MARKETING TO THE ME GENERATION

Carman Allison VP Consumer Insights - Canada

#MILLENNIALTALK

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THE CHALLENGE FOR GROWTH

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CPG STILL SPUTTERING FOR GROWTH IN NORTH AMERICA

United States

Nielsen: MarketTrack - Total Tracked Sale52 wks ending March 8, 2014

Canada

+1.4 +0.2

Dollars

Nielsen: ScanTrack - Total Tracked Sale52 wks ending March 25, 2014

UnitsDollars Units

+1.1 -0.1

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2009 2010 2011 2012 2013 Q1 2014

5

22 2

2 2

0

20 0 0 1

$ % Chg Unit % Chg

Inflation +5 +0 +2 +2 +2 +1

2014 IS STARTING OFF SLOW

Source: Nielsen MarketTrack, National All Channels – 52weeks to March 8, 2014 - Total Tracked Sales excluding Fresh Random Weight

Slow growth, driven only by inflation

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TRENDS IMPACTING GROWTH

• Economy still fragile• Cautious Consumer

Cyclical Changes

• Value Motivators• Retail, Redefined• Connected Consumer• Evolving Consumer

Structural Changes

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Video

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MILLENNIALS ARE…

Redefininghow we

communicate

First generation to grow up with the

internetMost familiar with

technology than previous generations

Entering the

work force

Consumers of the

future

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COMMON GENERATIONAL DEFINITIONS While there are many generalizations, there is no “official” definition

<20‘Gen Z’23%

19-37‘Gen Y’26%

38-47‘Gen X’

7%

48-67‘Boomers’

28%

68+‘GI’

16%

Source: Statistics Canada – Census 2011

7.9 9.1 2.4 9.6 5.5 Millions

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CURRENTLY MILLENNIALS ARE UNDER REPRESENTED IN PURCHASING POWER

Millennials’ Importance

26%

Source: Source Nielsen Homescan – 52 weeks to March 29, 2014

14% 12%

% of Population

9.1 M

% Household Heads

2.0 M

% of CPG $’s

11.7 B

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42% of Millennials between 20-29 years old still live at home“

”Source: Statistics Canada – Census 2011

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MILLENNIALS SPEND 18% LESS

Spend Per Household

Total Millennials

$7,214

$5,899

Source: Nielsen Homescan 52 weeks to March 29, 2014 – HH <35 years

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EATING OCCASIONS

Millennials Boomers

79%

In Home meals

68%

Only 68% of Millennial meal occasions occur in the home

38% of Millennials vs. 32% of Boomers are more likely to prefer immediate prep time

Source: Nielsen Consumption Diary, Time Period: Q2 2013 -Q1 2014

IN HOME IN HOME

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GENERATION WHY?

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HOW ABOUT 24 BILLION REASONS?

2024 $24.3 Billion 23% of CPG

Growth Opportunity in 10 years:

New Households $10.0 Billion

Increased Consumption $14.3 Billion

Today $11.7 Billion 12% of CPG

Source: Nielsen Homescan 52 weeks to March 29, 2014 – HH <35 years – Based on older generation spend

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15Source: Statistics Canada M: Millions

2010 2020 2030

Millennials Boomers

MILLENNIALS WILL SURPASS BOOMERS BY 2020

26%

0.288.9 M9.7 M

26%

24%

10.0 M9.4 M

26%

20%11.0 M

8.3 M

34.2 M 38.4 M 42.1 MTotal Canada

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THE CPG GROWTH ENGINE WILL SWITCH GEARS

By 2020…

Source: Nielsen Homescan 52 weeks to March 29, 2014 – HH <35 years – Based on older generation spend

MILLENNIALS BOOMERS

+$12.6 B

+207%

-$4.3 B

-9%

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AGING IN AND AGING OUT

Nielsen Homescan – Dollar Consumption Index – 52 wks to December 28, 2013 – Consumer Facts CPG Departments

HH Dollar Index 55-64 yrs 65+ yrs Trend

OTC 118 146

Baking Needs 103 106

Pet Needs 136 89

Paper Products 109 95

Oral Hygiene 107 100

Confectionery 106 87Bakery 104 90

Beverages 103 81

Household Products 101 90

Condiments & Sauces 101 89

As consumers age, they change their consumption of key CPG departments

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WHICH CPG DEPARTMENTS ARE MOST COMMONLY FOUND IN A MILLENNIALS’ SHOPPING BASKET?

Nielsen Homescan – Dollar Consumption Index – 52 wks to December 28, 2013 – Consumer Facts CPG Departments Relative Index (82 for total)

Relative Dollar Index <35 years

Baby Care 384

Desserts 150

Body Care 122

Hair Care 120

Prepared Foods 120

Refrigeration & Dairy 118Frozen Food 114

Snack Foods 112

Produce 111

Condiments & Sauces 111

Expensive house market

High unemployment

ratesStaying in

school longer

UrbanCultural

Delaying Marriage

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20Source: Nielsen Spectra, March 2014 - < 35 years old

Post Secondary Educated

54%Single

61%

43%

Rent their residence

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MILLENNIALS: FIND US IN CITIES

79%

Source: Stats Canada 2011 Census , Nielsen Spectra, March 2014 <35 years old

% who live in a CMA(Census Metropolitan Area)

Top Cities: Population Index (100=26%)

Vancouver 136St. Johns NF 123Calgary 120Montreal 118Regina 115Toronto 112Saint John NB 110Halifax 109Ottawa 109Winnipeg 109

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MILLENNIALS ARE MORE DIVERSE

Source: Statistics Canada

For visible minorities…

Canada:

40.1

33.4Average age

vs

7 out of 10 Visible Minorities are

first generation Canadian…

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23Source: Nielsen Global Online Consumer Confidence Surveys, Q3 2013 - Canada – Nielsen 2013 Gas Impact Survey

“I do not intend to buy a car in the near future (34%) I wish I could get where I am going conveniently without

a car (72%)A car is simply a tool to get me where I am going (81%)“

12% don’t own a car (vs 8% population)

7% own a hybrid/electric (vs 8% population)

Another 10% planning to buy

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YOUNGER GENERATIONS ARE PLAGUED WITH HIGHER LEVELS OF UNEMPLOYMENT

Source: Statistics Canada, December 2013Source: Nielsen Global Online Consumer Confidence Surveys, Q1 2014 - Canada

Unemployment Rates

Canada:

7%

However

64% feel positive about their personal finances (vs 52% CA)

60% Report excellent or good job prospects (vs 68% CA)

10% have no spare cash (vs 20% CA)

14%unemployed

(under 25)

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25Source: Statistics Canada

39%

36%

< $30K $30K - $70K > $70K> $100K

26%21%

36%

43%

Millennials Canada

NOT AS CASH STRAPPED AS YOU WOULD THINK

12%

18%

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26Source: Nielsen Global Online Consumer Confidence Surveys, Q1 2014 - Canada

106<35 89

55+

9935-54

MILLENNIALS ARE MORE CONFIDENT THAN OLDER GENERATIONSConsumer Confidence Index by age group

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Despite being optimistic, I still demand value and authenticity.“

”

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Source: Nielsen Global Online Consumer Confidence Surveys, Q4 2013 - CanadaNielsen, PanelViews, Economic Impact, survey 2013Nielsen, PanelViews, Consumer Opinions survey, 2013

THE LOYALTY CHALLENGE

Buy more private label(index: 125)

Shop at stores with lower prices

(index: 114)

73%

Price, first thing to look atwhen purchasing

(index: 120)81%

76%

70%

Easily persuaded to buy a different brand

(index: 122)

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39%30%

MILLENNIALS SPEND ALMOST 4 OUT OF EVERY 10 CPG DOLLARS IN DISCOUNT RETAILERS

Source: Nielsen Homescan 52 weeks to March 29, 2014 – Total Tracked upc’s

Discount Dollar Loyalty

Millennials Total CA

30%

CHANNEL $ LOYALTY

Grocery 46% 43%Drug 4% 6%Mass 16% 12%W-Club 9% 11%

M T

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THE MILLENNIAL #GROCERYTRIP

Nielsen, PanelViews, Social Media, survey 2013

Over 50% check reviews & coupons

online

57% know the stores that offer the

best price

49% will buy more for loyalty points

73% prefer a “one stop shop” experience

51% say trips are “quick trips”

41% would use their phone to pay

73% say price is the first thing to look at when purchasing

60% would prefer loyalty card on their phone, not plastic

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MILLENNIALS SUPPORT SOCIAL CAUSES

70% Find it important

to have programs to improve the environment

48% Will spend more on

products from socially responsible

companies

44% Has purchased from

a company that gives back to

society

44% shop at

retailers that support social

causes

Authentic, creative and diverseSource: Nielsen Global Online Consumer Confidence Surveys, Q1 2013 - Canada

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I want to watch what I want, when I want… and for free.“

”

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Media Usage

MEDIA HABITS DIFFER BETWEEN GENERATIONS

Source: Nielsen Spectra, PMB , January 2014

BoomersMillennial

TV

Internet

Magazines

Newspaper

Radio

LIGHT HEAVYMEDIUM

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34Source: Nielsen Borealis; TV Data Source: BBM Canada

Millennials

Boomers

OVER THE PAST 3 YEARS, MILLENNIALS ARE WATCHING LESS TRADITIONAL TELEVISION

2012 2013 2014

22hr 48min

33hr 36min

22hr 29min

33hr 47min

20hr 52min

33hr 59min

4.9 hrs/day

3.0 hrs/day

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TOP 10 TV SERIES AMONG MILLENNIALS IN 2013

Source: Nielsen Borealis; TV Data Source: BBM Canada – TV Series Excluding specials

1. Amazing Race Canada 12. Big Bang Theory 33. Masterchef 584. Stanley Cup Finals 55. Sochi 2014 66. La Voix 27. Agents of S.H.I.E.L.D 538. Under the Dome 49. Amazing Race 910.Grey’s Anatomy 22

Boomers

FEMALES:

7 of 10 are reality shows

MALES:

2 of 10 are reality shows

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MILLENNIALS ARE CUTTING THE CORD

% with no cable or TV subscription

Millennials Boomers

26%

12%

Source: Nielsen Spectra, 2014 Mar

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LESS CABLE BUT MORE ONLINE MEDIA

46% News Websites

34% Watch TV online

26% Newspapers Online

22% Radio Online

Boomers

23%

5%

14%

7%

Source: December 2013 Nielsen PanelViews Social Media Survey

Millennials

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We can post, tweet and text all about it, right now, 24/7, globally, anytime, anywhere.

“”

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POWER AT THEIR FINGERTIPS

% Total Ownership

12% expected to buy in next year

63% potential ownership

Source: Nielsen PanelViews, Social Media Survey, 2013

51%

7% expected to buy in next year

86% potential ownership!

% Millennials Ownership

79%

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65% have purchased or are

willing to purchase via virtual store

70% have purchased from an

online store

E-commerce M-commerce

Nielsen, PanelViews, Social Media, survey 2013

LEADING TO ONLINE SALES

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WHAT ARE MILLENNIALS BUYING ONLINE? AND WILLING TO BUY ONLINE?

Source: Canadian PanelViews Social Media Survey Oct 2013

Currently Buying Online27% Toys22% Health & Beauty21% Cosmetics15% Paper Products12% Baby Products11% Household Products11% Confectionery9% Pet Products8% Non Perishable Food7% OTC Drugs7% Beverages6% Perishable Food5% Fresh Produce

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WHAT ARE MILLENNIALS BUYING ONLINE AND WILLING TO BUY ONLINE?

Source: Canadian PanelViews Social Media Survey Oct 2013

Currently Buying Online Willing to Buy Online27% Toys22% Health & Beauty21% Cosmetics15% Paper Products12% Baby Products11% Household Products11% Confectionery9% Pet Products8% Non Perishable Food7% OTC Drugs7% Beverages6% Perishable Food5% Fresh Produce

69% Paper Products67% Household Products60% Toys58% Heath & Beauty51% Pet Products51% Confectionery50% Cosmetics50% OTC Drugs49% Non Perishable Food47% Beverages43% Baby Products27% Perishable Food25% Fresh Produce

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MAKING THE MOST OF THE $24B OPPORTUNITY

Activateplans through superior sales

execution

Engagethem through effective and

efficient marketing

Identifyyour best customers

Developproducts and

content to meet their

needs

Source: Forbes

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AND ACT!

Find us in cities (or still living with Mom & Dad)

Respect our authenticity, creativity and diversity

Support our causes; brands that are a good “friend”

Give us a deal, but don’t scrimp on quality

Reach us via social media and mobile; e-commerce

Relate to us—make it relevant, personal, useful

Consumer Shopping Behaviour Q4 2011

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