Brand Unit Share Varies by Department

20.9% AVG ( + 0.9 pts)

> Development in food & beverage; share growth in all dept’s but Bev/Al


(+1.4 +1.1 +0.9 +0.8 +0.3 +0.8 +0.3 +0.5 +1.3 +0.3 0.0 0.0) +0.5


April 10, 2023

Stronger $ Growth from Store Brands & Overlap in Four Mega-Categories

Branded* Store Brands*

Flour 25% Flour 60%

Dry Vegetables & Grains 24% Pasta 40%

Pasta 22% Shortening & Oil 37%

Canning & Freezing Supplies 19% Dry Vegetables & Grains 36%

Season Gen Merchandise 14% Frozen Breakfast Foods 34%

Butter & Margarine 12% Baby Food 31%

Cough & Cold Remedies 11% Salad Dressings & Mayo 29%

Pet Food 11% Cheese 23%

Fresh Eggs 10% Crackers 23%

Yogurt 9% Coffee 22%

Dry Mix Prepared Foods 9% Detergents 22%

Fresh Meat 8% Syrup & Molasses 21%

Baking Mixes 8% Frozen Pizza & Snacks 21%

Shortening & Oil 8% Fresh Produce 19%

Car Accessories 8% Canned Vegetables 19%

Categories on both lists

Non-edible Categories

Top 15 Fastest Growing Categories

(% $ Change)

Food dominates both lists

Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year) –*minimum $100 million in sales


April 10, 2023

Stronger Unit Growth from Store Brands & Minimal Duplication in Categories

Branded* Store Brands*

Canning & Freezing Supplies 11% Baby Food 47%

Wine 7% Candles & Incense 24%

Vitamins 6% Flour 22%

Fresh Meat 4% Frozen Breakfast Foods 12%

Dry Mix Prepared Foods 4% Shortening & Oil 12%

Puddings/Desserts - Dairy 4% Detergents 11%

Refrigerated Juices & Drinks 3% Breakfast Foods 11%

Frozen Novelties 3% Fresh Produce 11%

Dry Vegetables & Grains 2% Ice Cream 11%

Bottled Water 2% Frozen Pizza & Snacks 11%

Dressing, Salad, Prep Foods 2% Cheese 10%

Liquor 2% Nuts 9%

Packaged Milk & Modifiers 2% Coffee 9%

Baking Supplies 1% Canned Vegetables 9%

Pasta 1% Salad Dressings & Mayo 8%

Top 15 Fastest Growing Categories

(% Unit Change)

Categories on both lists

Non-edible Categories

Non-edible success for Store Brands

Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 01/24/09 (versus prior year) –*minimum $100 million in sales


April 10, 2023

Store Brand Growth – Linked to Downturn or Long-term Trend?

Don’t let price gaps get too large & drive declining category sales

Don’t de-list high penetration, high frequency or strong niche brands & drive shoppers to retailers who carry them

Do promote store brands with brands where there is limited shopper overlap to drive category sales

Do promote store brands along with non-competitive or complimentary branded offerings to build larger baskets

Do select credible suppliers & hold them to high standards

Retailer Do’s & Don’ts:


April 10, 2023

Manufacturer Do’s & Don’ts:

Store Brand Growth – Linked to Downturn or Long-term Trend?

Be current in branded versus store brand pricing analytics

Be proactive in assortment analytics to show why your brand assortment aligns well w/store brand assortment

Provide retail partners with analytics to show which of your branded offerings make good promotional partners

Take a collaborative approach to how you assess branded versus store brand risks & opportunities – retailer focus has never been greater

Explore options for using excess capacity for store brand production


April 10, 2023

• During the early 1980s recession, companies that maintained aggressive sales & marketing efforts during recessions enjoyed more growth after the recession

• Greater successes to those who keep their foot on the gas, despite – or even because of – the economy

Revenue Growth % in First Five Years After Recession

275%

19%

Companies thatmaintained sales &

marketing efforts duringrecession

Companies that cut sales& marketing efforts

during recession

Source: McGraw-Hill Research

Investing During a Recession Helps You Emerge in a Stronger Position



What To Watch

JR


April 10, 2023

Developments Which Could Help Avert Deep Recession

Decreasing Demand for Crude Oil

Since July Highs:

Crude -73%

Retail Gas -53%

Decreasing Demand for Crude Oil

Since July Highs:

Crude -73%

Retail Gas -53%

Aggressive Fiscal and monetary

policy

Aggressive Fiscal and monetary

policy

Sources: EIA, Euro: Belgium, France, Germany, Italy, Netherlands, UK S&P GSCI returns qtr 2/11/09

Strengthening U.S. Dollar

Dollar vs. Euro: +25.13%

Strengthening U.S. Dollar

Dollar vs. Euro: +25.13%

Decreasing Commodity Prices

Latest 3 mths

Agri -2%

Indust.Metals -22%

Live-stock -9%

Decreasing Commodity Prices

Latest 3 mths

Agri -2%

Indust.Metals -22%

Live-stock -9%


April 10, 2023

Record Numbers of Store Closings?

• Starbucks closing nearly 1,000 underperforming stores worldwide in less than 2 years

• Circuit City closing all 567 store

• Linens ’n Things – closing all 571 stores & shifting to online model


April 10, 2023

Record Numbers of Store Closings?

• SuperValu – 50

• Sear’s Holding – 24

• Bruno’s – 10

• Penn Traffic – 8

• Sweetbay – 7

• Sam’s Club (Canada) – 6

• Bashas’ – 5

• A&P SuperFresh – 5

• …………

• Lane Bryant/Catherine's – 150

• Sprint – 133 stores

• FYE – 130

• Office Depot – 112 stores

• Zales – 105

• Macy’s – 10

• ………


April 10, 2023

Store Closings – How Will they Impact Your Business?

Opportunity for retailers to grab cheap property, expand store count & enhance market share

Threat to retailers relying on traffic draw from closed site(s) – be prepared to relocate quickly

Threat to manufacturer sales – be prepared to shift sales efforts to winning retailers


April 10, 2023

2009 Convenience Channel Industry Forecasts

Categories to Watch in 2009:Forecasted % Change in 2009 Dollar Sales

-2%

0%

2%

4%

6%

8%

10%

Chocola

te

Non Cho

cola

te

Min

tsGum

Cigar

ette

s

Other

Tob

acco P

rodu

cts

Cigar

s

Mal

t Bev

erag

es

Carbon

ated B

evera

ges

Bottled

Wat

er

Sports

Drin

ks

Energy

Drin

ks

Salty

Sna

cks

CandyCandy TobaccoTobacco BeveragesBeverages SNKSSNKS

CSNews Industry Forecast Study


April 10, 2023

The Chocolate Candy Category:Impacted by Higher Pricing & Economic Pressures

4.3 4.4 4.2 4.1 3.7

6.3

3.1 3.2 3.3 3.2 2.9 2.8 2.8 2.6 2.6 2.7 2.8

1.3 1.2 1 0.80.2

1.8

-0.7 -0.8 -1.1 -1.5 -2 -2.5 -3.2 -4 -4.6 -5.1 -5.6

-8

-6

-4

-2

0

2

4

6

8

1052

w/e

11/

3/07

52 w

/e 1

2/1/

07

52 w

/e 1

2/29

/07

52 w

/e 1

/26/

08

52 w

/e 2

/23/

08

52 w

/e 3

/22/

08

52 w

/e 4

/19/

08

52 w

/e 5

/17/

08

52 w

/e 6

/14/

08

52 w

/e 7

/12/

08

52 w

/e 8

/9/0

8

52 w

/e 9

/6/0

8

52 w

/e 1

0/4/

08

52 w

/e 1

1/1/

08

52 w

/e 1

1/29

/08

52 w

/e 1

2/27

/08

52 w

/e 1

/24/

09

Do

llar

& U

nit

% C

han

ge

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08

$0.09

$0.10

$0.11

$0.12

Avg

Pri

ce C

hg

$ % Chg vs YA U % Chg vs YA Avg Unit Price - Chg vs YA

Eco Conditions Worsen

Source: Scantrack, a service of The Nielsen Company; FDM excluding Walmart + C-Stores


April 10, 2023

The Premium Chocolate:The “Wave” Has Crashed as Unit Decline in Latest Periods

28.6 27.3 25.4 24.3 21.625.7

19 17.3 16.1 14.9 13.1 12 11.2 10.1 7.31.7 0.8

14.113.3

12.5 12.512.9

19

1513.5

1210.6

8.77.3 6.2

4.6

1.9

-1.5 -2.7

-10

0

10

20

30

40

5052

w/e

11/

3/07

52 w

/e 1

2/1/

07

52 w

/e 1

2/29

/07

52 w

/e 1

/26/

08

52 w

/e 2

/23/

08

52 w

/e 3

/22/

08

52 w

/e 4

/19/

08

52 w

/e 5

/17/

08

52 w

/e 6

/14/

08

52 w

/e 7

/12/

08

52 w

/e 8

/9/0

8

52 w

/e 9

/6/0

8

52 w

/e 1

0/4/

08

52 w

/e 1

1/1/

08

52 w

/e 1

1/29

/08

52 w

/e 1

2/27

/08

52 w

/e 1

/24/

09

Do

llar

& U

nit

% C

han

ge

$ % Chg vs YA U % Chg vs YASource: Scantrack, a service of The Nielsen Company; FDM excluding Walmart + C-Stores


April 10, 2023

Dark Chocolate: Signs of Leveling Off After Two Years of Strong Growth

$0

$250

$500

$750

$1,000

2003 2004 2005 2006 2007 2008

Mill

ions

Dark Chocolate

$290M

$816M$746M

$517M

$370M$327M

+9.

4%

+44

.3%

+39

.7%

Source: Scantrack, a service of The Nielsen Company; FDM excluding Walmart + C-Stores


April 10, 2023

Chocolate Singles:Unit Sales Continued Declines As Pricing Increases

1.6 1.9 2 2.1 1.7 2 2.3 2.5 2.6 2.6 2.4 2.1 1.6 1.5 1.6 1.9 2.2

-0.9 -1.3 -1.3 -1.5-2.7 -2.9 -3 -3.2 -3.6 -4 -4.6 -5.4

-6.6-7.7 -8.2

-9 -9.6

-12

-10

-8

-6

-4

-2

0

2

452

w/e

11/

3/07

52 w

/e 1

2/1/

07

52 w

/e 1

2/29

/07

52 w

/e 1

/26/

08

52 w

/e 2

/23/

08

52 w

/e 3

/22/

08

52 w

/e 4

/19/

08

52 w

/e 5

/17/

08

52 w

/e 6

/14/

08

52 w

/e 7

/12/

08

52 w

/e 8

/9/0

8

52 w

/e 9

/6/0

8

52 w

/e 1

0/4/

08

52 w

/e 1

1/1/

08

52 w

/e 1

1/29

/08

52 w

/e 1

2/27

/08

52 w

/e 1

/24/

09

Do

llar

& U

nit

% C

han

ge

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08

$0.09

Avg

Pri

ce C

hg

$ % Chg vs YA U % Chg vs YA Avg Unit Price - Chg vs YASource: Scantrack, a service of The Nielsen Company; FDM excluding Walmart + C-Stores



The Outlook



Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09

Index of Leading Indicators: Composite of ten indicators

Equity Markets (Dow, NASDAQ, S&P)

Consumer Expectations Index

Building Permits

New Factory Orders

Capacity Utilization

Productivity: Output per man-hour worked

Weekly Jobless Claims: 4 wk moving avg

Avg weekly hours worked

Help wanted Ad Indexes

Leading Indicators Remain Near Record Lows:Near term recovery (3-6 mths) not expected

Positive Neutral Negative

Sources: U.S Leading Economic IndicatorsSources: U.S Leading Economic Indicators

Next >< Back Main Menu



Jul 08

Aug 08

Sept 08

Oct 08

Nov 08

Dec 08

Jan 09

Feb 09

Mar 09

Apr 09

May

09

Jun 09

Nielsen Market Index Volume*

Nielsen Market Index Value**

Are consumers moving to Store Brands?

Are shoppers shifting to value channels?

Are retailers selling more on promotion?

Are consumers shopping more frequently?

Are consumers spending more per trip?

Nielsen Global Consumer Confidence^

Rising unemployment & declining consumer expenditures has US economy in worst shape in at

least a quarter century As economy stalls, consumers shifted to store brands, while

reducing their spending per trip

2008 2009(E) 2010 (E)

GDP 1.3% -1.2% 2.2%

ConsumerSpending 0.3% -1.6% 1.9%

InflationRate 3.8% 0.1% 2.3%

Unemploy.Rate 5.8% 8.0% 8.1%

SavingsRate 1.7% 5.1% 5.2%

USA Summary



What to Do Now

TH


April 10, 2023

15

21

11

18

11

8

9

6

15

20

10

18

12

8

9

7

Recession Indifferent

Recession Insensitive

Switch to Private Label

Light Coupon & Sales

Stock-up & Save

Switch Stores for Deals

Disloyal/Promotion Sensitive

Panic Stricken

% Dollars

% Hhlds

Source: Homescan®, a service of The Nielsen Company 52 weeks ending 12/27/08

Not All Shoppers Use the Same Coping Strategy During Down Economy

Economic Impact Shopper Segments


April 10, 2023

Category Sales Opportunities to Win in Down Economy Varies by Segment

Nielsen Economic Impact Segmentation:

Wine Candy Gum

Recession Indifferent 119 98 103

Recession Insensitive 109 97 100

Switch to Private Label 87 90 96

Light Coupon & Sales 101 96 102

Stock-up & Save 103 116 103

Switch Stores for Deals 91 101 97

Disloyal/Promotion Sensitive 66 104 88

Panic Stricken 86 107 110

$ Buying Rate Index



April 10, 2023

Promotion Support Required to Win in Down Economy Varies by Segment

Nielsen Economic Impact Segmentation:

Wine Candy Gum Wine Candy Gum

Recession Indifferent 119 98 103 114 80 73

Recession Insensitive 109 97 100 85 73 66

Switch to Private Label 87 90 96 44 44 46

Light Coupon & Sales 101 96 102 127 113 117

Stock-up & Save 103 116 103 105 153 155

Switch Stores for Deals 91 101 97 119 120 124

Disloyal/Promotion Sensitive 66 104 88 80 106 124

Panic Stricken 86 107 110 77 133 128

$ Buying Rate Index Deal Index



April 10, 2023

Challenging but Opportunistic Times in 2009

• Existing behavior will intensify: - Greater at-home related opportunities

- Fulfillment of basic over discretionary needs

- Pervasive trading down

- Variety & convenience take a back seat to value

• Don’t assume consumers are not willing to pay a premium

• Utilize advertising to communicate why your brand should be bought exactly at the point when consumers are thinking about every purchase

•More than ever, the ability to understand consumers, categories, channel, media at an increasingly granular level will deliver the insights to drive success


April 10, 2023

Nielsen Economic Advisor:What You Need To Know

March 5, 2009

Todd Hale,SVP, Consumer & Shopper Insights

James RussoVice President, Marketing

Todd Hale,SVP, Consumer & Shopper Insights

James RussoVice President, Marketing

Nielsen Review of US Consumer Market

Business

Transcript of Nielsen Review of US Consumer Market